Pushes to Expose State UI Insolvency: The New York Times: February
New York Seeks Federal Help in Paying State Jobless Claims
By LESLIE EATON
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
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.