Florida's unemployment insurance trust fund has run out of money, forcing the state to tap a federal loan to keep unemployment benefits flowing to more than a half-million jobless.
State officials stressed there will be no immediate effect on those receiving unemployment insurance.
"There will not be any delay or lapse in payments. They will continue to receive their benefits as scheduled," said Robby Cunningham, a spokesman for Florida's Agency for Workforce Innovation, which oversees the unemployment program.
The loan from the U.S. Department of Labor, which is interest-free until January, 2011, is part of the federal stimulus program. It works like a line of credit with the state allowed to draw down what it needs on a daily basis.
On Monday, Florida used up the final $36 million left in its trust fund, including pending receipts, and was forced to borrow $1.7 million to meet expenses. On Tuesday, it drew down another $43.3 million.
Given Monday and Tuesday are typically the busiest payout days, the state anticipates borrowing about $18 million more to get through the rest of the week.
Florida is approved to borrow up to $300 million in August and up to $310 million in September, which Cunningham said should "absolutely" be sufficient.
Florida's unemployment trust fund is intended to be self-sustaining. Employers are taxed every quarter on the first $7,000 in wages per employee. Historically, rates are set each fall and become effective the following January.
During this recession, the longest since World War II, the trust fund has been squeezed from both sides: More people have been applying for unemployment benefits. At the same time, Florida has fewer and smaller companies putting income into the fund.
The state had been anticipating this moment for a long time.
As recently as last July, the fund balance topped $2 billion. But that money evaporated quickly as the state's unemployment rate accelerated to reach its current 34-year high of 10.7 percent statewide.
By March, the fund had been sliced in half to just under $1 billion; during July alone, its balance shriveled from $450 million to $208 million.
The fund is used solely to pay 26 weeks of state-funded benefits for unemployed workers who are deemed eligible. The federal government pays for other unemployment compensation that's been available during the recession, such as an added layer of emergency benefits and extended benefits for those who have exhausted state benefits.
So far, 18 states have tapped the federal loan system.
The lifeline, however, is viewed as a temporary fix.
Florida and other states will wrangle with long-term options to replenish their funds and pay back the federal loans — options such as raising employer taxes, tightening eligibility or cutting benefits.
Jeff Harrington can be reached at email@example.com or (727) 893-8242.