Monday, August 5, 2013
California owes the federal government $10 billion it’s borrowed to cover a shortfall in the fund used to pay for unemployment benefits. The state’s been borrowing since 2009.
For more than four years, California’s been borrowing money from the federal government to help pay out unemployment benefits. The state is now considering how to repay its debt.
The Great Recession hurt California in many ways, including decimating the fund it uses to pay unemployment benefits. The state owes the federal government $10 billion that it borrowed to cover a gap in its unemployment trust fund. For the last two years it’s had to pay interest on the loan- this year, more than $260 million.
Now that its finances are looking up, California is beginning to think about paying back its debt. Governor Jerry Brown’s administration is working with business and labor groups to come up with a legislative fix by possibly increasing employer contributions, decreasing benefits or both.
While benefits have increased over time, California has not increased the required contribution from employers since 1984.