Colorado Department of Labor borrowing millions to pay unemployment benefits
Jessica Zartler 3 hrs ago
DENVER – The state’s Unemployment Trust Fund has run out of money forcing the Colorado Department of Labor to borrow more than $250 million in federal funds to keep paying thousands of people who are out of work. Because of the swell of unemployment claims during the recession, the Colorado Department of Labor says its unemployment fund has reached insolvency. As of May 11, the state has borrowed $254 million in federal funds to continue to pay benefits to people who are unemployed. “Thankfully we’ve been able to give the same benefits going forward even though we are borrowing money,” Executive Director of the Department of Labor & Employment Don Mares said. Although people who are unemployed will not see a change in their checks, businesses across the state will feel the pinch in the form of unemployment insurance rate hikes. Mares says the state uses a complicated formula based on statutes and could not say at this point how much the rate increases will be. He also said not every business will see increases in their payments. “It depends on how many jobs are created and getting those people back to work so to the employers out there, the sooner you can hire people, the better,” Mares said. This is not the first time the Colorado Department of Labor has had to borrow to pay people who are unemployed. Mares says the state’s Unemployment Trust Fund went into the red in the middle of the 1980’s during a recession and had to borrow federal funds for 3 1/2 years. Colorado is also not alone in its unemployment money woes, 34 other states across the country have also had to borrow federal funds to pay unemployment benefits. Mares says the state could pay back the more than $250 million to the federal government as early as 2013. He says that depends on how quickly the job market moves in the recovery and although it has been slow so far, he is optimistic. “Things are getting better. We see it in our unemployment office and we see it in the jobs that are created slowly it’s getting better. In terms of sustainability, boy, we dug a deep hole in this recession so it will take some time. I hate to say it but it will be a while before we have sustainable growth,” Mares said.