CA Unemployment Going Broke?
Posted by Lori Dorn on September 2nd, 2008It looks like CA’s UI program is projecting a $1.6 Billion shortfall by the end of 2009.
From the LA Times:
SACRAMENTO — — With joblessness at a 12-year high and expected to head higher, California’s fund for paying unemployment benefits is about to go broke.
The fund, sustained mainly by taxes on employers, is projected to be deeply in the red as soon as March.
And the administration of Gov. Arnold Schwarzenegger is alarmed that it may have to keep the fund afloat by borrowing from the federal government and using state money to pay nearly $100 million in interest over two years.
At stake is the stability of a 73-year-old program that began during the Depression. In July, California paid unemployment benefits worth $567.4 million and received 267,000 new claims for jobless benefits.
Under the program, eligible workers can receive maximum benefits of $450 a week, depending on their previous earnings. Benefits last as long as 26 weeks, and many out-of-work people can qualify for a 13-week extension, recently approved by Congress.
Unemployment checks won’t bounce, even if the fund goes bust, the Employment Development Department says. But labor experts warn that growing deficits could prove costly to employers, workers and the state.
According to the latest projections, which already appear optimistic, the hole in the fund could exceed $1.6 billion at the end of 2009 and $3.5 billion by December 2010 — unless the economy turns around dramatically.
You can find the most recent (May 2008) EDD UI forecast, where the pitfall was first projected here.
Wow, when it rains, it really pours. California can’t even pass a budget, let alone fix this any time soon.
My concern is that this benefit will either be reduced or unavailable to those employees who are no longer employed through no fault of their own.
Let’s just hope that layoffs/job eliminations are kept at a minimum until Sacramento can figure this all out.
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Despite assurances from the CA state government, I believe that unemployment checks are beginning to bounce. My sister has been on unemployment for the last few months, and when she deposited her unemployment check last week, it was returned. There was no reason cited (insufficient funds, stop payment, etc). What a mess..
Left by Kenny on September 13th, 2008