Business Process Design
Change Management
Program Development
Research
The Unravelling and Reinvention of a Potentially Catastrophic Approach to UID’s Financial Analysis and Forecasting
Reinventing an insufficient approach to financial analysis and forecasting, Spire was able to uncover root factors that were hindering the state’s ability to pay out unemployment benefits.
Context and Challenge
Unemployment insurance is a longstanding government program that provides temporary cash benefits to those who have recently been laid off. In this case, it provides an essential safety net for residents in Hawai‘i experiencing unsustainable cost-of-living challenges, in a state where the cost of living is among the highest in the United States.
The Unemployment Insurance Division (UID) administers unemployment benefits covered under the federal Social Security Act for individuals who qualify in Hawai‘i.
The UID program faced rapidly depleting financial reserves, as Hawai‘i continued to experience a low unemployment rate (employment levels have typically been used as a driving indicator of the amount of benefit monies needed). Thus, while low unemployment is recognized as a positive economic indicator, its systemically inverse impact on the funding mechanism of UID’s program placed the state and its residents in a precarious economic situation.
Spire’s Holistic Approach
The State of Hawai‘i’s Department of Labor and Industrial Relations/Unemployment Insurance Division (LIR/UID) engaged Spire to assess the current funding methodology, and to develop a financial revenue forecast that accounted for the volatility in the financial landscape.
Recognizing the conundrum of low unemployment’s impact on the issuance of state funds, Spire expanded its problem-solving range, casting a wider net of analysis that encompassed the underlying economic and social determinants that can also influence UID’s revenue forecast.
Our team surveyed the local government’s Economic Development Directors spanning all islands; analyzing relevant demographic, economic and workforce data to build a comprehensive understanding of these underlying and interdependent factors. Additionally, we assessed and evaluated emerging economic trends alongside evolving workforce dynamics that could materially impact the trajectory of revenue projections.
Spire’s field-tested team leveraged its working industry knowledge and experience across different economic conditions. This foundation provided the necessary capabilities to accurately assess and determine the impact of economic and emerging trends on financial projections.
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Unseen Risks Exposed
Revealed critical financial risks that threatened UID’s funding -
Driving Sustainable Solutions
Secured actionable recommendations and legislative funding for program stability -
Securing Essential Funding
Convinced legislature to fund solutions, ensuring program stability
The Results from Our Engagement
Spire’s holistic assessment and approach uncovered fundamentally important solutions and recommendations beyond the original scope of work.
The team learned that the state didn’t fully understand or realize the enormous risks they were operating under, resulting from its financial model at the time. These inherent problems and risks were not correctly diagnosed, as the most important measures weren’t being tracked.
The results of Spire’s expanded efforts established a more robust set of actions for the DLIR/UID management team to consider. Our findings and recommendations convinced the state legislature and government to set aside monies to address these systemic issues—ensuring it received the appropriate levels of funding needed to sustain its programs. Without Spire’s efforts, the state would currently be operating with an underfunded budget.
