California jobless fund headed for deficit

SACRAMENTO, Sept. 1 (UPI) -- California's fund for paying jobless benefits is running out of money, even as joblessness is at a 12-year high and rising, the Los Angeles Times reports.

The fund is largely financed by taxes paid by employers. The administration of Gov. Arnold Schwarzenegger may have little choice but to fund it with loans from the federal government and use state funds to pay as much as $100 million in interest over two years, the newspaper said.

California paid out $567.4 million in jobless benefits in July, as 267,000 new claims for benefits were filed.

Eligible recipients can draw a maximum benefit of $450 per week for up to 26 weeks, with the amount pegged to their income when they were working. Some workers can qualify for an extra 13 weeks of benefits.

Even if the fund runs out of money, unemployment checks will still go out to recipients, state officials told the Times. However, they said deficits could wind up being costly for employers, workers and the state.

Projections that the newspaper said already seem to be overly rosy suggest the fund could be $1.6 billion in the red by the end of 2009 -- and $3.5 billion down the following year -- without a significant upswing in the economy.