Micron cuts could shrink state’s unemployment trust
Fund pays benefits to workers who lose jobs
By JOHN MILLER
Associated Press
Friday, October 10, 2008 11:25 AM PDT
BOISE — Even before semiconductor maker Micron Technology Inc. said Thursday it would cut another 1,500 workers in Idaho, the state projected its unemployment insurance trust fund will be drained by half — to $120 million — by March 2010 as the economy slows.
The fund pays benefits to those who lose their jobs.
State officials, who maintain Idaho’s trust fund is healthier than those in many other states, couldn’t immediately gauge the impact of Micron’s most recent round of layoffs. Still, adding to the ranks of the jobless will increase payouts.
‘‘There’s a lot of things that depends on — how many people file for unemployment, what severance Micron provides, how fast workers find new jobs and whether they leave Idaho to take jobs outside the state,’’ said Bob Fick, an Idaho Department of Labor spokesman.
Just a year ago, reserves in Idaho’s unemployment insurance trust fund hit $317 million, bolstered by a robust economy and a jobless rate that fell as low as a record 2.7 percent in 2007, according to federal statistics. That boosted revenue for the fund and kept benefit payments in check. Since then, however, the reserve has slipped to less than $240 million after September as the unemployment rate has risen more than 2 percent since last January, to 5 percent.
In September, the state fund paid out $12.9 million in benefits.
Still, Idaho’s unemployment insurance trust fund is significantly more robust than states such as California and Michigan.
California’s unemployment fund expects a $1.6 billion deficit at the end of 2009, while Michigan’s fund had $225.3 million in federal loans in August. The National Employment Law Project, a New York-based advocacy group for the unemployed, has said as many as 18 states’ unemployment funds may struggle to stay solvent in the event of a recession.
Idaho state economists don’t expect the unemployment insurance trust fund here will be forced to seek federal loans to cover payments to jobless workers, based on their current projections that economic expansion will accelerate starting in late 2009, helping the fund to resume its growth as well.
Currently, the unemployment insurance tax rate for Idaho businesses is just less than 1 percent, among the lowest in the nation. It’s based on a formula agreed to in 2005 during negotiations that included the Department of Labor, the Idaho Association of Commerce and Industry business lobbying group and labor unions. According to that formula, which adjusts to accommodate changes in employment, the rate Idaho businesses pay is projected to rise to at least 1.5 percent in 2009, to ensure the unemployment insurance trust doesn’t run short of cash as more benefits are paid out and fewer workers contribute to the fund.
‘‘We think it will work and it will be the right formula,’’ said Dave Whaley, president of AFL-CIO of Idaho.
Under existing laws, unemployed Idahoans can collect state benefits of as much as $364 weekly, for a maximum of 26 weeks. That’s in addition to federal unemployment insurance payments that Congress has extended.
