MacIver News Service | September 28, 2010[Madison, Wisc…] The State of Wisconsin continues to borrow money from the federal government to pay unemployment benefits.
Wisconsin’s loans place the state as one of the largest Unemployment Reserve debtors in the country, and its ranking as a debtor increased over the last quarter.
If the amounts in Wisconsin’s Unemployment Reserve account in the U.S. Treasury are not sufficient to cover anticipated unemployment payments, the state can borrow funds from the federal government.
The outstanding loan balance at the end of the second quarter of this year was $1,424,769, up from last quarter’s ending balance of $1,337,768.
Despite receiving $134 million in Stimulus funds, Wisconsin’s Unemployment Reserve Fund ended 2009 with a deficit of nearly one billion dollars.
Normally, the interest rate charged on these funds either 10 percent or the average rate on specified federal securities. However, no interest is charged if a) the loan is made in the first nine months of a year b) the loan is repaid prior to October 1st of the same year and c) no additional loans are made before the end of that calendar year. A special assessment on employers may be required to pay interest on the loan.
According to data provided by the U.S. Department of Labor, Wisconsin has the 11th largest outstanding UI loan balance in the nation, up from 12th last quarter. Worse, the loan balance per covered employee is now the 5th largest in the country, up from 6th last quarter.
As a percentage of total wages, Wisconsin’s loan is the fourth largest in the nation, up from fifth last quarter.
Last month, MacIver News reported that an analysis by the Council of State Governments, indicated the third quarter total placed Wisconsin as the nation’s fourth most indebted state, per capita, for this program.