§ 52-04-05 — Determination of rates

North Dakota § 52-04-05

• Jurisdiction: North Dakota
• Title 52: Social Security
• Ch. 52-04: Contributions

Text

1. As used in this section:

a. "Income needed to pay benefits" means the estimate of benefits payable in a
given calendar year less the estimate of interest to be earned by the
unemployment insurance trust fund for that calendar year.
b. "Solvency balance" means the income needed, whether a positive or negative
figure, in a given rate year to reach the solvency target over the number of years
remaining of the period within which the solvency target is to be reached plus the
estimate of the amount of income needed to pay benefits.
c. "Trust fund reserve" excludes all Reed Act [42 U.S.C. 1103] cash.
2. For each calendar year, the bureau separately shall estimate the amount of income
needed to pay benefits and shall estimate the amount of income needed to reach a
solvency balance in the unemployment insurance trust fund, that moves toward the
solvency target amount as determined under this subsection. The solvency target is an
average high-cost multiple of one. The average high-cost multiple is the number of
years the bureau could pay unemployment compensation, based on the reserve ratio,
if the bureau paid the compensation at a rate equivalent to the average benefit cost
rate in the one calendar year during the preceding twenty calendar years and the two
calendar years during the preceding ten calendar years in which the benefit cost rates
were the highest. "Reserve ratio" means the ratio determined by dividing the balance
in the trust fund reserve at the end of the calendar year by the total covered wages in
the state for that year. "Benefit cost rate" means the rate determined by dividing the
unemployment compensation benefits paid during a calendar year by the total covered
wages in the state for that year. The computation of the reserve ratio and benefit cost
rate must exclude the wages and unemployment compensation paid by employers
covered under section 3309 of the Internal Revenue Code of 1986, as amended [26
U.S.C. 3309].
3. The initial trust fund solvency target must be achieved over a seven-year period from
January 1, 2000. After the solvency target required by this section is reached, the
calculation of the solvency target must be continued and, if the trust fund reserve as of
December thirty-first of any year is less or greater than the solvency target, the rates
must be adjusted so that one-fifth of the difference between the solvency target and
the current trust fund reserve is estimated to be collected in the following rate year.
4. Progress toward achieving the solvency target is measured by reducing any difference
between one and the average high-cost multiple of the state by an amount that is at
least equal to the ratio of the number of years left to reach the solvency target to the
difference between the trust fund reserve and the targeted amount. In setting tax rates,
the amount of the trust fund reserve may not be allowed to fall below three hundred
percent from a standard margin of error for the targeted amount of the trust fund
reserve. The executive director may make reasonable adjustments to the tax rates set
for a calendar year to prevent significant rate variations between calendar years.
5. Rates must be determined as follows:
a. The income needed to pay benefits for the calendar year must be divided by the
estimated taxable wages for the calendar year. The result rounded to the next
higher one-hundredth of one percent is the average required rate needed to pay
benefits.
b. The positive employer minimum rate in the first rate schedule of the table of rate
schedules is one-hundredth of one percent. The positive employer minimum rate
in each subsequent rate schedule of the table of rate schedules is the previous
rate schedule's positive employer minimum rate plus one-hundredth of one
percent. The negative employer minimum rate needed to generate the amount of
income needed to pay benefits is the positive employer minimum rate as
described in this subsection plus six percent.
c. The positive employer minimum rate necessary to generate the amount of
income needed to pay benefits must be set so that all the rates combined
generate the average required rate for income needed to pay benefits, multiplied
by the ratio, calculated under subdivision d, needed to reach the solvency
balance. The negative employer maximum rate necessary to generate the

amount of income needed to pay benefits is the negative employer minimum rate
necessary to generate the amount of income needed to pay benefits plus three
and six-tenths percent. However, the maximum rate must be at least five and
four-tenths percent.
d. The tax rate necessary to generate the amount of income needed to reach a
solvency balance must be calculated by dividing the solvency balance by the
amount of income estimated as needed to pay benefits and multiplying the
resulting ratio times each rate, within the positive and negative rate arrays, with a
minimum multiplier of one hundred percent for the negative rate array, as
determined under this section to meet the average required rate needed to pay
benefits as defined by subdivision a. The ratio calculated under this subdivision
must also be multiplied by any rate calculated as required by subsection 6 to
arrive at a final rate for a new business. All results calculated under this
subdivision must be rounded to the nearest one-hundredth of one percent.
6. a. Except as otherwise provided in this subsection, an employer's rate may not be
less than the negative employer minimum rate for a calendar year unless the
employer's account has been chargeable with benefits throughout the
thirty-six-consecutive-calendar-month period ending on September thirtieth of the
preceding calendar year. If an employer in construction services has not been
subject to the law as required, that employer qualifies for a reduced rate if the
account has been chargeable with benefits throughout the
twenty-four-consecutive-calendar-month period ending September thirtieth of the
preceding calendar year. If an employer in nonconstruction services has not been
subject to the law as required, the employer in nonconstruction services qualifies
for a reduced rate if the account has been chargeable with benefits throughout
the twelve-consecutive-calendar-month period ending September thirtieth of the
preceding calendar year. The executive director may provide any negative
employer whose contributions paid into the trust fund are greater than the benefit
charges against that employer's account, for a minimum of three consecutive
years immediately preceding the computation date or subject to the law as
required, with up to a thirty percent reduction to that employer's rate for any year
if that employer has in place a plan approved by the bureau which addresses
substantive changes to that employer's business operation and ensures that any
rate reduction provided will not put the employer account back into a negative
status.
b. An employer that does not qualify under subdivision a is subject to a rate
determined as follows:
(1) For each calendar year new employers must be assigned a rate that is
ninety percent of the positive employer maximum rate or a rate of one
percent, whichever is greater, unless the employer is classified in
construction services. However, an employer must be assigned within the
negative employer rate ranges for any year if, as of the computation date,
the cumulative benefits charged to that employer's account equal or exceed
the cumulative contributions paid on or before October thirty-first with
respect to wages paid by that employer before October first of that year. All
results calculated under this paragraph must be rounded to the nearest
one-hundredth of one percent.
(2) New employers in construction services must be assigned the negative
employer maximum rate.
(3) Assignment by the bureau of an employer's industrial classification for the
purposes of this section must be the three-digit major group provided in the
North American industrial classification system manual, in accordance with
established classification practices found in the North American industrial
classification system manual, issued by the executive office of the president,
office of management and budget. Employers who are liable for coverage
before August 1, 2001, remain under an industrial classification under the

two-digit major group provided in the standard industrial classification
manual unless they are classified in the construction industry within the
standard industrial classification code.
7. An employer who has ceased to be liable for contributions shall continue its
established experience rating account if it again becomes liable within three years
from the date that it ceased to be liable providing that the employer's experience
record has not been transferred in accordance with section 52-04-08. The employer's
rate, however, must be determined in accordance with subsection 6.