DENVER – The Colorado Unemployment Fund is expected to become insolvent early next week, but the state will borrow money from the Federal Unemployment Account and people who are unemployed should not have to pay a break in their benefits, Labor officials said and Employment Thursday.
The state fund currently has less than $ 50 million in it, CDLE senior economist Ryan Gedney said Thursday, adding that he expects it to go bankrupt early next week.
If that happens, the state will borrow from the FUA account for the rest of the year at zero interest – as 10 other states and the US Virgin Islands already do. Last week, Gedney said Colorado was among eight other states that had made loan applications under the expectation that they would also have to borrow from the federal government.
It will not be the first time Colorado has had to borrow federal dollars to pay regular unemployment benefits; it did so during the Great Recession, as did about two-thirds of all states, and during the economic disaster of the early 1980s.
Gedney said that about 85% of the federal money borrowed so far in the last recession has been made by California, New York and Texas.
The state will be able to borrow at zero interest for the rest of the year under measures passed by Congress, which could also extend the zero-interest loan if it so chooses.
Colorado had about $ 1.1 billion in trust fund at the start of the COVID-19 outbreak. The state paid just over $ 70 million in regular unemployment benefits last week. In total, the state has paid out $ 4.5 billion in regular and various federal unemployment benefits since the end of March.
CDLE Deputy Director Cher Haavind said the Colorado business community was agreeing during the Great Recession to use bonds to get out of debt to the federal government and said the department would explore several options to return the fund to solvency in the months preceding.
Another 6,187 regular unemployment claims were filed last week by Coloradans – the lowest number since the week ending March 14. And there were 9,048 initial complaints for Pandemic Unemployment Assistance filed by self-employed as gig workers last week.
Accommodation and dining services continued the highest share of regular initial claims for the week ending July 25th.
CDLE officials also discussed the FEMA supplementary payments for Lost Wages program – which the Trump administration ordered after the Pandemic Unemployment Compensation program expired in late July.
President Trump’s executive order authorizes FEMA to use up to $ 44 billion in disaster relief funds to provide additional payments of $ 300 per week if a state agreement agrees to a maximum of $ 100 and a person receives at least $ 100 per week in some form of unemployment benefit.
Haavind said the department received guidance Wednesday night on the federal government’s program, but that the Gov. administration Jared Polis still decided whether to apply for the funds and agree to the match.
But she said that as the state progresses with the program, it will likely take several weeks to reprogram the state’s systems and get the added benefits that people are streaming.
CDLE’s Jeff Fitzgerald said his reading of the guidance was that there would be only about $ 19 billion of the disaster fund available, as it could only be used up to $ 25 billion – and it could have $ 19 billion in money moved for upcoming disasters before it could potentially all be used by December 26th.
Fitzgerald said the state contest would have to come from both state funds and state money from CARES Act and that the trust fund could also be used to make the contest if the state decides to go ahead with the program. But he said estimates showed that progress with the program could generate between $ 60 million and $ 100 million in the Colorado economy.
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