Unemployment fund plummets to $70 million

CARSON CITY -- Nevada's unemployment trust fund has dropped to $70 million, down from $806 million a year ago, as unemployment in Nevada has reached its highest level since the Great Depression.

Cindy Jones, administrator of the Nevada Employment Security Division, said Monday that her agency has paid out $38 million a week to unemployed people as the jobless rate in Nevada reached a record 12 percent in June.

The state method for compiling unemployment was developed in 1976, so earlier unemployment levels are not known.

Jones said her agency might have to borrow as much as $1 billion in 2010 in order to keep paying benefits. The agency could secure interest-free loans from the federal government.

She told the Legislature's Subcommittee for Federal Stimulus Oversight that 18 states already are borrowing money to pay unemployment benefits and that number is expected to reach 36 in coming months.

"We are developing our strategies," said Jones about seeking the federal loan. "The situation changes all the time. We hope action will be taken at the federal level (to help states)."

So far, 1,891 unemployed workers in the state have exhausted all unemployment benefits.

Largely through the extension of federal programs, workers can receive unemployment pay for as long as 79 weeks, but Jones said Congress is considering adding 13 more weeks, bringing the maximum to 92 weeks.

"We expect (unemployment) numbers to worsen in the next couple of months," said Larry Mosley, director of the Department of Employment, Training and Rehabilitation.

Jones said they did not expect unemployment to reach 12 percent so quickly and the trust fund is being depleted quicker than anticipated.

Through a tax on employers, state unemployment benefits are paid to laid-off workers for a maximum of 26 weeks, but the additional weeks of benefits are being paid by the federal government through programs adopted by Congress.

Nevada's 12 percent unemployment is fifth highest in the United States. Michigan has the highest rate at 15.2 percent.

The national unemployment rate is 9.5 percent and is expected to increase to 9.6 percent.

Two years ago, Nevada's unemployment was just 4.5 percent.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.