Indiana unemployment fund broke, getting worse

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The state legislature begins its 2011 session on Wednesday, and fixing the Indiana unemployment system is high on its to-do list. Business owners are nervous that lawmakers will again raise rates for the general unemployment insurance fund, now at a deficit of over $2 billion, fully borrowed from the federal government and soon to begin collecting interest charges.

Lawmakers voted in 2009 to steeply increase employer premiums, but delayed them one year because of the weak economy. Those increases go into effect Jan 1.  While tough for employers to swallow, Indiana has one of the lowest premium rates in the country, and pays some of the highest benefit rates. That’s why the state has put itself in such a hole.

Those collecting unemployment insurance from Indiana’s state fund are worried that benefits will be curtailed, after remarks by Gov. Mitch Daniels suggested the possibility.

Fortunately, the unemployment rate in Indiana has leveled off, and in December, dropped to 9.8 percent. Over the course of 2010, the state added 46,000 private sector jobs to its payrolls.

Even with cuts in benefits and higher premiums, lawmakers expect that it will be 2020 before the fund reaches solvency.

www.in.gov/dwd

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