Unemployment Fund Running Out Of Cash In Kentucky
By Pauline Grant - January 17, 2009An enormous increase in the number of jobless Kentuckians is depleting the state of Kentucky's Unemployment Insurance Fund, Gov. Steve Beshear said Thursday.
Beshear said the state has about $52 million in the fund, enough money to cover about two more weeks of payments to unemployed Kentuckians. That's down from $116 million in December.
But the unemployed in Kentucky will not lost benefits. Beshear said all eligible unemployed Kentuckians would continue to receive checks, and that he is asking the U.S. Department of Labor for a $185 million loan to cover the costs through the end of March.
More than 88,000 Kentuckians filed claims for unemployment benefits in December 2008, and the state paid out a record $78.6 million that month.
"This was one of the clearest examples yet of how the national downturn in the economy is affecting our state in serious and troubling ways," Beshear told reporters.
The rush of people filing unemployment claims temporarily crashed the state's phones and a computer system designated for jobless claims earlier this week, said Helen Mountjoy, head of the state's Education and Workforce Development Cabinet.
In response, Mountjoy said, the agency increased the number of phone lines and improved the computer system to handle the increase in filers.
Kentucky has been paying out more in unemployment benefits each year than it has taken in through employer contributions each year since 2002. The difference has been made up by drawing down reserves in the Unemployment Insurance Trust Fund.
The state has begun requiring employers to put slightly more money into the trust fund each year, a move that was triggered by a state law passed some 25 years ago. Large companies with thousands of employees would pay an additional $5,000 a year. Mid-sized companies with about 300 employees would pay an additional $1,000 a year.
The governor said he also intends to appoint a task force to study the unemployment insurance system and to make recommendations on ways to restore solvency to the trust fund.
Kentucky's preliminary unemployment rate for November, the latest month available, was 7 percent, up from 5.1 percent in November 2007.
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