The Unemployment Insurance (UI) system provides temporary weekly benefits to qualified workers who are unemployed through no fault of their own. The system is run jointly by the states and the federal government.

• The states administer the system under federal laws and regulations, set regular benefit amounts, specify eligibility requirements, and distribute benefit payments.
• The federal government sets broad guidelines for the system, pays a portion of states’ administrative costs, and advances funds to states if they lack the money to pay benefits promptly.

Funding for UI is drawn from payroll taxes levied primarily on employers (by state governments and by the federal government).

Benefit payments and tax receipts flow through the Unemployment Trust Fund (UTF) in the U.S. Treasury and are considered federal spending and revenues. That fund directly links revenues and distributions for the permanently authorized unemployment programs. Each state has an account in the UTF. States can accumulate balances during periods of low unemployment, draw down those balances when benefit expenditures exceed tax receipts, and borrow from the federal government when balances are insufficient to cover benefits.