Holden signs law to rescue state's unemployment fund

Gov. Bob Holden signed into law July 1 a bill aimed at rescuing the state's unemployment insurance fund from insolvency by raising the amount employers pay to the fund.

The new law raises the maximum weekly unemployment benefit from $250 to $320 a week by 2010 and will increase the amount employers pay to the fund, a news release from the governor's office said.

The legislation, HB 1268, limits the amount the state can borrow to provide a short-term boost to the unemployment fund, while the solvency of the fund remains the employer's long-term responsibility.

"This provides a long-needed solution to the depletion of the fund. It prevents an over-reliance on borrowing, which could jeopardize the state's AAA rating, and it creates a solution that will benefit our workers and our Missouri businesses for years to come," Holden said.

The new law creates a five-member board to determine appropriate borrowing levels and methods, not to exceed $450 million to be paid back in no more than three years. The borrowed money will be used to repay higher interest federal loans in an effort to preserve future tax credits for businesses of the state.

It also includes stiffer penalties for unemployment insurance fraud and it limits benefits for those who are unemployed due to misconduct.

Since the fund went bankrupt in March 2003, Missouri has borrowed more than $290 million. Earlier this year, employers were billed approximately $7 per employee to pay down debt. Debt had been projected to exceed $560 million by 2006.