USA Today: States running out of money in jobless funds

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States running out of money in jobless funds
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By Dennis Cauchon, USA TODAY


The sharp rise in joblessness is draining unemployment insurance trust funds in many hard-hit states, setting the stage for a federal bailout to keep the funds solvent.

The unemployment rate reached a five-year high of 6.1% in August, putting the number of jobless people at 9.5 million, up 2.4 million from a year earlier. About one-third of the jobless collect unemployment insurance from state governments.

California, New York, Ohio and Michigan are among populous states projected to deplete their unemployment insurance funds this year or in 2009 to cover the cost of benefits.

The financial struggles should not jeopardize weekly jobless payments, which average $299 per week. "People will get their benefits. It's just a matter of where the money will come from," Loree Levy of the California Employment Development Department said.

The federal government is required to loan states money when their trust funds run short. In the short term, bailouts increase the federal deficit. In the long term, businesses pay higher unemployment insurance taxes to replenish the trust funds.

"Ohio hasn't faced anything like this for many years. I doubt other states have either," Ohio Chamber of Commerce President Andrew Doehrel said. ......(more)

The complete piece is at: http://www.usatoday.com/money/economy/employment/2008-09-08-unemployment_N.htm