Employee Relations 01/11/2013
Governor States Plans to Bring Labor and Business Together to Address UI Fund Deficit
In his budget proposal released yesterday, Governor Brown stated
his intent for the Secretary for Labor and Workforce Development
to bring together business and labor in a series of meetings for
the purpose of addressing the Unemployment Insurance (UI) Fund
Counties will recall that due to a structural imbalance between revenues and benefit payments, the Employee Development Department in 2009, in order to continue making UI benefit payments, began borrowing funds from the Federal Unemployment Account. The UI Fund deficit was $9.9 billion at the end of 2011, and is projected to be $10.2 billion by the end of 2013. The state made interest payments on the loan in the amounts of $303.5 million (in 2011) and $308.2 million (in 2012) through a loan from the UI Disability Fund. The Governor’s Budget proposes continuing to borrow from the Disability Fund to pay the 2013 interest expense of $291.2 million. Additionally, pursuant to federal law, a reduction was triggered in 2012 in the employer tax credit in order to begin repaying the federal loan – a continued decrease by 0.3 percent will occur each year that the outstanding balance remains.
The Governor intends for the stakeholder meetings to identify “preferred alternatives” to meet the annual interest obligations on the federal loan, fully repay the loan, and bring the Fund to solvency.
CSAC will keep counties apprised of further discussions regarding the meetings.