Indiana requests $330 million federal loan for unemployment insurance

BY PATRICK GUINANE, Times of Northwest Indiana
pguinane@nwitimes.com

INDIANAPOLIS | Indiana wants to borrow up to $330 million from the federal government to stabilize its unemployment insurance trust fund.

Gov. Mitch Daniels sent U.S. Secretary of Labor Elaine Chao a letter requesting the loan late Monday.

Benefits paid to unemployed Hoosiers have exceeded employer payroll taxes in each of the past seven years, the state said in a news release. And the unemployment trust now has a balance of only $21 million.

"Indiana has a mismatch between benefits paid and the employer taxes that fund them," Teresa Voors, commissioner of the Indiana Department of Workforce Development, said in a statement. "It's a problem that has been growing for several years, and we would be working to fix it even if the national economy were strong."

Daniels and legislative leaders have acknowledged that the growing gulf between unemployment benefits and employer taxes must be addressed in the 2009 session of the General Assembly.

The unemployment trust had had a balance of $1.6 billion in 2000. Since then, lawmakers have increased worker benefits from $236 a week to $390.

The trust fund ran a $172 million deficit last year, and in the first 10 months of this year claims paid have exceed employer premiums by $242 million.

Daniels is asking to borrow up to $10 million this month, $140 million in December and as much as $180 million in January.