Florida borrows to pay unemployment

08/25/09 Mitch E. Perry
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With Florida's unemployment rate the highest it’s been in over 3 decades, the state’s savings account to pay unemployment compensation claims ran out of money yesterday.

But officials with the state Agency for Workforce Innovation stress that benefits will continue to flow to laid-off workers as Florida begins to borrow from the federal government.

Robbie Cunningham is with the Agency for Workforce Innovation. Cunningham told a Florida newspaper that Florida is authorized to borrow $300 million for August and $310 million for September, a request that has to be renewed to make sure the state only borrows as much as is needed to cover the benefits.

According to the federal Department of Labor, Florida and 16 other states owe money to the federal government for unemployment benefits.

In June, Governor Charlie Crist signed legislation that allowed an estimated 250,000 unemployed Floridians to be eligible for Extended Benefits. The legislation also amended portions of the unemployment compensation law related to the solvency of Florida’s Unemployment Compensation Trust Fund in order to replenish the fund sooner than under current provisions. It also temporarily increased the maximum taxable wage base from the first $7,000 annually to the first $8,500 annually of employees’ wages.

But Florida Republicans rejected $444 million in federal stimulus dollars that were also available for unemployment compensation.

Currently, there are about 650,000 Floridians on various types of unemployment compensation. State officials could not confirm if that was a record high in the state.

Democrat Dan Gelber says the state has an unemployment compensation system that was literally created before there were computers, which is why the system needs to be modernized. He said that was what the GOP leaders needed to agree with in order to get the stimulus funds.

Robbie Cunningham insists that though the state is borrowing now from the federal government, those on unemployment won’t notice any difference.

Nationwide, The National Employment Law Project, a New York-based advocacy group for the unemployed, estimates 540,000 Americans will exhaust their unemployment benefits by the end of September and another 1.5 million will run out of coverage by the end of the year.

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