Federal Loan To Tide Over State Unemployment Trust Fund

Tennessee will borrow money from the federal government in order to keep paying unemployment benefits. Otherwise, at the rate it’s going, it would run out of funds around the end of this month.

Businesses in Tennessee pay unemployment taxes on the first $9,000 each worker earns in a year. That money goes to benefits for workers who are out of a job.

April is usually the biggest time for the state to collect those taxes, which should replenish its dwindling fund. But in the meantime, to avoid a potential shortfall, the state is taking out a federal bridge loan.

Don Ingram, with the state labor department, says that money is interest-free, has no strings attached, and should be paid back quickly.

“We’re projecting by April 15th we should have more than adequate balance in our trust fund to pay that money back.”

Tennessee has about 180,000 workers on its unemployment rolls – three times the typical amount before the recession.

Right now the state unemployment fund has just under $55 million, and sends out some $16 million in benefits each week. State officials say because the job market is expected to recover slowly, Tennessee could find itself in a similar situation next year.

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