Kentucky Could Be Out of Money to Pay Unemployment Benefits in Less Than a Month
After an unprecedented four weeks, three of which have set all time records for the number of Kentuckians filing for unemployment, the state’s unemployment insurance trust is projected to be approximately a month away from running out of money.
National comparisons show Kentucky’s overall Unemployment Insurance Trust Fund solvency ranking 45th in the United States, only having enough money for about 4 more weeks of payments. Research by Pegasus Institute echoes those projections.
Prior to the coronavirus induced economic shut down the Trust fund had achieved positive returns for the better part of a decade, with surpluses every year since 2012. At the start of 2019, the fund reported a balance of $540,208,208, a solid foundation but still not quite enough to reach the Department of Labor’s minimum recommended adequate solvency level.
The total was no where near enough to meet the challenge of the Great Pause, however. Nearly eight years of positive returns can only sustain the system for a few weeks with Kentucky’s current number of unemployed citizens. The last four weeks have seen 395,510 total new unemployment claims in the Commonwealth representing 14.3% of the total civilian workforce. Each passing week of total economic shut down while continuing to add more citizens to the unemployment benefit rolls, placing additional strains on the system.
According to reports filled with the US Treasury Department, the state’s Unemployment Trust ended the month of March with $557,490,044 on hand but had already depleted that total to $426,768,409 by April 16th, a decline of more than 23% in just two weeks. As the number of individuals receiving benefits grows, the deficit compounds.
Several neighboring states are set to deplete the entirety of their funds in a similar time frame as Kentucky. Ohio, which ranks 48th in solvency in the United States is set to be out of money in approximately two weeks. Illinois and West Virginia both have only marginally better projections than Kentucky, set to be out of money in approximately 5 weeks.
Tennessee is the most stable in the region, and has had considerably fewer unemployment benefit claims per capita, with 18 weeks of funds on hand.
Kentucky lawmakers have been given numerous opportunities to reform unemployment insurance since the end of the Great Recession, with several bills filled by State Representative Russell Webber that would have improved the solvency level of the system. Lawmakers have instead chosen to maintain some of the highest benefits in the region, exacerbating the difficulties that the trust now faces.
During the Great Recession, the state required federal assistance to maintain the UI Trust.