Kentucky to Forego $90 Million for Jobless Workers Unless Unemployment Insurance Updates Made by August

By Jason Bailey
February 2, 2011

New Report: Kentucky to Forego $90 Million for Jobless Workers Unless Unemployment Insurance Updates Made by August

Last Chance to Modernize Unemployment Program Before Federal Money Disappears

A new report shows that Kentucky will miss out on $90 million in federal incentive money unless it acts by August 2011 to make changes that modernize its unemployment insurance system.

The bonus money was made available as part of the federal Recovery Act. In the last two years, 38 states have acted to receive at least partial incentive monies, and 32 states have made changes to access their full incentives.

“Kentucky’s high unemployment rate makes more visible the serious holes in our unemployment insurance system,” said Jason Bailey, Director of the Kentucky Center for Economic Policy. “The Recovery Act provided incentive money for states to take action to make unemployment insurance better reflect the reality facing workers today. Kentucky has not yet taken those actions, and now is the last chance to access bonus money for doing so.”

Modernization reforms target a portion of low-wage workers, women, part-time workers and the long-term unemployed. They take into account significant changes in the labor market since unemployment insurance was created.

Kentucky passed legislation in 2010 to address issues related to the solvency of its unemployment insurance trust fund, but decided to put off making a decision about unemployment insurance modernization until 2011. Without action in the current General Assembly, Kentucky will forfeit these monies.

“In the current economic downturn, only one in four unemployed workers collects state unemployment benefits in Kentucky,” noted Bailey. “That ranks Kentucky 47th among the states—one of the lowest rankings in the country. We must begin addressing ways that unemployment insurance fails to assist many who have lost their jobs.”

Kentucky has the eighth-highest unemployment rate among the states. The report notes that of the seven states with higher unemployment rates, all but one have acted to receive full incentive monies by modernizing their program. While Kentucky has had to borrow from the federal government to address the deficit in its unemployment insurance system, many of the 31 other states that have also had to borrow decided to enact modernization at the same time.

The report, which provides more detail about modernization options, can be accessed here.

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The Kentucky Center for Economic Policy (KCEP) was founded in 2011 with the purpose of conducting research, analysis and education on important state fiscal and economic policy issues. KCEP seeks to create economic opportunity and improve the quality of life for all Kentuckians. The Center is an initiative of the Mountain Association for Community Economic Development (MACED) and is supported by foundation grants and individual donors.