Published: September 24, 2009 09:12 pm      

Unemployed face loss of benefits

Officials welcome federal extension

DANVILLE — Benefits for around 10 percent of the state’s unemployed will run out by the end of the year unless an extension approved by the U.S. House of Representatives on Wednesday gets through the Senate and is signed into law.

The measure passed the House 331-83.

Without the 13-week extension, some 40,000 state residents would see the 79th week of unemployment benefits become their last, unable to find work after exhausting 26 weeks of regular state unemployment benefits and two previous federal extensions dating back to July 2008.

“People across all sectors of our economy are feeling the effects of this recession,” said U.S. Rep. Tim Johnson, R-Urbana, after voting for the measure. “The promise of 3.5 million jobs as a result of the so-called stimulus looks like a pipe dream.”

State Rep. Bill Black, R-Danville, said the federal extension is needed because jobs still aren’t available.

“The economy has not picked up and we (the state of Illinois) can’t extend the benefits,” he said. “It’s kind of bleak.”

Black said the state’s well-documented financial mess is being compounded by its 10.4 percent unemployment rate — 11.4 percent in Vermilion County and 13.4 percent in Danville. He said those issues have led to an inability to extend state benefits without borrowing due to a depleted unemployment insurance trust fund it uses to pay out new claims.

“The state’s unemployment trust fund has never been insolvent,” he said, even during the high-employment era of the early 1980s. “Right now it’s pretty broke and the money we’re borrowing will have to be paid back.”

Without the federal extension he predicted thousands would face the loss of benefits within weeks.

Greg Rivara, Illinois Department of Economic Security spokesman, said the economy and volume of claims had indeed depleted the trust fund, with the state borrowing some $300 million to this point to pay new claims.

He added, new claims would not be denied due to the fund’s shortfall, and IDES would be ready to help current claimants receive any new federal benefits that become available. Without an extension, he said 40,000 of the state’s 450,000 unemployed would no longer be eligible for unemployment.

“The fund is not bankrupt,” Rivara said. “We don’t talk about it in bankrupt terms. It does run in the red a little bit, but that doesn’t jeopardize anybody’s unemployment payment. It was never meant to replace someone’s income; it was always meant as a bridge.”

Illinois is already one of 21 states with high unemployment statistics using a no-interest “line of credit” from the federal government, he said, which means shortfalls can be met as needed. Twenty-six states with unemployment numbers similar to Illi-nois are included in the proposed federal extension.

Rivara said the loans would be paid back “through the normal course of business.”

“You should be realistic about this economy, but be optimistic as well. Now’s the time for people to prepare because this economy will turn around,” he said.

Illinois residents are not the only ones suffering.

According to a recent Associated Press story, some 5 million people — about one-third of those on the unemployment list nationally — have been without a job for six months or more, a record since data started being recorded in 1948. The information was compiled by the research and advocacy group, National Employment Law Project.

“It smashes any other figure we have ever seen. It is an unthinkable number,” said Andrew Stettner, NELP's deputy director. He said there are currently about six jobless people for every job opening.

Right now the average unemployment benefit in Illinois adds up to about $325 and increases to $559 for families, Rivara said.

An advisory board comprised of private sector interests has been tasked with figuring out how the state can rebuild its trust fund so new claims can continue to be honored in the future.

“Our advisory board is aware of the demands on the services,” Rivara said, “and that they are unprecedented demands.”

He declined to discuss specific funding options likely being considered by the board, but said the amount businesses already pay into the trust fund is based on a “three-year snapshot” of a business’s hiring or layoff patterns, size and type.

Black worries the advisory board will try to try to balance the trust fund on the backs of business, which he said would be a mistake that would drive business owners away from Illinois.

“Workers think they pay into the unemployment insurance fund, but it’s really their employers who do,” he said. “What is it going to take to replenish that trust fund in Illinois? If its businesses, at what point do employers just say I don’t have the cash flow?

“There is a price to be paid for this.”

LOCAL NUMBERS

Vermilion County recorded a jobless rate of 12.1 percent in August, according to the Illinois Department of Employment

Security. That compares to a rate of 9 percent a year ago. In Danville, August’s rate was 13.7 percent. It was 10 percent a year ago. Rockford recorded the highest jobless rate at 15.1 percent