Jobless Claims Could Drain State Fund By Year's End
The state fund that helps unemployed workers is paying out millions of dollars every week, and the fund could need help by the end of the year.
At the end of February, before the coronavirus was detected in South Dakota, the balance in the state’s Unemployment Trust Fund was $132 million.
The current balance is about $114 million. That’s a drop of $18 million in less than two months.
“But the preliminary modeling we’ve done does show that our trust fund will remain solvent for the remainder of the calendar year,” said Marcia Hultman, who runs the state Department of Labor and Regulation.
So far, the extra unemployment assistance approved by Congress is merely passing through the state department on its way to unemployed workers. The federal money is not helping the state keep its trust fund solvent. That’s because the state is paying out benefits from its own fund in addition to the federal benefits.
Hultman said the state trust fund might eventually need a loan or grant from the federal government. That happened during the Great Recession, when the state got a $17 million loan from the feds.
Employers might also have to kick in extra money. They already pay taxes to the fund, but a state law triggers an extra surcharge if the fund drops to $11 million. Hultman said she realizes the surcharge could hurt employers who are already struggling because of the pandemic.
“Typically when times are the worst is when you may have that surcharge kick on,” Hultman said. “That’s why we’ve tried to design our trust fund to avoid that at all costs, but like I said, this is unprecedented and nothing that we could’ve ever modeled for.”
Since the beginning of the pandemic, about 23,000 people have filed for unemployment help in South Dakota. During the week of April 5-11 alone, the state Labor Department paid out $2.8 million from its own trust fund and $5.7 million in federal money.
The federal money provides up to an additional $600 per week in benefits for claimants, beyond the maximum $414 per week from the state.
Before the pandemic, Hultman said, her department had 11 employees taking unemployment calls and 10 processing claims. Since the pandemic began, Hultman has internally transferred dozens of employees to help with the surge in activity. She's moved about 50 employees to help take calls and 20 to help process claims. She said another 20 employees are in training to process claims, and 20 more will be trained after that. “These are all internal DLR employees,” Hultman said. “None of them are new hires.”
The state has received about $2.5 million from Congress to help cover those operational costs, including overtime pay, Hultman said.
Hultman is asking out-of-work South Dakotans to file their claims online at RAclaims.SD.gov to reduce call wait times. She’s also reminding claimants that they must request their benefits each week to continue receiving them.
At the end of last week, because of congressional legislation, eligibility for unemployment benefits expanded to more types of workers, including the self-employed, independent contractors and gig workers.
Hultman said she expects the eligibility expansion to temporarily push unemployment claim numbers even higher. For example, Hultman said her department has fielded inquires from some of the state’s 2,500 licensed cosmetologists, many of whom are independent contractors and are therefore newly eligible for unemployment assistance.