The state’s Unemployment Insurance (UI) Trust Fund is not just broke and in debt to the federal government to the tune of over $300 million through January; it’s going further in the hole by a magnitude that few have come to grips with. Conservative estimates suggest that Indiana is going to have to borrow somewhere in the neighborhood of $1.5 billion to meet its obligations.
The system needs a major overall. It suffers from a structural deficit that is getting exponentially worse as the economy continues to eliminate jobs. The problem actually began well before the economy tanked. A deceivingly large balance from several years ago has steadily disappeared. Last year the fund took in only $579 million, while paying out $986 million in benefits – a rounded off annual structural deficit of $400 million. Clearly there is a problem with the system.
Assuming the revenues paid in by employers in 2009 are equal to 2008 (which is questionable) and the monthly benefit demand remains $150 million (also questionable), the structural deficit for 2009 will be a whopping $1.2 billion. Unless something is done, by this time next year the negative balance will total approximately $1.8 billion. Federal stimulus money is anticipated, but it also increases and extends the mandatory benefits, exacerbating the problem rather than ameliorating it. Keep an eye on this issue because even though it is currently being overshadowed by other topics (budget, stimulus plan, etc.) it looks to become a major part of the legislative puzzle before the session ends.