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Unemployment fund could need another loan

Unemployment fund could need another loan

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Maryland’s labor department is prepared to take out another loan in early 2011 to pay jobless benefits following a year in which and lawmakers scrambled to secure federal funds to shore up a benefits system stressed by continued high unemployment.

The loan would likely be a short-term, interest-free bridge from the federal government to keep the state’s Unemployment Insurance Trust Fund solvent, said Julie Squire, assistant secretary of the Department of Labor, Licensing and Regulation.

“It all depends on the demand on the trust fund,” Squire said.

It would mark the second year in a row for the state to turn to the U.S. Department of Labor for an unemployment insurance rescue. The state borrowed $133 million, interest free starting in February to keep benefits flowing. And later, lawmakers passed a deal hammered out by business and labor interests that altered benefits to qualify Maryland’s trust fund for a $127 million infusion from the economic stimulus package.

Despite those efforts, businesses’ unemployment taxes in 2011 will remain at the highest-possible levels, with a chance of slight relief reserved for 2012. Still, those with their fingers on the pulse of the unemployment insurance system say there is reason for hope.

In 2009, the state paid out $1.06 billion in benefits, or nearly $90 million per month. This year, the average monthly payments slid to $76 million and the state has seen fewer initial claims being made, and benefits being exhausted.

The state had $275 million in the trust fund in addition to the borrowed $133 million last week, with the next round of tax payments expected in January. Businesses will pay unemployment insurance taxes between $187 and $1,147.50 per employee in 2011.

“We’re definitely headed in the right direction and we’re certainly better off than the majority of the states,” said Ronald L. Adler, a human resources consultant who represents the Maryland Chamber of Commerce on the state’s Joint Committee on Unemployment Insurance Oversight.

It remains to be seen what impact changes made by the General Assembly in the spring will have on the system.

The package of benefit expansions and reductions were designed to be cost-neutral and don’t go into effect until March 1, but the committee already has its eye on another round of changes to the unemployment insurance system.

A group of labor and business representatives will begin meeting this year to examine for what seasonal workers, who can claim jobless benefits, should be eligible in the state’s unemployment system. And they’ll also look for a way to raise the maximum weekly benefit from the $430 set in October to about $500, or 54 percent of the average weekly wage.

“Folks are trying to live on unemployment insurance benefits. They’re getting less than 50 percent of their previous wage, and in some cases, a lot less,” said committee member Jason Perkins-Cohen, executive director of the Job Opportunities Task Force. “This is the reality, that when you lose your job, you have to find some way to pay the bills.”

As with the changes made this year, increasing benefits while maintaining the stability of the trust fund will likely mean decreasing the pool of those who are eligible to collect them. Cuts discussed in the spring but ultimately left untouched included adding a “waiting week” before laid-off workers can collect benefits and tying the length of a worker’s benefits to his or her time employed.

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