Unemployment Benefit Payment Funds Being Secured
The Illinois Department of Employment Security (IDES) announced it will begin to borrow funds from the federal government. The funds will be borrowed to continue to meet unemployment benefit payment obligations to claimants who have lost work as the COVID-19 pandemic continues. After the announcement, Illinois joins eight other states that have either been approved to borrow or have begun to borrow money from the federal government to continue to fulfill unemployment benefit payments.
The IDES is anticipating that, through the end of June, it will borrow approximately $300 million from the federal government. The borrowing of money will be through a long-existing mechanism set up to enable states to continue to fund essential benefit payments when demand increases unexpectedly.
Through September 2020, the IDES has been approved to borrow up to $3.8 billion. The department borrowed $1.4 billion during the 2008 Great Recession. That money was repaid in just five years through a joint funding agreement with Illinois’ business community. The employer taxes funds The Unemployment Trust Fund one hundred percent.
Historically, the ability to pay back the borrowed money is made in the form of an agreed rate change in employer taxes. However, IDES and the Pritzker administration are exploring federal legislative options. One of the options includes a stimulus package specifically aimed at forgiving states’ unemployment expenses and rebuilding unemployment trust funds.
From March 1- June 18, 2020, more than $7 billion has been paid in unemployment benefits to Illinois claimants. The Illinois Unemployment Trust Fund in regular unemployment benefits has paid out $2.5 billion. The Federal Pandemic Unemployment Compensation benefits gave out $4.3 billion while the Pandemic Unemployment Assistance benefits gave $290 million.