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Florida pays off federal loan used to keep unemployment benefits flowing

Published May 24, 2013

Here's one more sign Florida's jobs market is reviving: The state has paid back the $3.5 billion loan it needed to pay weekly unemployment benefits during the economic crisis.

The final payment of $9.2 million was made Tuesday and went toward interest, according to the Florida Department of Revenue. Total interest paid on the loan was $99.5 million.

The state's Unemployment Compensation Trust Fund was intended to be self-sustaining, with employers taxed quarterly on employee wages. During the recession, however, the fund went insolvent as Florida was squeezed from both sides: more people were applying for unemployment benefits while Florida had fewer and smaller companies putting income into the fund.

In August 2009, Florida began dipping into a federal loan program, one of 36 states to seek a federal bailout for their trust fund at some point over the last four years. So far 14 states have paid the money back.

To repay its debt, Florida used more than $3.1 billion from employer tax collections and $390 million from a tax credit through the Federal Unemployment Tax Act.

About 252,000 Floridians were receiving what the state now calls "re-employment benefits" as of the week ended May 18, roughly half the number from three years ago, according to the Florida Department of Economic Opportunity.

DEO spokesman Jessica Sims said there was no specified payoff schedule for the loan, but noted Florida has moved much quicker than some other large states, notably California and New York, which still have large outstanding balances.

David Hart, executive vice president of the Florida Chamber of Commerce, said putting the unemployment trust fund back in the black showcases the success of Gov. Rick Scott's job creation strategies.

"Florida's unemployment rate has dropped from 11.1 percent to 7.2 percent since Gov. Scott was elected, and ultimately, putting Floridians back to work through private-sector job creation is the best way to keep our unemployment compensation system financially sound," Hart said.

Job creation, however, wasn't the only thing that helped the state rebuild its trust fund coffers so quickly. Many jobless Floridians weren't eligible for aid from the fund.

Studies have shown it's not only tougher for jobless workers to receive unemployment benefits in Florida than practically any other state, but the payouts are also among the lowest nationwide.

"The question is how did (the fund) get to zero," said Mike Evangelist of the National Employment Law Project, a worker advocacy group. "True, the economy is improving, but the bigger story is the benefit cuts that were made."

The average weekly unemployment payout in Florida is $231 with state benefits running out after 19 weeks. Unemployed Floridians may be eligible for up to 25 more weeks of federal benefits beyond that.

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About 70 percent of Floridians receiving state benefits run out of eligibility before finding a job, "by far the highest exhaustion rate in the country," Evangelist said.

Last month, the U.S. Department of Labor slammed the state of Florida for making it difficult for some unemployed people to get jobless benefits, particularly the disabled and those who speak Spanish or Creole.

Federal officials found that Florida violated the civil rights of unemployed individuals, beginning in 2011, when it required them to apply online for benefits and take a 45-question "assessment" to gauge their skills before receiving an unemployment check.

State officials challenged many of the initial findings but said they would work with the federal government to improve aid to the jobless.

Jeff Harrington can be reached at jharrington@tampabay.com.


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