California to borrow federal money to cover soaring jobless claims

By Patrick McGreevy at the LA Times

April 22, 2020


California has been approved to borrow what is expected to be billions of dollars from the federal government to pay unemployment benefits to those left jobless by the coronavirus pandemic, raising concerns about the cost of repaying the debt.

The state made the request as its reserves for paying unemployment benefits are being quickly depleted, requiring California to begin borrowing in just a few weeks, officials said Wednesday.

“We have protocols in place for difficult moments such as this to ensure critical safety nets remain in place,” California Labor Secretary Julie Su said.

With more than 2.7 million Californians filing new claims for unemployment benefits in the last month, experts say the state will probably have to borrow more than the $10.7 billion in loans it received from a federal trust fund during the Great Recession.

“Without the help of the federal government, we wouldn’t be able to pay benefits unless we could come up with billions of dollars or dramatically cut benefits, neither of which is a positive scenario,” said Maurice Emsellem, director of the Fair Chance Program at the National Employment Law Project in Berkeley. “It’s very likely that it is going to be more than we borrowed last time.”

Read more at the LA Times

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