Coronavirus In Ohio: State Borrows $3.1 Billion After Unemployment Fund Goes Broke
Ohio's unemployment compensation fund is officially broke, and the state has asked the federal government to borrow $3.1 billion so payments can keep going out to out-of-work residents.
In the last 90 days, Ohio has paid out $4.1 billion to 699,000 Ohioans – that's a full billion more than has ever been paid out in a full year. Fewer than 6% of claims, or just over 71,000, are still pending, while about 30% of claims have been denied.
By Tuesday, there was only about $88 million in the unemployment compensation fund, so the state asked for a $3.1 billion line of credit from the federal government and started to take funds from it.
Ohio Department of Job and Family Services director Kim Hall said the government will waive interest on what’s borrowed through the end of the year, but the interest rate will increase to 2.4% on January 1.
“If the state doesn't pay in full by November 2022, then employers will see a gradual increase in their unemployment taxes. That will be due in January of 2023," Hall said.
The interest rate ticks up by 0.3% every year after that.
State lawmakers are considering other options, such as asking voters for permission to issue bonds to pay back the loan sooner. When the fund went broke in 2008, it took seven years to pay off the state’s $3.4 billion loan.
Ohio is not the only state that's borrowing money to shore up its fund. Eight other states have requested borrowing authority but haven't tapped that money yet.