Whether the State trust fund balances are adequate is ultimately a matter about which each State must decide. States have a great deal of autonomy in how they establish and run their unemployment system. However, the framework established by the Federal Government requires States to actually pay the level of benefits they determine to be appropriate; in budget terms, unemployment benefits are an entitlement (although the program is financed by a dedicated tax imposed on employers and employees and not by general revenues). Thus, if a recession hits a given State and results in a depletion of that State's trust account, the State is legally required to continue paying benefits. To do so, the State will be forced to borrow money from the Federal Unemployment Account. As a result, not only will the State be required to continue paying benefits, it will also be required to repay the funds plus interest it has borrowed from the Federal loan account. Such States will probably be forced to raise taxes on their employers, an action that dampens economic growth and job creation. In short, States have strong incentives to keep adequate funds in their trust fund accounts.
http://www.policyalmanac.org/social_welfare/archive/unemployment_compensation.shtml
Florida, borrowed: $1,612,500,000.00 (1.6 billion plus interest)
Started borrowing: August, 2009
Did anybody know this was going on? Also, why is the federal government involved in our unemployment compensation system to begin with.. and how did the FEDs gain the right to force us to borrow from them, at an interest rate they set?
