Financial Provisions of California’s Unemployment Insurance Code

Division 1, Part 1, Chapter 6 of the California Unemployment Insurance Code deals with financial provisions. Article 1 concerns deposit accounts. Section 1501 authorizes the director to deposit for the purpose of clearance by the director all money collected under this division, in a state or national bank in this state. After clearance the money so deposited shall be deposited in the State Treasury to the credit of the proper fund as prescribed in this division.

Article 2 deals with the Unemployment Fund. The Unemployment Fund is continued in existence as a special fund, separate, and apart from all public money or funds of this state. This fund consists of (1) all employer contributions collected under this division; (2) interest earned upon any money in the fund; (3) any property or securities acquired through the use of money belonging to the fund; (4) all earnings of such property or securities; (5) all money credited to this state’s account in the Unemployment Trust Fund; (6) all assessments collected; and (7) all other money received for the fund from any other source.

Section 1522 requires the Unemployment Fund to be administered by the director exclusively for the purposes of this division without liability upon the part of the State beyond the amounts paid into and earned by the fund.

Section 1523 says that withdrawals by the director from the Unemployment Fund are exempted from the operation of specified sections of the Government Code.

Section 1524 provides that the State Treasurer is ex officio the treasurer and custodian of the Unemployment Fund. The Treasurer must administer the fund in accordance with the directions of the director. The official bond of the State Treasurer must cover the faithful performance of his duties as treasurer of the Unemployment Fund.

Section 1525 requires three separate accounts to be maintained within the fund.

Section 1526 says that all contributions and amounts payable to the Unemployment Fund after proper clearance must be forwarded to the Treasurer who immediately deposit them in the clearing account.

Section 1526.1 provides that all withheld income taxes and amounts payable to the Personal Income Tax Fund after proper clearance must be forwarded to the Treasurer who shall immediately deposit them in that fund.

Section 1526.2 states that all worker contributions and amounts payable to the Disability Fund after proper clearance must be forwarded to the Treasurer who shall immediately deposit them in that fund.

Section 1526.3 says that all amounts payable to the Contingent Fund after proper clearance must be forwarded to the Treasurer who must immediately deposit them in that fund.

Section 1526.4 specifies all amounts payable to the Unemployment Administration Fund after proper clearance must be forwarded to the Treasurer who must immediately deposit them in that fund.

Section 1527 states that, immediately after clearance, all money in the clearing account except interest on contributions, and penalties collected must be deposited in or invested in the obligations of the Unemployment Trust Fund of the United States of America or its authorized agent to the credit of this State, and the amounts deposited or invested must be entered in the Unemployment Trust Fund Account.

Section 1528 says that the benefit account consists of all money requisitioned from this State’s account in the Unemployment Trust Fund, except money requisitioned for administration, and any money so requisitioned, except money requisitioned for administration must be transferred out of the Unemployment Trust Fund account into the benefit account.

Section 1528.5 provides that money credited to the account of this state in the Unemployment Trust Fund by the Secretary of the Treasury of the United States of America pursuant to Section 903 of the Social Security Act, as amended, may not be requisitioned from this state’s account or used except for the payment of benefits and for the payment of expenses incurred for the administration of this part. 

Section 1529 requires money to be requisitioned from this State’s account in the Unemployment Trust Fund solely for the payment of benefits and in accordance with authorized regulations.

Section 1531 requires the director, without presenting vouchers and itemized statements therefor, to withdraw from the benefit account any sums which he deems necessary for the payment of benefits for a reasonable future period. The Controller shall draw his warrant for any claim presented by the director for the payment of benefits under this account and the Treasurer must pay the warrant.

Section 1532 requires money in the benefit payment account to be used solely to pay benefits pursuant to authorized regulations and no other disbursement shall be made therefrom, but amounts erroneously and illegally deposited in such account may be refunded therefrom, except that money credited to this State’s account.

Section 1533 states that money in the clearing and benefit accounts may be deposited by the Treasurer, under the direction of the director, in any bank, savings and loan association, or public depositary in which public funds of the state may be deposited, but no public deposit insurance charge or premium shall be paid out of the fund. Money in the clearing and benefit accounts cannot be commingled with other state funds, but must be maintained in a separate account on the books of the depositary.

Section 1534 says that refunds or judgments payable pursuant to this part, may be paid from the clearing account or from the benefit account with respect to any money erroneously deposited therein, upon warrants issued by the Controller under the direction of and in accordance with authorized regulations, except that money credited to this state’s account.

Section 1535 provides that, during the time as the Federal Social Security Act and Federal Unemployment Tax Act are amended so as to remove the requirement that all money withdrawn from the Unemployment Fund be used solely in the payment of unemployment compensation, exclusive of expenses of administration, and for refunds of sums erroneously paid into such fund and refunds paid in accordance with the provisions of FUTA.

Section 1536 specifies that any amounts determined by the director or his authorized representatives to be payable to employing units as refunds of contributions erroneously paid which are unclaimed at the end of three years from such determination shall be included in the revenue to the Unemployment Fund or in the case of interest or penalties, to the Contingent Fund.

Section 1537 says that, whenever any warrant drawn on an account in the Unemployment Fund or on the Unemployment Administration Fund or the Contingent Fund by the Controller remains unclaimed after one year the amount will revert to the account and the fund from which the amount was payable.

Article 3 deals with the Administration Fund. Section 1555 provides that the Unemployment Administration Fund is continued in existence as a special fund in the State Treasury. All money which is deposited or paid into this fund is hereby continuously appropriated and made available to the director for the purposes authorized in this article without regard to fiscal years.

Section 1556 says the Unemployment Administration Fund must consist of all money appropriated by this state for the purpose of administering this part, money deposited for the purpose of expenditure, and all money received from the United States of America, or any agency, or from any other source for such purpose.

Section 1557 requires money in the Unemployment Administration Fund to not be commingled with other state funds, but must be maintained in a separate account on the books of the depositary.

Section 1558 says all money in the Unemployment Administration Fund is to be expended solely for the purpose of defraying the cost of the administration of this division.

Section 1558.5 states that money in the Unemployment Administration Fund may be expended for any cost of administration under this code, or for any expenditure by the department chargeable pursuant to state or federal law to another state or federal fund or appropriation or to a subvention, payment under a contract, or other source and expended for any purpose authorized by such state or federal law, in accordance with a plan or system of accrual cost accounting.

Section 1559 requires all money in the Unemployment Administration Fund to be deposited, administered, and disbursed in the same manner and under the same conditions and requirements as is provided by law for other special funds in the State Treasury, but the director may draw, without at the time furnishing vouchers and itemized statements, sums not to exceed in the aggregate an amount equal to 1% of the total disbursements made.

Section 1560 provides that all money in the Unemployment Administration Fund, in excess of current requirements, and not otherwise invested, may be deposited by the State Treasurer in banks and savings and loan associations and otherwise held and invested by him in the same manner as provided by law in the case of other special funds in the State Treasury, and under the same rules and regulations that govern the deposit of other public funds.

Section 1561 makes the State Treasurer liable on his official bond for the faithful performance of his duties in connection with the Unemployment Administration Fund. This liability exists in addition to any liability upon any separate bond now existing or which may be given in the future.

Section 1562 states that California recognizes its obligations to replace, and pledges the faith of this state that funds are to be provided in the future, and applied to the replacement of, any money received from the federal government and any money granted to this state.

Article 4 deals with the Contingent Fund. Section 1585 provides that there is in the State Treasury a special fund known as the Employment Development Department Contingent Fund. The Employment Development Department Contingent Fund is the successor of the Department of Human Resources Development Contingent Fund. There is deposited in or transferred to this fund five specified types of monies.

Section 1585.5 requires the director to estimate the amount of penalties and interest collected by the department relating to the withholding of personal income tax and must transfer the amount to the Personal Income Tax Fund on a quarterly basis.

Section 1586 specifies that all amounts in the Contingent Fund are continuously appropriated without regard to fiscal years for refund of amounts collected and erroneously deposited therein, for interest payable under this division on refunds and judgments and for the administration of the department.

Section 1586.5 appropriates from the Contingent Fund to the Employment Development Department an amount sufficient to augment an appropriation available from the Unemployment Trust Fund for acquisition of real property, or for construction and equipment of state public works projects, in order to provide for payment of such public work projects for which an appropriation is available where such project cannot be undertaken because the estimate exceeds the amount available or bids received are in excess of the estimate.

Section 1588 specifies that any amount authorized to be expended from the Contingent Fund for administration may be transferred to the Unemployment Administration Fund, but any amount not needed for the purpose for which authorized must, upon order of the Director of Finance, be retransferred to the Contingent Fund.

Section 1589 provides that, in lieu of filing claims for refund and interest payable on refunds against each of the funds from which an amount has been determined to be due under this division, the director may file a single claim with the State Controller showing the amount payable from each fund for payment from the Contingent Fund.

Section 1590 requires the director to from time to time determine, and the State Controller must from time to time transfer, the unencumbered balance of the Contingent Fund which at any time during any calendar year exceeds $1,000,000 to the Unemployment Fund and the Disability Fund.

Section 1590.5 provides a statement of legislative intent that the Budget Act for each fiscal year must appropriate the entire amount available in the Contingent Fund during the fiscal year for the purposes of this article.

Article 4.1 deals with the Building Fund. Section 1591 provides that there is in the State Treasury the Employment Development Department Building Fund. There is deposited in, or transferred to, the fund two specified types of monies. Also, money in the fund can only be expended pursuant to appropriations by the Legislature.

Section 1592 requires the EDD Building Fund to be used for the acquisition, construction, or renovation of department facilities, necessary for the director to administer this code and laws.

Article 4.5 deals with the Benefit Audit Fund. Section 1595 provides that there is in the State Treasury a special fund known as the Employment Development Department Benefit Audit Fund.

Section 1596 continuously appropriated all amounts in the Benefit Audit Fund without regard to fiscal years for the refund of amounts collected and erroneously deposited therein, and must be appropriated annually in the Budget Act by the Legislature for the financing of administrative costs associated with the discovery and collection of unemployment compensation benefit overpayments.

Article 5 deals with investments in or expenditures for property. Section 1601 provides that, when money other than Disability Fund money is used in the purchase of property and in the construction of buildings, and appurtenant facilities, or in the purchase of property, or in the construction of buildings, and appurtenant facilities, for the use of the department, or for the use of the department and other state agencies.

Section 1602 requires the department to comply with all federal regulations with regard to the sale of property in which the federal government has an equity interest.

Article 6 deals with the Employment Training Fund. Section 1610 provides that there is in the State Treasury a special fund known as the Employment Training Fund. There is deposited in or transferred to this fund all contributions collected from employers.

Section 1611 requires moneys in the Employment Training Fund to be expended only for the purposes specified and for the costs of administering this article, except those moneys may be used for any of four specified purposes.

Section 1611,5 authorizes the Legislature to appropriate from the Employment Training Fund an amount specified in the annual Budget Act to fund the local assistance portion of welfare-to-work activities under the CalWORKs program..