“California’s Unemployment Insurance (UI) Trust Fund that pays out state benefits is now ‘structurally insolvent,’ according to a recent report.
The Legislative Analyst’s Office noted the debt crisis involving the California Employment Development Department’s (EDD’s) UI trust fund on July 7.
The state report was released following the ‘May Fund Forecast’ report by the EDD. It said that a temporary surcharge, which state businesses are currently paying to cover the agency’s multi-billion-dollar debt to the federal government, may continue to be in place for some time.
The additional taxes being paid by employers will offset the $20 billion in federal loans taken by the state to cover UI benefit payments during the pandemic and related stimulus measures.
The money that California is using to pay claimants’ benefits, is already guaranteed by the federal government, no matter what financial condition the EDD is in.
California is one of the two states that have remaining debt from the pandemic, and it accounts for 73 percent of that debt nationwide, with New York accounting for the rest.”