The Kansas Unemployment Insurance (UI) Trust Fund was created in 1937 as the state counterpart to the Federal Unemployment Insurance Trust Fund. The UI Trust Fund provides income stability for Kansas citizens during times of economic difficulty while stimulating economic activity. UI is a federal program managed by the State and requires all changes to the Employment Security Law (ESL) to be approved by the U.S. Department of Labor (USDOL) before taking effect.
State Fund Contributions
Contributions to the UI Trust Fund are made by Kansas employers and are governed by KSA 2025 Supp. 44-710a. The UI Trust Fund is designed to be self-correcting during economic cycles. Moneys in the UI Trust Fund accumulate during periods of economic expansion; benefits are primarily distributed during times of economic retraction.
Starting in 2026, the taxable wage base for employer contributions to the Employment Security Fund is a percentage of the statewide average annual wage. The percentage progressively increases as follows:
- 25.0 percent beginning in calendar year 2026;
- 30.0 percent beginning in calendar year 2028;
- 35.0 percent beginning in calendar year 2029; and
- 40.0 percent beginning in calendar year 2030.
Beginning in calendar year 2031, the wage base will remain at 40.0 percent unless any combination of employer contribution rate schedules G through M are in effect for any five preceding consecutive calendar years occurring after 2031. If that occurs, the percentage will increase to 45.0 percent regardless of changes to the rate tables. For 2026, the taxable wage base is $15,100.
Employer Classification
The amount collected from employers varies depending upon the presence or absence of several factors or conditions, the primary of which is employer classifications. Employers in Kansas can be classified as a new employer, an entering and expanding employer, a positive balance employer, or a negative balance employer.
New Employers
New employers with fewer than 24 months of payroll experience have a contribution rate of 1.75 percent, unless they are in the construction industry. New employers within the construction industry are instead charged a contribution rate of 5.55 percent of their taxable wage base.
If the new employer is expanding or moving from another state, they are eligible to request an alternate rate. If they meet the qualifications, then the employer’s contribution rate would be equal to their previous rate in the other state provided the rate was 1.0 percent or greater of their taxable wage base. To retain the reduced contribution rate, the employer must maintain a positive account balance throughout the four-year period the reduced rate is in effect.
Experience-Based Employers
Employers with an employment history of at least two years qualify for experience-based ratings. Employers are classified as positive balance when their total contributions to the UI Trust Fund exceed the amount of unemployment benefits charged to their accounts. Positive balance employers are grouped into 28 rate groups depending upon their unemployment experience, and a specific contribution rate is determined for each employer. The standard rates for the positive groups range from 0.0 percent for rate group 0 and increase in each subsequent rate group until 5.55 percent is established for rate group 27.
An exception to this is if a positive balance employer’s reserve ratio has increased significantly due to an increase in their taxable payroll. If an increase occurred by a minimum of 100.0 percent due to employment growth rather than a change in their taxable wage base from the previous year, then the employer shall be given a reduced rate. The rate would be for a period of three years and require the employer to maintain a positive and increasing account balance for the three years.
Employers are classified as negative balance when their total contributions to the UI Trust Fund do not exceed the amount of unemployment benefits charged to their accounts. These employers are grouped into 11 rate groups. The standard rates for the negative groups range from 5.85 percent for rate group N1 and increase in each subsequent rate group until 8.35 percent is established for rate group N11.
Active negative-rated employers are eligible for a calculated negative debt write-off and forgiveness amount. If on any computation date an employer’s account registers a negative reserve ratio of -7.150 percent or less, a portion of benefit charges will be conditionally forgiven and removed from the employer’s account to bring the account to a reserve ratio of -7.150 percent. The employer will be assigned to rate group N11. Such employers can avoid the write-off and N11 assignment for the next three calendar years by submitting a voluntary contribution at least equal to the amount necessary to establish their account reserve ratio to at least -7.149% for the next calendar year.
Solvency Adjustments
Once standard rates are set, they are modified based upon the solvency adjustment. The solvency adjustment, which is based upon the UI Trust Fund’s Average High Cost Multiple (AHCM), is applied to all experience-rated employers and ranges from an increase of 2.0 percent to a decrease of 2.0 percent. The AHCM is derived by dividing the UI Trust Fund’s reserve ratio by the average high benefit cost rate. This adjustment allows the rates to respond to the solvency state of the UI Trust Fund.
Employers also have the choice to make additional contributions to the UI Trust Fund to become positive balance employers and qualify for an experience-based rating with lower contribution rates.
Federal Unemployment Trust Fund
In addition to the contributions to the UI Trust Fund, employers are taxed by the Federal Unemployment Tax Act (FUTA).
Employers pay a rate of 6.0 percent on the first $7,000 of income; however, the federal government provides a tax credit of 5.4 percent against this rate for states with an unemployment insurance program in compliance with federal requirements. This yields an effective contribution rate of 0.6 percent for Kansas employers. FUTA funds are used for administrative purposes and to fund loans for state unemployment insurance programs when they become insolvent.
Under federal and state unemployment law, governmental entities and nonprofit organizations generally pay into the UI Trust Fund during the year after a laid-off employee has collected unemployment insurance benefits.
Solvency of UI Trust Fund
Kansas uses the AHCM, as recommended by the USDOL, to ensure the UI Trust Fund is adequately funded. The primary determinants of the UI Trust Fund depletion rate are the benefits paid out, the number of persons to whom unemployment is paid, and the amount of time for which benefits are paid.
Current Status of the UI Trust Fund
If the UI Trust Fund is depleted, as occurred during the Great Recession, the Kansas Department of Labor (KDOL) is authorized to borrow from the USDOL, the Pooled Money Investment Board, or both to make weekly benefit payments.
The State General Fund is not obligated to ensure the solvency of the UI Trust Fund. Likewise, the UI Trust Fund may not be used for non-employment security purposes. Prior to the COVID-19 pandemic, the state’s UI Trust Fund was considered sufficiently solvent that any loans taken from USDOL would be at 0.0 percent interest. Failure to repay the loan results in the FUTA tax credit for employers being reduced by an additional 0.3 percent annually until the debt is repaid; additional federal credit reductions may also apply. If a state has an outstanding federal advance on January 1 for two consecutive years, the advance must be fully repaid before November 10 of the second year to avoid a FUTA credit reduction for employers. Thus, if the state’s UI Trust Fund requires a loan by January 1, 2027, then full payment would be due on November 10, 2028. If a loan is made on January 2, 2027, or later, then full payment would be due on November 10, 2029.
The UI Trust Fund balance can be found on the KDOL’s website.
Employee Eligibility
An individual is eligible for unemployment compensation when that person has lost employment through no fault of their own. Termination for cause or resignation generally disqualify
a person from receiving UI benefits; however, the Kansas ESL allows for several exceptions to this prohibition.
Temporary Unemployment
“Temporary unemployment” means an individual that has been laid off due to lack of work by an employing unit for which the individual has worked full-time and reasonably expects to resume full-time work at a future date and the individual’s employment with the employing unit has been temporarily suspended and not terminated.
Temporary unemployment generally is limited to eight consecutive weeks. However, an extension of eight additional weeks is permitted upon the Secretary of Labor’s approval. The request must be made in writing by a rated contributing employer and identify the affected individual or individuals. The employer must also agree to provide any reports concerning the extension required by the Secretary. In addition, the extension is allowed only upon a determination by the Secretary that the employer has filed all required employment security reports, paid all required contributions, and is primarily engaged in the production and distribution of ready-mixed concrete or the construction of streets, highways, elevated highways, roads, airport runways, public sidewalks, or bridges.
Employee Benefits
The amount of money an employee can receive in benefits will vary depending on the level of compensation the employee received during employment and the length of time the employee can receive benefits. However, there are strict upper and lower limits on benefit payments to prevent over- and under-compensation. If KDOL determines a person knowingly made a false statement or representation or knowingly failed to disclose a material fact to obtain or increase unemployment benefits, that person is disqualified from receiving benefits for one year following repayment for a first occurrence and five years following repayment for any subsequent occurrence.
Calculating the Weekly Benefit
The weekly benefit amount is what the claimant will receive each week in unemployment compensation. The weekly benefit amount is determined by multiplying 4.25 percent times the highest earning quarter in the first four of the last five completed calendar quarters. The maximum weekly benefit amount is limited to 55.0 percent of the average weekly wages paid to employees in insured work in the previous calendar year. Claimants are guaranteed to receive at least 25.0 percent of the maximum weekly benefit amount effective as of the beginning of the individual’s benefit year. For the benefit year commencing on July 1, 2026, the maximum weekly benefit amount is $663 and the minimum weekly benefit amount is $165.
Calculating the Length of Compensation
During a standard or non-recessionary period, an employee’s duration of benefit is calculated in one of two ways; the calculation yielding a shorter duration is used. First, an employee can receive weekly compensation for a specified number of weeks, or second, the duration of benefits is determined by multiplying one-third times the total earnings received in the first four of the last five completed calendar quarters.
The weekly benefits amount is divided into the total benefits received to determine the number of weeks an employee can receive compensation. If the unemployment rate for Kansas is equal to or greater than 6.0 percent, a person is eligible for a maximum of 26 weeks of benefits. If the unemployment rate is less than 6.0 percent but equal to or greater than 5.0 percent, a person is eligible for 20 weeks of benefits. A person is eligible for 16 weeks of benefits if the unemployment rate is less than 5.0 percent. For purposes of this provision, the law calculates the unemployment rate using a three-month, seasonally adjusted rolling average.
Enforcement of the UI System
To address UI fraud, tax evasion, and identity theft, Kansas law requires the Secretary to:
- Provide the Legislature with an annual report on investigations involving the misclassification of employees;
- Develop a form for claimants to establish their identity before a Kansas law enforcement officer;
- Provide readily accessible means for employers to notify KDOL when a claimant refuses to return to work or refuses an employment offer;
- Create an audit process for employers to submit reports regarding activities related to work search requirements, or to the My Reemployment Plan for applicants who do not participate in a scheduled interview or fail to notify the employer about their inability to participate.
System Improvements & Modernization
In response to vulnerabilities in the legacy UI system exploited by fraudulent actors during the COVID-19 pandemic, KDOL was required to implement a modernized unemployment insurance program IT system. Requirements of the program included:
- Cross-checking Social Security Numbers with the Social Security Administration;
- Checking new hire records against the National Directorate of New Hires to verify eligibility;
- Verification of immigration or citizenship status;
- Comparison of applicant information to local, state, and federal prison databases through incarceration cross-matches; and
- Other various features to mitigate fraud and abuse of the system.
Along with that project, the Unemployment Compensation Modernization and Improvement Council was created to examine and recommend changes to the system to enhance the system for claimants and employers. In addition to suggested improvements of the UI process, and throughout the course of the IT modernization project, project updates are provided to the Council until its scheduled dissolution on December 31, 2026.