Jobless Benefits Fund Broke; Ohio Starts Borrowing From Feds
The fund by which Ohio pays jobless benefits is officially broke, and the state has asked to borrow more than $3 billion so payments can keep going out to unemployed workers.
The state has paid out $4.1 billion to 699,000 Ohioans in the last 90 days. That's a billion more than has ever been paid out in a full year. Fewer than 6% of claims are pending - that's just over 71,000, andsome go back to March. About 30% of claims have been denied.
There was only about $88 million in the unemployment compensation fund on Tuesday – so the state has asked for a $3.1 billion line of credit from the federal government and started to take funds from it.
Ohio Department of Job and Family Services Director Kim Hall said the feds will waive interest on what’s borrowed through the end of the year, but the interest rate will go to 2.4% on January 1.
“If the state doesn't pay in full by November 2022, then employers will see a gradual increase in their unemployment taxes. That will be due in January of 2023," Hall said.
And the interest rate ticks up by .3 percent every year after that.
State lawmakers are considering options such as asking voters for permission to issue bonds to pay back the loan sooner.
The Ohio Senate has unanimously agreed to ask voters to approve a constitutional amendment to issue bonds to pay back federal government loans to cover the fund by which the state pays jobless benefits. That fund will go broke in a few weeks. House would still have to approve it.— Karen Kasler (@karenkasler) June 10, 2020
It took seven years to pay off the state’s $3.4 billion loan when the fund went broke in 2008.
Ohio is not the only state that's borrowing money to shore up its fund. Eight other states have requested borrowing authority but haven't tapped that money yet.