State unemployment fund out of money

PHOENIX — The state's jobless fund is broke.

Figures as of Monday show less than $25.2 million left in the account the state uses to pay the benefits of those during the first 26 weeks of their unemployment. That's a direct result of the recession being longer and deeper than anyone anticipated: Before the downturn, there was $1 billion in the account.

For all intents and purposes, that trust fund balance amounts to looking for nickels in the couch cushions: The most recent weekly payment was almost $15.8 million.

Ken Rosevear, executive director of the Yuma County Chamber of Commerce, said those numbers mean we're all in bad shape.

"These are scary numbers," Rosevear said. "The Legislature and governor have challenges.

"This carries through health care and all the other programs that people use in the state of Arizona, including Yuma."

Some say the development is not the end of the world.

Gov. Jan Brewer already has approved the state borrowing money from the federal government. And the request for the first $50 million is going out this week.

But it portends higher costs for employers in the years to come — the employers who already are trying to deal with the economy in their own way.

Right now companies pay an average of $145.60 a year for each employee. That is based on a formula of 2.08 percent of each worker's first $7,000 of wages.

The actual amount, however, can vary widely depending on each firm's experience, meaning how often they lay off workers. Those with the best experience are paying just $1.40 a year; companies with a lot of their former workers winding up on unemployment can pay as much as $378.

Yet even with that premium increase, the state is still not getting ahead of the curve.

Steve Meissner, spokesman for the state Department of Economic Security, said the revenues for the first quarter of last year — at the old rate — were more than $100 million. This year, even with the sharp hike, collections for the first quarter will be less than that.

The problem, said Meissner, is that some companies have gone out of business. And those that are left just don't have as many people working.

Those figures are borne out by figures from the Department of Commerce.

As of January, the number of people working in Arizona was about 2,366,000, with a seasonally adjusted unemployment rate of 9.2 percent.

A year earlier the employment figure was 2,416,500 with a jobless rate of 8.0 percent. And at the end of 2007, before the bottom dropped out of the market, the state had a 3.8 percent jobless rate and 2,713,600 people in the workforce.

Nor are things going to get better soon.

But Rosevear said he and others at the chamber have a plan to help: in the next 10 days, Rosevear said they'll begin making presentations to local businesses to help retain their employees through the summer. He said right now they're working with multiple agencies.

Given the current employment predictions, Meissner said his agency already figures that the average annual unemployment insurance premium will rise to $157.50 next year. And the rate will have to rise even higher than that — and remain there for at least two years — to both repay the federal borrowing as well as replenish the state's trust fund.

The latest figures show nearly 173,000 Arizonans collecting jobless benefits, compared to fewer than 28,000 at the end of 2008.

Those current numbers, though, are a bit misleading as they include not only those who are in the first 26 weeks of unemployment — the part paid for by the state — but also those who are eligible for various federally funded extended benefit programs. Meissner said the more comparable figure for current state-funded recipients is closer to 55,000.

Meissner said the borrowing should be of no concern. 

He said 30 other states already have borrowed money from the federal government. Meissner said Arizona's healthy financial condition — at least until a few years ago — prevented the state from having to follow suit until now.

Rosevear said he disagrees.

"To me, borrowing from the federal government to fund this program is a concern," he said. "It's a huge concern.

"It's just like using one credit card to pay off another one."

Yuma Sun Staff Writer Stephanie A. Wilken contributed to this report.