The State of Nevada Unemployment Insurance Trust Fund is dipping to record lows and will be in a negative position between the middle and end of October for the first time since the 1970s, said Cynthia Jones, Deputy Director of the Nevada Department of Employment, Training and Rehabilitation and administrator for the DETR's Employment Security Division.
"We have already put the process in motion to borrow funds from the federal government, ensuring that we can continue, without interruption, to pay unemployment benefits," Jones said.
Nevada has submitted a letter to U.S. Department of Labor Secretary Hilda Solis, requesting up to $264 million in federal loans to meet state unemployment insurance obligations through Dec. 31, 2009, Jones said. Thereafter loan requests may be submitted every 90 days.
"The state is currently sending out $35 million per week in unemployment benefit payments - which includes federal extensions - to approximately 110,000 benefit recipients," Jones said.
"Without drastic improvements in current economic conditions in Nevada, DETR estimates approximately $1 billion in federal loans will be necessary by the end of calendar year 2010."
Under the American Recovery and Reinvestment Act provisions, interest on federal loans has been waived through the end of calendar year 2010. If another extension is not granted, Nevada would have to begin interest payments on the federal loans on Sept. 30, 2011.
The Employment Security Council will convene on Oct. 6 to hear information regarding the status of the Unemployment Insurance Trust Fund, benefit payments, tax collections and trust fund balance projections for this year, 2010 and future years.
The council, which consists of nine members appointed by the governor, will discuss the unemployment insurance tax rate scheduled for the upcoming calendar year and strategies for repaying funds loaned by the federal government.
The Council will be presented with a number of average tax rate scenarios (with associated tax schedules) and the resultant impacts on interest costs, loan repayment and strategies toward moving again towards reestablishing Trust Fund solvency and rebuilding sufficient reserves, Jones said.
