INDIANAPOLIS | State workforce officials announced Monday that Indiana is on track to pay off its massive unemployment insurance debt to the federal government in the next four years.
The state still owes $1.34 billion it borrowed between 2008 and 2012 to pay unemployment benefits after the state's unemployment trust fund went broke following years of underfunding and the effects of the Great Recession.
Commissioner Scott Sanders of the Department of Workforce Development told a panel of state lawmakers that a combination of more Hoosiers with jobs and a business-paid penalty has helped reduce the debt from its April 2011 peak of $2.2 billion.
"At this point in time we believe the trust fund loan will be paid back to the federal government by 2017, which is a year ahead of forecast and good news for Indiana employers," Sanders said.
Hoosier companies this year are paying a federally-mandated per employee penalty of $63. That is set to rise to $84 next year and will continue to increase by $21 per employee per year so long as the state has outstanding unemployment loans.
The penalty is applied directly to the state's loan principal. Indiana businesses collectively paid $104 million last year and will pay about $160 million this year. The state also is paying 2.5 percent interest on the debt.
Sanders said fewer Hoosiers are filing for unemployment as the economy slowly grows, with most weeks in 2013 seeing less than 5,000 initial filers.
As a result, he said, the state now is consistently taking in more in unemployment insurance premiums than it is paying out in benefits.
Last week, about 40,000 Hoosiers were collecting unemployment during the state-paid first 26 weeks of benefits, with another 19,000 receiving federal-paid extended benefits, which are set to expire at the end of the year.
Over the course of the past year a total of 180,000 Hoosiers received unemployment benefits for at least one week.
The average benefit was $276 a week and the average length of unemployment payments was 13.5 weeks, down from 14.8 weeks in 2012, Sanders said.