Unemployment Benefits

Why it Matters: Unemployment benefits are funded by employer taxes and federal dollars. When unemployment compensation fund balances are insufficient to fund current benefits, the fund borrows from the federal government. As shown in the chart below, the unemployment compensation fund balance had declined from a surplus of $1.7 billion in fiscal year 2003 to a deficit of $2.8 billion at the end of fiscal year 2011, as a result of unemployment benefits paid to individuals continuing to exceed unemployment contributions collected from employers. In fiscal year 2012, the fund received the proceeds of a bond issuance, which were used to repay outstanding advances from the federal government. As a result, the fund ended fiscal year 2012 with a positive fund balance of $1.2 billion.