FRANKFORT, Ky. (9/15/13) – Kentucky’s balance on nearly $1 billion borrowed from the federal government to cover a surge in unemployment benefits claims in recent years is expected to be around $675 million by year’s end, state officials say.
Education and Workforce Development Cabinet Secretary Thomas Zawacki told the Interim Joint Committee on Labor and Industry last week that the federal loan advances should be reduced by over $162 million in 2013, bringing the balance to the estimated $675 million mark.
Kentucky has borrowed more than $948 million from the federal government since early 2009 to cover a shortfall in the state’s unemployment insurance (UI) trust fund, according to state officials. In 2012, the Kentucky General Assembly passed House Bill 495, which allowed the state to borrow funds to pay interest on the federal loan and save employers $600 million in tax penalties.
Funds borrowed to pay interest on the federal loan, as well as the interest itself, will be paid with a 0.22 percent surcharge on employers based on their covered employees’ wages, Zawacki said. The surcharge will be implemented on Jan. 1, 2014, he said, adding that Kentucky is “on target to pay all our federal Title XII advances (federal unemployment loans) by 2017—five years earlier than originally anticipated.”
At least 30 states have borrowed money from the federal government to beef up their unemployment insurance programs during the recent recession, state officials say.
Year to date, benefits paid from the unemployment insurance trust fund are down 2.4 percent, from $288 million for the same period in 2012 to $281.9 million so far in 2013, Zawacki said. Meanwhile, contributions from employers to the trust fund are up 1.5 percent year to date—from $431 million to $437 million, he told the committee.
“So we continue to see progress in the contributions,” he told lawmakers.
The state’s unemployment insurance trust fund became insolvent in 2009 when benefits skyrocketed; Contributions paid into the fund were insufficient to cover the cost, based on a chart shared with the committee by Zawacki.
Zawacki told lawmakers that the trust fund is now “on a path to solvency” and will continue to be “as long as we stay on course.”
The committee also heard reports on new procedures for medical fee disputes from the Department of Workers’ Claims and labor-management relations and apprenticeship from Kentucky Labor Secretary Larry Roberts.
The meeting was held at Kentucky Dam Village State Resort Park in Gilbertsville in concert with the 36th Kentucky Labor-Management Conference. I was glad to be able to attend the conference and talk with our labor managers and others involved with labor from around the Commonwealth. It was a great opportunity to learn what state labor leaders are doing to attract more industry and workers (including apprenticeship programs) and to listen to comments and concerns from across the state.
I will have more to share next time. Have a great week ahead!
Disclaimer: The content supplied by columnists and letters to the Editor on this site does not in any way, shape or form, implied or otherwise, necessarily express or suggest endorsement or support of any of such content, statement, or opinions therein. SurfKY News does not necessarily adhere to or endorse content provided by outside non-staff sources.
Copyright 2013 SurfKY News Group, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
|< Prev||Next >|