I’ll Bet You Didn’t Know – Unemployment Insurance Fund Borrows from Federal Government to Make Payments

The California Unemployment Insurance Program provides workers, who lose their jobs through no fault of their own, with weekly unemployment insurance payments. The Unemployment Insurance program is 100% funded by employers who pay State taxes on wages paid to employees.

You may not know it but each time a State Unemployment Insurance claim is paid, the State falls further in debt. As reported in today's Orange County Register (11/9/11), California's Unemployment Insurance Trust Fund, which pays out California Unemployment Insurance claims, has been borrowing money from the U.S. Government to pay the State's unemployment benefits since 2009 and is expected to be $10.1 billion in the debt in 2011 according to reports from California's Employment Development Department which runs the State Unemployment Insurance program.

The state projects deficits of $10.7 billion in 2012 and $10.3 billion in 2013 unless changes are made to California's Unemployment Insurance program. In order to make up some of the deficit, California employers will have to pay up an additional $21 per employee in federal employment payroll taxes next year to begin paying down the $9.2 billion that California has borrowed from the Federal government.