OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

sHB-5261

AN ACT CONCERNING OPERATORS OF ATHLETIC ACTIVITIES, COACHES AND REFEREES AND THE EMPLOYER-EMPLOYEE RELATIONSHIP.

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 17 $

FY 18 $

Labor Dept.

UCF - Net Revenue Loss

Up to $2.2 million

Up to $3.0 million

Note: UCF=Unemployment Compensation Fund

Municipal Impact:

Municipalities

Effect

FY 17 $

FY 18 $

Various Municipalities

Savings

Potential

Potential

Explanation

The bill exempts coaches and referees who work for certain private or public athletic programs from employer-employee rules for unemployment insurance purposes. This results in a net revenue loss to the Unemployment Compensation Fund (UCF) of up to $2.2 million in FY 17 and up to $3.0 million annually thereafter, as well as a potential savings to certain municipalities.1 The net revenue loss could be less to the extent operators of covered athletic activities and their coaches and referees agree to enter into an employer-employee relationship, as is permitted in the bill.

This estimate assumes that an average of five coaches or referees are employed at each of the 2,865 active employers in sports- and recreation-related fields in the state, and that each earns at or above the $15,000 taxable wage base for the state unemployment tax. Utilizing an average state unemployment tax rate of 3.5%, this analysis yields an estimated annualized revenue loss of approximately $7.5 million to the UCF.2 This estimate also assumes an average annualized savings of $4.5 million to the UCF in the form of reduced unemployment compensation payouts based on the current state unemployment rate of 5.5% and an average weekly unemployment benefit of $327 for an average of 17.6 weeks.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

Sources:

Department of Labor Unemployment Insurance Statistics

 

Federal Bureau of Labor Statistics

1 Private sector employers pay unemployment taxes on the first $15,000 in annual wages paid to employees, while public and non-profit employers generally reimburse the Unemployment Compensation Fund for the cost of any benefits incurred.

2 The state unemployment tax rate ranges from a low of 1.9% to a maximum of 6.8% depending on the employer's prior experience with unemployment compensation.