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State will begin borrowing money Thursday to pay jobless benefits
Missouri's unemployment fund has been tapped dry
By Chad Livengood • [email protected] • February 25, 2009
JEFFERSON CITY — Missouri will begin borrowing money on Thursday from the federal government to bailout its insolvent unemployment trust fund.
Department of Labor and Industrial Relations will take out a $15 million loan to pay out benefits to the 219,000 jobless Missourians for the rest of the week, said Wanda Seeney, spokeswoman for the state agency.
The number of individuals filing for unemployment has spiked in recent months, causing a cash crunch in the fund, officials said.
On Monday, the fund was down to $9 million, Seeney said.
For the rest of February and all of March, the department expects to borrow $260 million in interest-free loans from the federal government, Seeney said.
"We have more people who are applying for unemployment, so that means more money being drawn out from the fund,” Seeney said.
The department expects to see an influx of first quarter payments into the unemployment insurance trust fund at the end of March, which should alleviate the need to borrow money after April, Seeney said.
"We don’t think there will be a need ot borrow beyond April, into May,” she said.
The last time Missouri borrowed money to bailout the unemployment fund was the 2003-2004 fiscal year, when the state took a $288 million loan from the federal government.
As of December, the unemployment rate in Missouri was 7.3 percent.
Missouri is one of ten states in the country seeking loans from the federal government to keep unemployment benefit checks going out in the mail.
Just last week, Gov. Jay Nixon announced that he had signed a deal with the federal government to draw down an extra $25 dollars a week for every jobless recipient through the president's economic stimulus bill. The extra money came with no strings attached.
In a statement, labor department Director Lawrence Rebman said it was essential to borrow money so that unemployment checks could arrive on time to those out of work.
But because our projections show that claims for benefits will outpace the current fund balance, I have requested authority to draw down funds beginning in February and as needed to pay benefits to unemployed workers in Missouri. Missourians should take comfort in knowing they will receive the benefits to which they are entitled," Rebman said in a statement.
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