Beebe Says Unemployment Fund In The Black, Paying Back Fed Debt

Nearly two years after the state’s unemployment insurance (UI) trust fund found itself $360 million in the hole, Gov. Mike Beebe (D) says the jobless safety net has paid back nearly half its federal debt and is operating in the black.

In his weekly radio address, Beebe singled out the UI trust fund and outlined what has transpired to pull the fund balance out of the red.

The trust fund, which is financed through payroll taxes that companies pay on their employees, was hit hard when jobless claims skyrocketed during the recession and early recovery years.

Those circumstances led the fund to borrow heavily from the federal government, raising concerns about how the state would repay its advances. The governor, Arkansas legislators, and business leaders changed a number of provisions in the 2009 and 2011 legislative sessions to repair the trust fund’s solvency. Two years ago, the reforms were projected to lead the state to be debt-free by 2015 and it appears on track to do so.

Beebe said:

Two years have passed, and we’ve reached an important milestone. We are still paying back the federal government, but the total has dropped by almost half to $193 million. Meanwhile, the Trust Fund has been replenished and now has a $205 million balance. It’s the first time in four years that we’ve had a positive overall balance in our Unemployment Insurance Program.

Although we now have a positive balance, we’re not going to exhaust it by immediately paying off the rest of the federal advances. We need to keep a healthy balance in the trust fund to handle anticipated new unemployment claims for the rest of this year, as well as for any unexpected employment shifts. We still expect to complete our repayments to the federal government next year. And, when that happens, businesses will see their full federal tax credits restored.

You can access his full remarks at this link.