By: Ted Dabrowski and John Klingner
The record 178,000 Illinoisans who applied for jobless benefits last week are learning that the state’s unemployment trust fund is one of the nation’s least prepared. With just $2 billion set aside at the beginning of 2020, Illinois’ fund was the 4th-least solvent in the nation.
Gov. J.B. Pritzker says the money Illinois received from the recent federal stimulus package dedicated to unemployment won’t be enough to cover needed payments. Illinois will have to borrow additional money from the federal government, the governor said.
Only the trust funds in California, New York and Texas were less prepared than Illinois, based on a solvency metric measured by the Department of Labor.
In contrast, 2nd-most solvent Oregon had more than $5 billion set aside to pay unemployment benefits, even though its labor force is a third the size of Illinois’.
The shortfall in Illinois’ fund comes as the state’s new unemployment claims rose from 10,000 to nearly 180,000 in the past two weeks. Across the nation, 6 million Americans applied for unemployment benefits this last week.
This isn’t the first time the Illinois trust fund has run out of money. In 2011, Illinois had to borrow $2.4 billion from the Feds to refill the fund’s coffers.
Illinois didn’t learn much from its experiences during the Great Recession. Before the Coronavirus crisis hit, the state had no rainy day funds set aside. Its pension debts were at record levels. It was billions behind on its payments to vendors. Now it turns out, the state can’t make unemployment payments without having to borrow from the Federal government.
Read more about the impact of the Coronavirus on Illinois:
- Coronavirus impact may push Illinois state pension debt to over $300 billion
- Don’t Let States Rob COVID-19 Funds to Bail Out Pensions
- As the crisis deepens, keep an eye on Illinois’ unpaid bills
- Bad Public Pension Bailout Ideas Now Surfacing
- What next for Illinois?
- State of Illinois provides first look at possible revenue impact from downturn
- Will Recession Revive Discussion of Municipal Bankruptcy and Bankruptcy-for-States?
- Stock market meltdown, collapsing bond rates will wreak havoc on Illinois’ weakest pension plans