- The Washington Times - Friday, February 28, 2003

ST. PAUL, Minn., Feb. 28 (UPI) — The trust fund that pay's Minnesotan's unemployment benefits has fallen into the red, officials said Friday.

However, benefits will continue to be paid because the Unemployment Insurance Trust Fund has begun borrowing from the federal government.

"Going into loan status does not affect our ability to pay unemployment benefits," said Minnesota Department of Economic Security of Economic Security Commissioner Harry Mares. "The federal loan process exists for situations such as this where high payouts cause state trust funds to be used up."

The state's fund has borrowed nearly $15 million this week. In subsequent weeks, the state will borrow approximately $20 million per week, with interest. However, during the summer the state pays out between $10 million and $15 million a week in benefits.

"If nothing changes in the way the department raises money to pay claims, we will be in debt until the middle of 2005," Jack Weidenbach told United Press International. "If changes to the system are approved we will be out of debt by the second quarter of 2004."

Weidenbach, the unemployment insurance program director at the Minnesota Department of Economic Security, said legislation to fix the situation and bring the trust fund back into the black would be introduced next week.

"The proposals suggest changes to decide how much employers have to pay into the unemployment trust fund," he said. In other words, the proposal would result in a smaller rate increase for 75 percent of Minnesota's employers than would occur under the current law.

"Adoption of the legislative proposal on (the fund's) solvency is key to getting us out of debt faster," said Mares.

Weidenbach told UPI that even though that unemployment remains low in Minnesota — 3.9 percent — the workforce has grown over then past few years resulting in an increase in the total number of people receiving payments.

In 2002, MDES paid out a record $1.1 billion in unemployment benefits to unemployed Minnesotans. This number represented 2.9 million weeks paid compared to 1.5 million in 2000.

Other states have had similar high payments causing a number of them to resort to borrowing as well, he said.

The agency offers special Web sites, one where unemployed workers are able to file for benefits, mnworkworcecenter.org, and one where employers can pay unemployment taxes and file quarterly reports, mnwfc.org/tax/efile.htm.

(Reported by Chris H. Sieroty in Washington)

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