Fed loans fund states' jobless benefits

WASHINGTON, April 9 (UPI) -- Most states are out of money to pay unemployment benefits, forcing them to borrow from the U.S. government, a report indicates.

Officials from 33 states and the Virgin Islands said their coffers for jobless benefits are empty and they borrowed nearly $39 billion from the federal government, CNN reported Friday. Officials in four other states said they were nearing insolvency.


The information was contained in a report released Thursday by the National Employment Law Project.

To cope, officials were slashing services ranging from police horses to fireworks, the report said.

The report indicated California borrowed the most -- more than $8.4 billion -- followed by Michigan and New York, both with loans of more than $3 billion, CNN said. Nine states reported borrowing at least $1 billion from the federal government.

When the recession began, only 19 states met the recommended funding level -- one year of reserves equal to the highest amount of unemployment insurance paid during previous recessions, CNN said.

Of the states likely to fund jobless benefits without borrowing from the federal government, 10 followed the recommended tactic of building their jobless benefit funds during strong economic times so they can draw from them during downturns, the National Employment Law Project said.


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