Indiana's Trust Fund has paid more in benefits than it has received from employer premiums for the past decade. In 2010 alone, Indiana paid $1.02 billion in regular state Unemployment Insurance benefits from the Trust Fund. To combat this issue, Indiana has passed Unemployment Insurance Reform (HEA1450). The goals of the Unemployment Insurance Reform are to align premiums, benefits, and eligibility to achieve structural Trust Fund Balance in normal economic times, repay the Federal loan with interest by 2018, ensure fair benefits for unemployed Hoosiers, and maintain Indiana's competitive business climate.

Effective July 1, 2011, employees working in "on-call" or "as-needed" roles or employed at a business during planned short-term shutdowns were not eligible for unemployment insurance benefits.

Effective October 1, 2011, employee severance pay is deducted from unemployment benefits. Additionally, employees that receive a voluntary buyout are not eligible for benefits.

Effective July 1, 2012, the unemployment benefit calculation will be based upon annual salary and not high quarter wages. The benefit will replace wages at the national average of 47%, with $390 remaining as the maximum weekly benefit. These changes are expected to reap a 20% estimated savings.

In related legislation, Senate Enrolled Act 86 denies unemployment insurance benefits for individuals who test positive for drugs when they fail or refuse a pre-employment drug test. Employers are to send drug test results to the Department of Workforce Development to deny benefits. The failed drug test or refusal to take the test is treated as a "work refusal" for purposes of unemployment benefits.

Calculating the Financial Benefits of Lean using Lean Accounting - Part 2 of 4

The first step in this process is to understand the "future state" of a lean implementation. A lean implementation uses current state and future state value stream maps to plan continuous improvement. After the current state map is created, a lean implementation team will create a future state map that identifies what wasteful activities will be eliminated and how much productive capacity will be created. Future state maps are usually created for 6-12 months after lean implementation begins. Some lean implementations also create a longer-term future state map for 2-3 years out. 

Once the future state has been created, a Lean Steering Team (LST) can begin its work to define the financial benefits of lean. Two areas need to be addressed: using available capacity to grow revenue and capacity management.  

Revenue growth opportunities should be looked at in the classic marketing approach:

• Can we sell more existing products to existing customers?
• Can we develop new customers for our existing products?
• Can we develop new products for existing customers?
• Can we develop new products for new customers?

Here are some issues to consider when the team is reviewing options of revenue generation:

• What impact will lead time reduction have on your competitive position in existing markets?
• How can you position yourself against your competitors if you lead times are less than theirs?
• If lean principles are applied to the product development process, what impact will this have on generating revenue from new products?
• How much available capacity will be used in generating this revenue?

Part 3 of Nick Katko's article will be published in our next issue.

Please contact Scott Olinger, CPA, CPIM, at (800) 880-7800 or solinger@hsccpa.com for more information.