State's Unemployment Fund Going Broke; Legislative Hearing Set

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(Sacramento, CA)
Monday, October 6, 2008

Right now the state’s unemployment fund is paying out more in benefits than it’s taking in.  Deborah Bronow with the unemployment insurance branch says the fund is expected to bring in about four-point-eight billion dollars this year – but pay out more than six billion.  She says that means it’s set to run out of money around March. 

 “Given the current sequence of events, once we go broke, we will probably remain broke for an extended period of time without some action being taken.”

Bronow says if the fund goes dry, checks won’t bounce – but rather they’ll take out a federal loan to stay solvent.  That means the state gets hit with the interest.  Democratic Assembly Speaker Karen Bass has pledged to introduce legislation addressing the problem.  Bronow says changes to the fund could include increasing the amount of tax employers pay or changing the structure of the program.