Although California's once-dismal employment picture is slowly improving, the state's Unemployment Insurance Fund is not only plagued by digital glitches, but is still paying out more in benefits than employers are paying into the UIF in taxes, according to a new report from the state Department of Employment Development.
Some other revenue, including earnings on fund balances, are offsetting the shortfall, so the immense deficit in the UIF, $10.2 billion at the end of 2012, will decline fractionally to $9.7 billion by the end of this year, the EDD report predicts, then continue to decline as employment improves and insurance benefit payouts drop.
The UIF deficit has been covered by loans from the federal government, on which the state is now paying interest, and the feds have also boosted their share of employers' payroll taxes to begin repaying the debt.
The department predicts that the UIF deficit will shrink to $7 billion by the end of 2015 as unemployment drops from 1.9 million workers in 2012 to 1.3 million in 2015 and payouts decline from $6.6 billion in 2012 to $5.7 billion in 2015.
Employers paid $5.4 billion into the UIF in 2012 and that is expected to increase to $6.2 billion in 2015. Additionally, the boost in federal taxes to repay the debt is expected to surpass $600 million this year and $1 billion by 2015.
The UIF pays basic benefits to unemployed workers and benefit extensions have been financed by the federal government. But due to the state's improving job picture, the 100 percent federally financed extension, which paid out $7.2 billion to jobless Californians in 2012, and $4.6 billion this year, will end on Dec. 31.
Gov. Jerry Brown has proposed changes in the unemployment insurance program to improve its ability to cope with economic downturns, but the Legislature has so far refused to act.