DENVER—Colorado expects to join 25 other states soon in borrowing money from the federal government to shore up its fund for paying unemployment benefits, the head of Colorado’s labor department said Thursday.
Recipients of unemployment benefits won’t be affected, Colorado Department of Labor and Employment Executive Director Donald Mares said.
Legislative and state economists have warned that the Colorado fund has been dwindling as layoffs have risen in the weak economy. The fund’s balance is now $30 million, down from $562 million a year ago.
Mares told the legislative Joint Budget Committee on Thursday that about $21 million was paid in benefits from the trust fund in November 2007. That was up to $94 million last November. The rising demand for benefits comes as the fund’s revenue has declined.
“The trust fund comes from employers’ premiums, and fewer and smaller companies are paying those premiums that support the fund,” Mares said.
The last time the state had to get money from the federal government to replenish the fund was in the early 1980s, when it borrowed about $222 million. At the time, the fund had deficits from roughly December 1982 until April 1985.
Under the federal stimulus bill, states can borrow from the federal government interest-free this year to shore up unemployment insurance trust funds.
