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NYUP Pushes to Expose State UI Insolvency: The New York Times: February 28, 2003
New York Seeks Federal Help in Paying State Jobless Claims


New York State wants to borrow an additional $860 million from the federal government to finance unemployment benefits for jobless workers, bringing its total loan to more than $1.6 billion, the New York State Department of Labor announced yesterday.

With high joblessness continuing to plague the state, its unemployment insurance fund has been running in the red since December. New York has already borrowed under a federal program that automatically lends states money so they can continue to pay jobless benefits. Under that program, it had asked for $760 million in loans, which were supposed to keep the fund solvent through March.

But in a letter sent Tuesday to the federal Department of Labor, Lewis Stein, director of finance for the New York State Department of Labor, said the state needed $400 million in March alone, plus $460 million for April and May.

The state will have to pay interest at a rate of 6.08 percent annually, according to the federal Labor Department. If the state does not repay the borrowings within two years, the federal government institutes an automatic charge on employers.

Unemployment insurance funds have run into financial trouble in several states, but New York's situation appears to be the most severe.

State officials attribute the fund's debt to the spike in unemployment after the Sept. 11 terrorist attack and the continuing recession. Since September 2001, the statewide unemployment rate has risen to 6.3 percent from 5.2 percent; in New York City, the rate has jumped to 8.4 percent from 6.6 percent.

Some analysts suggested, however, that at least some of the fund's difficulties were caused by the Pataki administration's efforts to reduce employers' unemployment insurance taxes during the boom years.

And advocates for the unemployed contend that the fund's financial problems are already prompting state labor officials to try to reduce the amount of money the fund needs by denying benefits to some jobless people.

"There is enormous pressure to hold down claims and hold down the duration of claims," said Jonathan Rosen, a founder of the New York Unemployment Project. "They are digging deeper to try to disqualify people."

But Robert M. Lillpopp, a spokesman for the state Department of Labor, said, "We make every effort to make sure those people who are due unemployment insurance benefits receive them."

While unemployment insurance claims have dropped recently, they remain higher than they were a year ago. Over the last month, an average of almost 24,000 people a week have applied for unemployment benefits. During the same stretch of 2002, the number was below 23,000.



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