How will the proposed increase in unemployment benefits affect the unemployment trust fund?

The Senate will likely vote tomorrow on a bill to increase unemployment benefits temporarily by $45.

The Employment Security Department says they do not believe the May to January increase — along with a bump in the minimum payment to $155 per week — would significantly affect the unemployment insurance trust fund, which is a pool of money employers have paid into over the years that finances the claims.

We’ve heard lawmakers say that Washington’s trust fund is one of the healthiest in the nation. It’s at $4.1 billion — or enough to pay out claims for 21.2 months.

So how would increasing benefits affect the balance?

If the economy operates as they expect, ESD wrote in a memo to lawmakers that the fund balance would dip to 15.6 months’ reserve in 2012, then recover.

If they increase the benefits, the fund would dip to 14.6 months’ worth of claims in 2012, then recover.

But the department also ran numbers for what would happen if the recession is comparable to what the state experienced between 1981 and 1984, with unemployment rates of up to 12 percent.

In that scenario, the fund would dip to a 9.5 month buffer in 2011 without the $45 increase. With the increase, it would hit 8.6 months in 2011.

In both test cases, the difference between enacting the $45 increase and not represents about a month’s worth of benefits. So according to ESD’s math, increasing benefits by $45 temporarily wouldn’t make or break the system.

That said, to get a “healthy” rating from the federal government, state UI trust funds are required to have a 12-month reserve and the Legislature aims to keep a balance of 15 months.

Tags: unemployment