The state unemployment fund continues to bleed money and state officials don’t want to explain why
Despite record payouts from the Unemployment Insurance Trust Fund, state officials are being evasive about how much money is left and how much they are paying out each week. With the ordered lockdown and the highest jobless rate since the Depression, there is no question the fund is being rapidly depleted, but officials refuse to be transparent with the details.
State officials claim 26 weeks of unemployment benefits are available before the state portion of the fund runs out, but the recent high rate of payout would indicate otherwise.
For example, for the week ending May 2nd, officials paid out $639 million, with the state portion being about $213 million from the state trust fund. Last week the Employment Security Department (ESD) reported paying out $988 million, with $272 million coming from state trust funds. The fund had $4 billion on May 1st. Simple math shows at an average of payout rate of $250 million a week means all the money will be gone in around 100 days depending on the starting fund balance.
In addition, ESD reports that 36% of people who have filed have not received any payments yet, which means the weekly payout rate will likely be higher.
These numbers are not readily available from the ESD press releases and contradict the departments own public statements. They were provided directly to Washington Policy Center by the Employment Security Department (ESD) after our article last week exposed the inaccurate nature of the numbers the department has been publishing. ESD included a breakout of state and federal money in its May 7th press release, but officials still don’t acknowledge the weakened state the trust fund is in. Additionally, ESD has mixed in the federal benefit of $600 per person per week into the numbers, money that is not part of the state trust fund.
Whether the fund runs out of money in 30, 60 or 100 days, the problem is the fund is running out of money much faster than state officials admit.
As it stands today, the state fund is already down nearly $1 billion since the beginning of the year.
We are likely to see a prolonged increase in the unemployment rate, as much as four times higher than the 5% rate state officials projected for 2020.
Depending on how long this goes on, it all adds up to a multibillion-dollar problem for the state. Legislators and the public need accurate information so they can start addressing the fix.
Based on the slow-phased approach to reopening the economy, unemployment will be kept artificially higher. There is a point when the lockdown policy will be doing more harm to the state than the original health crisis did. The best way to regain the state’s fiscal health is to bring jobs back. Once people go back to work, they start paying into the unemployment fund instead of drawing money out.
The longer businesses are forced to remain closed and workers are home, the larger this problem will become.