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State unemployment fund projects a $27.3 billion deficit
November 3rd, 2009, 11:32 am · 25 Comments · posted by Mary Ann Milbourn
California's unemployment insurance trust fund is bleeding money with state officials estimating it will be $27.3 billion in the hole by the end of 2011, according to a new state forecast.
Officials already were projecting major deficits in the fund a year ago, before the full impact of the banking crisis hit in late 2008. The fund's losses accelerated this year as the country plunged into its deepest recession in 70 years with California's unemployment rate hitting a modern-day high of 12.3% in August.
Employers, who support the fund through a tax on each worker, are expected to contribute $4.3 billion this year but that is nowhere near the $12.5 billion that is projected to be paid out in benefits. After eking out a $326.2 million surplus in 2008, the trust fund is expected to be $7.4 billion in the red by the end of this year. (Click on chart below to enlarge.)
Source: California Employment Development Department
Just two years ago, at the end of 2007, the fund had a $2.7 billion surplus. As the recession worsened last year, the state projected a $2.4 billion deficit by the end of this year. The state, however, never anticipated the massive layoffs that took place late last year and in early 2009. That resulted in the deficit soaring $5 billion more than expected.
Officials project that the situation will worsen next year as more than 2.3 Californians are expected to be collecting unemployment, up from 2.2 million this year. Although the unemployment picture is expected to ease slightly in 2011 to 2.1 million, the cumulative costs to the trust fund will skyrocket to an estimated $27.3 billion deficit.
And things could be worse. The stimulus package approved by Congress in February provides $8 billion for extended unemployment benefits this year and $1.1 billion in 2010. In addition, the federal government is forgiving the interest on the funds the state is borrowing this year and next year to pay unemployment benefits. But in January 2011, the interest clock will begin running again and the state will have to pay back the borrowed federal funds in full by that September.
State officials have warned for years that the unemployment insurance trust fund is way out of whack. Benefit payments have increased over the last 20 years with no adjustment in eligibility rules or the employer tax that goes to support the trust fund.
Read the full state unemployment insurance trust fund report HERE.
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this is pathetic. pay your own bills or leave california. if you want to give yourslef a better shot at a job go find all those mexicans sitting on the street like cockroaches. exterminate them. now that would be a great day.
Sounds like you have a good plan there desertstorm, why don't you find them and do it yourself? Or better yet, just wait those cockroaches will exterminate you pretty soon.
there are plenty of $10 entry level jobs available out there, but if you can collect $500 per week from unemployment insurance for 79 weeks, um 99 weeks is about to get approve, would you accept the entry level job.?
A bit more right than my own views but we are on the same page, I as an employer/ 1099 have never been eligible and have never collected despite funding it for years. Problem is the sheer # of educated recipients not being able to go out and hustle for cash like those of us with street smarts. The liberals need to cut em off after 6 months max and let them either sink or swim, that's the reality of business. Any short term pain will be much better than the long term price tag of all the Bailouts, stop the bleeding so we can all get back to work.
I've been eligible and never collected (in 20 years of work), yet they announced 6 months ago the fund was DEPLETED. Hmm where did all those premiums they were entrusted with go. What if I was laid off tomorrow? Where's my 26 weeks (not that it would take me that long to bounce back.. if you are an employee, always have a plan B, C, D)...
desertstorm: depends, how much does it pay? are there benefits??
WOW, that is not good at all! People need to understand how bad this news really is, if the economy does not rebound in a huge way that deficit will grow. Once again I'll advocate how important it is to keep people employed private & Government. I'm all for pay cuts & benifit cuts but NO layoffs that will just add to this problem.
desertstorm, how about instead of advocating violence by exterminating a group of people and blaming all our woes on them, if your looking for a job you take their place at the Home Depot parking lot and try working. Funny, with all the talk of unemployment, I haven't seen too many, oh wait a minute, "any" white guys out soliciting work. I can only imagine they're still waiting for that perfect job with good pay that someone else has already taken. Boohoo.
And, I understand, they collect above $10.00 / hour cash! If I were on unemployment with marketable skills I would hang out at Home Depot looking for additional income.
INDEED, Now you're thinking
yep.
Just another of the fine gifts that the greedy rethuglicans left us with; no jobs, no money and a couple of wars bleeding our treasury dry in the name of what? Freedom...for who? The Iraqis dont have it and the Afgans dont want it.
desertstorm, you talk about unemployment benefits as if it is akin to welfare. It's not even close!!! Unemployment benefits allows you to barely cling on to a roof over your head and food for your family. Unlike welfare that separately and directly pays your rent to your landlord, separately pays for food (food stamps), and gives you a small monthly stipend for other sundry living costs. So shut-up, you really don't have a clue what you're talking about!!!
Really Do you even now what the maxiuim payment's per week are? It's a hell of a lot more than welfare. WOW do you even know what you're talking about...Wake up People this is not going to improve until WE as a state do something about it.
Why sure. That's what happens when Wall Street bets the house that prices will continuously appreciate and it finally blows up in their face. Millions upon millions of innocent folks lose their jobs. And the amount of money needed to pay the unemployed victims is MINISCULE as compared to the amount of tax money literally gifted to the same Wall Street criminals who were ALLOWED to take down our entire economy!!!
So there is no surprise here. Just don't blame it on the peasants. Point your fingers toward DC and NYC. Those are the ones who deserve your anger!!!
What a very naive and an uneducated response. Don't blame Wall Street & the Government for our shortcoming as a state. If you didn't see this coming where the hell have you been living the last 25 years? It amazes me how dumfounded we are when the truth is mowing your lawn & taking care of your kids every day.
I just renewed my unemployment. Woohoo!!
You hit the nail right on the head, Desertstorm.
If we got rid of all the illegal pisa's, the economy would simply adjust. Just think of all the apartment & houses that will become available. Our inflation has simply gone out of control. We have more roommate situations than anywhere else in the USA, expect Manhattan NY. the huge difference is we have tons of space & more houses & Apartments than the big apple.
Oh & that 12.6% unemployment rate would disappear. Believe me most people would do jobs for less money than there used to if they at the very least, can afford to have their OWN place to live. It's simple Economics 101 people. Oh and just think our public schools won't be ranked 48th in the nation anymore WOW time to step up & man up.
I think you need to re-enroll in Economics 101, CJ. Economies don't just simply 'adjust' when you take out potentially tens or hundreds of thousands of people. Empty apartments and houses means that you're potentially sticking landlords with mortgages and no source of income to pay the mortgage. Plus, fewer people also means less sales tax revenue. This translates to fewer city services and/or layoffs of city employess; or fewer city funded projects, which in turn drives down industries like construction.
Economies don't exist in a vacuum. I think you need to reevaluate your premise.
Unemployment is not paid out to illegals yet why do these numbskulls blame them for the 80million payout a day from the state of California.I'm guessing cj and the first commentor are probably in that unemployed bunch and have no one elseto blame for their predicament than themselves. They feel big about using the Nazi term extermination yet in reality have no guts to really do something. Man up is the right words but don't just write if you know in your self that your a weasel and have no guts to do what you say much less attach your name to something you believe . Yes, man up Nazi weasels!
welfare, food stamps, free lunch programs, free breakfast, free medical care for when Jose Jr. or Juanita gets the sniffles, no taxes, no fear of authority... sounds pretty good to me.
Yup. That's the way it is in the Peoples Republic of California. Compare that with Texas where these handouts don't exist. What happens? The freeloaders come to California (its called Social Dumping in Economics) , vote for Democrats who keep them well supplied with freebies, taxes go up to pay for more freebies , more jobs flee the state, and more people end up on welfare and freebies. And thus cycle continues and we spiral down to bankruptcy. Just like New York City circa 1980.
Bicker, bicker bicker, meanwhile big govt will eat all of us alive. Keep voting in the ones that have gotten us here.
This is simple math or business economics. If expenses don't get lowered when revenues tumble then you go BK. The same model applies to GM, your home finances, and the government.
Not so funny to realize, but the government and GM are eerily similar; large bureaucratic organizations, leadership with head in the clouds, large unionized workforces, declining revenues that result in drastic changes.
We should prepare ourselves for either higher taxes or lower government expenses. I guess we could continue to put our head in the sand but eventually the punch bowl will go empty.
Well of course the unemployment fund is sunk in debt. Is that any surprise in a state where the Democrats have done such a fabulous job in driving away businesses? If we had more employers in the state we'd have fewer unemployed people. Let's compare: In Texas where the Republicans control the legislature, governors house and senate seats, the economy is doing much better than here. AND it is expected to come out of this recession sooner. Therefore, they have fewer unemployed. Many of OUR businesses have fled to Texas leaving many of their ex-employees here unemployed.