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$20 billion deficit projected in California unemployment fund by end of 2011

The highly respected and non-partisan Legislative Analyst’s Office (LAO) says the California Unemployment Insurance Fund is insolvent and worse, will face a deficit of $20 billion by the end of 2011. The numbers are really dismal.

In 2009, the fund paid out $11.3 billion in benefits while only taking in $4.5 billion from employers, and has been getting interest-free loans from the federal government to help make up the shortfall. But those loans will soon start charging interest, which means another $500 million will be owed by the state.

California’s unemployment rate in September was 12.4% (PDF), unchanged from August, but still extremely worrisome. Imperial County has the highest unemployment in California, with a catastrophic 30.4%. Nationally, the unemployment rate is 9.6%, while the underemployment rate stands at 17.1%.

The LAO states the obvious, saying the state must act now and take measures to bring unemployment benefits in line with revenues received.


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