Kentucky unemployment insurance fund has a balance of $0
After months of unprecedented unemployment insurance benefits claims amid the COVID-19 global pandemic, Kentucky’s fund for those claims is at $0 and the state is having to borrow money from the federal government—which will translate to a hit for employers.
In a meeting of the Program Review and Investigations Committee, state officials discussed the status of claims that have been distributed, claims still under review, as well as the status of the Kentucky Unemployment Insurance (UI) Trust Fund.
Kentucky Department of Education and Workforce Cabinet Deputy Secretary Josh Benton said to date, the state has paid out $3,227,068,980 in unemployment insurance benefits.
Benton noted Kentucky’s UI Trust Fund was being rebuilt following the recession and had a balance of around $618 million in 2019 before the pandemic hit.
The fund now has a balance of $0.
While the state has been using federal CARES Act funding to establish new funds and pay claims to many during the pandemic, Benton said the influx of claims has obviously depleted the state UI Trust Fund.
Kentucky’s federally-funded UI Trust Fund was established in April, and as of July 20, the account had a balance of about $102 million. The drawdown for Kentucky’s federal UI Trust Fund is projected to reach $425 million by the end of September and $650 million by year’s end, according to officials.
Kentucky also took out a federal loan this year totaling $825 million in June to deal with some of the issues with the UI Trust Fund.
In 2009, Kentucky owed nearly one billion to the federal government for unemployment insurance because benefits had been increased and funding was insufficient for those benefit levels. Employers had to pay more in federal UI taxes because of this debt on the state. In 2016, the state finally paid off that debt and achieved a positive balance in the UI Trust Fund.
A similar fate is facing the state’s employers as the mechanisms currently in statute to help replenish the fund and pay back any federal loans are solely “on the back of employers,” cabinet officials said.
When asked if there were any discussions on how to fix the problems with the fund and pay back the loans without putting the full burden on Kentucky companies, officials stated while there could be an ask for some federal relief, there have not been any conversations for other options that they were aware of up until this point.