HB 2877 (2026) — Unemployment Administration Adjustment Fund
Overview
- Purpose: Establish a dedicated, self-funded “Unemployment Administration Adjustment Fund” in the Missouri state treasury to defray the costs of administering Missouri’s Employment Security (unemployment compensation) program. The bill also creates an annual employer-funded adjustment to finance administration costs, distinct from (and offset against) traditional unemployment insurance trust fund contributions.
- Sponsor and status: Prime sponsor Rep. Voss; companion bill SB 1399 (2026). As of the latest action, the House Government Efficiency Committee reported Do Pass; full chamber action followed.
Key Provisions
- Creation of the Unemployment Administration Adjustment Fund (288.135)
- A new fund in the state treasury to hold money for admin costs of the Missouri Employment Security law.
- Fund sources: money collected under 288.136 and other appropriations by the General Assembly.
- Administration: state treasurer serves as custodian and may disburse per state law (Sections 30.170 and 30.180).
- Use of funds: solely for defraying the cost of administering the unemployment program; funds do not revert to general revenue at the end of a biennium.
- Investment and earnings: funds invested like other state funds; interest credited to the fund.
- Federal alignment: funds may not be used to substitute for federal funds or reduce federal grant amounts for administering the program.
Annual Unemployment Administration Adjustment (288.136)
- Amount: each employer liable for unemployment contributions (excluding those with zero contribution rate) must pay an annual adjustment equal to 0.05% (five one-hundredths of 1%) of the employer’s total taxable wages for the 12-month period ending the prior June 30.
- Timing and delinquency: employers are notified by March 31 of each year; the amount becomes delinquent 30 days later.
- Collection: delinquent amounts may be collected as provided by sections 288.160 and 288.170; all collected funds go to the Unemployment Administration Adjustment Fund.
- First-quarter offset: for the first quarter of each calendar year, the total contributions due from each employer are reduced by the dollar amount of the adjustment; reductions cannot cause quarterly contributions to fall below zero.
- Triggers for not applying the adjustment:
- If the September 30 balance of the Unemployment Administration Adjustment Fund is $40 million or more, OR
- If the average balance of the Unemployment Compensation Trust Fund over the four preceding quarters (Sept 30, Jun 30, Mar 31, Dec 31) is less than $450 million,
- then no unemployment administration adjustment is applied in the next calendar year.
Administrative details and impact
- Notification: employers must be informed of the annual adjustment by March 31.
- Net state effect: The bill is designed so that the adjustment funds and the offsets to the Unemployment Insurance Trust Fund balance are revenue-neutral at the state level (one fund gains, another loses by the same amount).
- Non-federal mandate: The bill is not a federal mandate; it creates a state-funded mechanism.
- Interaction with existing funds: Contributions to the adjustment fund come from employer wages and are offset against the Unemployment Insurance Trust Fund contributions, ensuring no net increase in total employer contributions in a given year beyond the described adjustment.
Who is affected
- Primary: Employers liable for Missouri unemployment contributions (excluding those with zero contribution rate).
- Secondary: State agencies administering unemployment benefits (Division of Employment Security) and related state funds (Unemployment Administration Adjustment Fund vs. Unemployment Insurance Trust Fund).
- Local governments and small businesses may experience indirect impacts due to administrative changes and potential offsetting fund effects; fiscal notes project net state and federal fund impacts that largely offset each other.
Fiscal and Temporal Aspects
- Funding effect: The fiscal note estimates the initial annual transfer into the Unemployment Administration Adjustment Fund around $10.22 million (based on 2026 wage base), with subsequent years estimated around $9.89 million in 2028 and $9.58 million in 2029, fluctuating with wage base and fund balances.
- Net impact: On the Unemployment Administration Adjustment Fund (inflow) and the Unemployment Insurance Trust Fund (outflow) are equal, yielding a net zero impact to the state’s overall budget position in the bill’s design, though the explicit fund mechanics shift administration costs into a self-contained mechanism.
- Effective date: The bill outlines annual actions starting with the 12-month period ending June 30 preceding the first year of operation; administrative procedures (notice by March 31, delinquency 30 days later) apply each year thereafter.
Notes
- The bill’s supporters frame it as creating a self-sustaining funding source to cover administration costs without drawing on General Revenue, while opponents expressed concern about additional fees but no formal opposition was voiced in committee.
- The measure aligns with a broader pattern of creating dedicated trust or adjusting funds to isolate program administration costs from benefit funding.
