Alternative Strategies for Financing State Unemployment Insurance Trust Fund Deficits: State Experiences in the Aftermath of the 2007 Recession (Final Report)
This study analyzed states' approaches to financing deficits in their Unemployment Insurance (UI) trust funds following the 2007 recession. The study describes the implementation of complex Federal and state statutes, federal guidance and policies which regulate the process of obtaining and administering funds. This analysis relied on document reviews and interviews with state and Federal staff and professionals in the finance industry.
The study team developed a simulation model to estimate and compare costs associated with different financing options and approaches. The model was used to simulate a variety of economic and deficit conditions to draw broad inferences about the types of outcomes that different financing approaches may produce. The study also describes the decision-making factors for selecting a method to finance deficits in UI programs, including the availability of information about local economic conditions, states' UI trust fund solvency, and/or prior experience with borrowing. The study presents estimated costs associated with different methods and configurations of borrowing instruments used for obtaining funds to finance deficits in UI programs.