State Application for New Federal Unemployment Benefit Funds Approved

The federal government has approved Connecticut’s application for COVID-19 funding replacing the $600 weekly unemployment benefits program that expired July 31.

Thee new federal funding will provide an additional $300 weekly for up to five weeks to eligible applicants.

Connecticut applied last week, with Gov. Ned Lamont saying the funds will “help fill the hole left when the federal Pandemic Unemployment Compensation Program expired.”

“It is important to remember that this is only a temporary backstop,” Lamont said.

“It’s imperative that the Trump administration reach an agreement with Congress on comprehensive legislation that provides stable and long-term funding to supplement weekly unemployment benefits.”

Executive Order

The president signed an executive order in early August authorizing the use of up to $44 billion in Federal Emergency Management Agency disaster relief funds to replace the expired program.

His original directive provided individual benefits up to $400 weekly, with $100 of that funded by state governments.

The U.S. Department of Labor later amended that order, with benefits already provided by states counting toward their contribution.

State labor officials expect about 250,000 people will be eligible for the new federal benefit.

Only those collecting at least $100 weekly in state benefits are eligible for the new federal benefit.

Through this week, 26 states have applied for the program, which states will administer, as they did with PUC funds.

The Connecticut Department of Labor expects about 250,000 people will be eligible for the federal benefit, which FEMA will terminate once available funding is exhausted or if Congress passes new legislation.

Connecticut has recovered 132,200 (45%) of the 291,300 jobs lost in March and April because of COVID-19 shutdowns and restrictions.

Unemployment Claims

The state labor department has received 750,000 unemployment claims since mid-March and has paid out about $4.4 billion in benefits.

About $1.6 billion of that was paid out of the state’s Unemployment Trust Fund, with $2.8 billion coming from federal funds and grants.

Labor department officials expect the state’s fund will run out of money in September, with federal loans then needed, as in the 2008-2010 recession, to maintain benefits.

The pandemic has exposed the frailty of the state’s unemployment fund and the critcial need for long overdue reforms says CBIA’s Eric Gjede.
“We could be in a better position for the next [recession] if we just made a few simple changes.”https://t.co/dMX10shzFM

— CBIA (@CBIANews) August 10, 2020

The cost of repaying the recession loan—with interest—fell on employers, who saw their federal unemployment tax jump from $42 to $189 per employee between 2011 and 2015.

That was in addition to the larger state unemployment tax.

Businesses are concerned they will again have to shoulder the burden of new federal loans, a concern compounded by the unresolved solvency issues the state’s fund faced before the pandemic.

CBIA has long supported reforms to stabilize the fund, including raising the minimum earnings threshold and prohibiting claimants from receiving benefits while also receiving severance pay.

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For more information, contact CBIA’s Eric Gjede 860.244.1931 | @egjede