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State unemployment fund running deeply in red

by on
in Employee Benefits Program,Human Resources

The best estimates are expected to show that Minnesota’s unemployment insurance fund spent about twice what it took in during 2009.

With state unemployment running at about 7.6%, the state has paid out approximately $1.6 billion in benefits in 2009, but only taken in about $850 million.

The fund’s balance at the beginning of the year was about $500 million, but the drain began almost immediately. By midyear, the state was borrowing from the federal government to make benefits payments.

Traditionally, winter has been a season of high unemployment benefits as workers who work outdoors in fields such as construction are laid off. So the deficit will most likely grow before it begins shrinking.

When it does start shrinking, employers that laid off more workers will see higher unemployment premiums based on their experience. Increased premiums should begin in 2012.

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