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Indiana Will Borrow From Federal Government For Unemployment Fund

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At the start of the year Indiana's unemployment trust fund had $900 million, but now stands at about $175 million.

The Department of Workforce Development says it will borrow from the federal government to shore up its unemployment trust fund, which has paid more than three-quarters of its balance to out-of-work Hoosiers through the pandemic.

DWD pays regular unemployment claims out of a rainy day fund built by payroll taxes from Indiana employers. At the start of the year it had $900 million, but now stands at about $175 million. Unemployment loans to states will have zero interest until the end of the year, but it could mean tax increases for employers in the future.

READ MORE: Could Indiana's Unemployment Benefits System Have Been Better Prepared For COVID-19?

 

Chief of Staff Josh Richardson said the exact timing for borrowing will depend on tax revenue from the second quarter and how many people still need unemployment benefits. 

“We’ll keep an eye on that, but it looks like sometime in September,” he said. “If the [unemployment] numbers continue to fall, hopefully late September. If they don’t, probably early September for borrowing.”

Federal law requires the state to pay unemployment claims no matter the fund’s balance and a loan will not affect pandemic unemployment programs created by Congress.

Contact reporter Justin at jhicks@wvpe.org or follow him on Twitter at @Hicks_JustinM.

For the latest news and resources about COVID-19, bookmark our Coronavirus In Indiana page here.

Want to contact your legislators about an issue that matters to you? Find out how to contact your senators and member of Congress here.

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