Correction: Federal Loan Connection
Interest payments on a loan Colorado secured to help pay unemployment benefits are connected only to the 26 weeks of benefits jobless workers receive from the state of Colorado. The payments have nothing to do with the federal extension of unemployment benefits to 99 weeks for some workers, according to information the Colorado Department of Labor and Employment sent to the Business Times.
Unemployment benefits received above 26 weeks are paid directly by the federal government, according to the CDLE. Ellen Golombek, executive director of the CDLE, also sent a letter to the editor that appears on page 35 of this issue.
A story in the June 23 to July 13 issue of the Business Times reported the federal loan was connected to the federal extension of jobless benefits. The story also reported a bill for the interest payments went to all businesses that have paid an unemployment claim in Colorado. According to the CDLE, some employers who’ve paid a jobless claim won’t receive a bill for the interest.
“It is indeed a very complicated program, made even more so when we are administering federal extensions,” Cher Haavind, director of government policy and public relations for the CDLE, wrote in an e-mail to the Business Times.
As reported in the June 23 to July 13 issue of the Business Times, the CDLE sent a letter to about 35,000 businesses, informing them they owe an average of $340 to be billed in July. Collectively, the businesses will pay $11.9 million in interest payments due the federal government. The interest is for the federal loan accepted in January 2010. Interest on the loan began to accrue in May 2011.
The loan became necessary because the Colorado Unemployment Trust Fund didn’t have enough money to pay the federal government, owing approximately $500 million, according to a news release issued to explain House Bill 1288, state unemployment insurance trust fund reform legislation. The release was issued jointly by the CDLE, National Federation of Independent Business and Colorado Association of Commerce and Industry. The fund was short of money needed to pay jobless claims because of an inadequate statutory formula that failed to account for the size of the Colorado economy and because of a national recession, according to the news release.
The goal of the new law is to repay the federal loan before federally mandated penalties against Colorado begin and to rebuild a fund balance before the next economic downturn.
The measure is also designed to construct a new unemployment insurance trust fund rate chart that reflects and grows with the size of the Colorado economy to provide adequate reserves for jobless workers.
“Unfortunately, there is no legislative quick fix, but we are engaged with and working alongside the business community to bring about reforms that will return us to solvency and help us recover and rebuild during future economic downturns,” Haavind stated.