MN Unemployment Ins. Fund: Record $772M Deficit
Minnesota's unemployment insurance fund hit a record deficit last month of $772 million, but that deficit will decrease in the next few days as money trickles in from employers.
According to Lee Nelson, legal counsel to the Minnesota Unemployment Insurance Program, the record deficit was reached on April 23 and shrunk to about $719.7 million by April 28.
Nelson said that the bulk of an estimated $440 million that will be collected from employers will come in by Tuesday, as many employers file their taxes electronically and Monday is the last day to file without a penalty.
Money is collected from employers quarterly. Due to the structure of the tax, about 40 percent of the money from employers is collected in the first quarter, followed by 30 percent in the second, 20 percent in the third, and the remaining 10 percent in the fourth.
When the state experiences an unemployment insurance deficit, it borrows money from the Federal Unemployment Account and repays that money later on, along with interest. Nelson estimates that the state will pay slightly under $20 million in September when it pays the annual interest, which was waived in 2009 and 2010 under the federal stimulus program. Nelson said that there is a bill in Congress to waive the interest in 2011, but it “hasn't gained much traction.”
Nelson said that the state expects to bring in more than it pays out in 2011, and that the balance of the fund will be positive by 2013-assuming the economy continues to improve.
The Minnesota Unemployment Insurance Program was started in 1936 and provides temporary benefits to qualified people who are out of work through “no fault of their own.” The fund is administered by the Minnesota Department of Employment and Economic Development.