N.C. unemployment trust fund running out
Posted November 21, 2008
Raleigh, N.C. — North Carolinians who are out of work look to unemployment insurance to help pay their bills, but the trust fund that money comes from is running low and could soon run out, officials said.
The National Employment Law Project, a New York-based think tank, estimates reserves in the trust fund will last for about four more months.
“You would like to have more cushion,” N.C. Employment Security Commission Deputy Commissioner David Clegg said.
Clegg said at one time there was more than a year's worth of money in reserves.
North Carolina’s unemployment rate climbed to 7 percent in October, even though the state reported a net increase of some 4,100 jobs.
In October, $119 million were paid from the fund. The trust fund balance is currently around $355 million.
For the second month President George W. Bush signed a bill offering federal money to North Carolina’s unemployed.
Clegg said the fund will also get an increase from tax collections.
“There will be a tremendous infusion of cash into the trust fund in the first quarter of 2009,” Clegg said.
There is a chance similar concerns could arise again in the new year.
“We are going to have to begin having very serious solvency discussions,” Clegg said.
North Carolina is among 19 states cited by the National Employment Law Project as having nearly insolvent or marginally solvent trust funds.
If the fund runs out of money, the Employment Security Commission will have to take out a loan from the federal government to pay unemployment benefits. The last time that happened was in 2002.