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State To Pay Off Unemployment Insurance Trust Fund

By Brandon Smith

Posted October 16, 2015

Indiana is preparing to save employers $327 million next year by paying off a federal loan for its unemployment insurance trust fund.

The move comes after the State Budget Committee gave the plan an enthusiastic response.

When the recession hit in 2008, Indiana's unemployment insurance trust fund was rapidly depleted, forcing the state to get a loan from the federal government.

Every year that any part of the loan remains unpaid, Hoosier employers have to pay a tax penalty. This year, it was $105 per employee.

By loaning itself $250 million from the state's General Fund, Indiana will pay off the rest of the loan by early November, avoiding next year's penalty and saving employers $327 million.

Lennie Busch, a restaurant owner in Bloomington has about 200 employees and paid a tax penalty last year of more than $25,000.

Busch says the state's move to pay off the loan will make a huge difference.

"That $25,000 is a new pizza oven for me or it's being able to hire another person back-of-the-house to make everything run a little bit smoother," she says.

The state will be able to pay back the money it takes out of the General Fund through next year's unemployment insurance tax collections.

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