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FOR MORE INFORMATION CONTACT: Wanda Seeney (573) 751-7500
FOR IMMEDIATE RELEASE: February 25, 2009
Missouri Shores Up Unemployment Trust Fund, Ensures Continued Benefits
Missouri Department of Labor and Industrial Relations to Begin Borrowing this Week
JEFFERSON CITY, MO – The Department of Labor and Industrial Relations moved today to borrow money from the U.S. government to ensure that unemployed Missourians are able to continue to receive unemployment benefits as they seek to return to work. As is the case in many states struggling with the sagging economy, the fund Missouri uses to pay unemployment benefits is running low on cash as claims rise.
On Monday, February 23, there was $9 million remaining in the UI Trust Fund. Last week, the department paid out $23.5 million in unemployment benefits. Based on those facts, the DOLIR will need to borrow approximately $15 million this week to supplement the remaining Trust Fund balance. Due to provisions of the recently passed federal recovery act, Missouri will be able to borrow the necessary funds on very favorable terms, accruing no interest and making no repayments until December 31, 2010.
“With 219,000 Missourians unemployed it is critical that we provide them with the tools and resources they need to get back to work,” said DOLIR Director Lawrence Rebman. “But because our projections show that claims for benefits will outpace the current fund balance, I have requested authority to draw down funds beginning in February and as needed to pay benefits to unemployed workers in Missouri. Missourians should take comfort in knowing they will receive the benefits to which they are entitled.”
The DOLIR is prepared to borrow approximately $15 million to pay unemployment benefits this week.
Last month, Director Rebman requested authorization to borrow funds from the federal government on an as-needed basis. The authorization allows the DOLIR to borrow up to $70 million in February; up to $120 million in March; and up to an additional $70 million in April. The DOLIR does not anticipate the need to borrow in May, though the Department will take the appropriate steps to request additional funding as needed, should conditions change.
Missouri has borrowed funds for the Unemployment Insurance trust fund several times previously, most recently taking a loan of $288 million in 2003-2004. Nine other states across the nation currently are borrowing from the federal government to meet unemployment fund shortfalls.
Failure to borrow federal dollars to fund the unemployment shortfall would likely result in Missouri employers losing their Federal Unemployment Tax Act tax credits, which offset federal taxes paid by employers on employee wages. The estimated cost to Missouri employers of losing those credits would be more than $971 million this year.
To find out more about Missouri’s Unemployment Compensation Trust Fund, please visit the Internet site,
http://www.dolir.mo.gov/ES/ui-tax/documents/2008-UCTrustFund.pdf. To learn more about the Department of Labor and Industrial Relations, visit the Internet site www.dolir.mo.gov.
Information and Planning · 421 East Dunklin
· P.O. Box 504 · Jefferson City, MO
65102-0504
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