California's unemployment benefits system 'broken' with $20B owed to feds in loan debt: report
Story by Jamie Joseph • 14h
California’s unemployment insurance (UI) financing system is facing big deficits, requiring a full "redesign," according to a new report from the state’s nonpartisan Legislative Analyst’s Office (LAO).
The system, meant to be self-sufficient, has fallen short of covering annual benefit costs, resulting in a projected $2 billion annual deficit over the next five years and an outstanding $20 billion federal loan balance.
"This outlook is unprecedented: although the state has, in the past, failed to build robust reserves during periods of economic growth, it has never before run persistent deficits during one of these periods," the LAO report, titled "Fixing Unemployment Insurance" and published Tuesday, stated.
Independent analysts project that annual shortfalls will increase California's federal loan, costing taxpayers around $1 billion in interest each year. The system, which is funded by employer payments to the UI Trust Fund, hasn’t been updated since 1984 and "cannot keep up with inflation or provide the intended wage replacement of half of workers’ wages," according to the report.
https://www.msn.com/en-us/money/personalfinance/california-s-unemployment-benefits-system-broken-with-20b-owed-to-feds-in-loan-debt-report/ar-AA1vdflA?ocid=msedgdhp&pc=HCTS&cvid=0080c214b80c4beeb656511a5293443c&ei=131
