Bonds are not prerequisite to eliminate unemployment trust fund debt by 2015

 

Issuing a bond might not succeed in helping the employers or the state to acquire money as the state owes $343.6 million debt to the feds for unemployment insurance. 

According to the calculation of the Arkansas Department of Workforce Services and published by the Arkansas State Chamber of Commerce states, the Arkansas can attain financial freedom by 2015. The new modification brought by the previous legislative session coupled with escalating economic scenario helps Arkansas to become debt free.

In a recent presentation, the State Chamber President Randy Zook concluded that the business community in Arkansas can expect positive news with the boost in the trust fund.

Hiring more workers in Arkansas helps to improve the economical scenario. After the completion of 88th General Assembly the changes brought by Act 861 has wiped out wage indexing, Arkansas unemployment benefits have been reduced from 26 to 25 weeks. And the workers who are planning to take voluntary retirement needs to qualify the required eligibility criteria. Therefore, Mr. Zook added that these changes might help to save approximately $60-75 million.

According to the Act 1125 passed by the State legislators, that has impelled Governors to release bonds to erase the unemployment trust fund debt. 

However, if the bonds are not issued after the implementation of the changes then there will be a deficit of $46.2 million in the trust fund by the end of 2014. But by 2015 $137 million might help to boost the trust fund. But with the issue of the bonds it will be easier to erase the trust fund debt by 2011 and by 2014 the trust fund will have a balance of $184.4 million.

In the long run the bonds will not help to boost the fund more than it has been estimated. But it might be beneficial for employers as there will be significant hike in their payments to serve the bond debt as there will 30% more per employee. But if the bonds are not issued then there will be no change in the employer’s payments unless the federal government makes changes.

A Magnolia banker and former State Representative who co-chaired the Joint Budget Committee in 2009 Bruce Maloch concluded that with the expected economic recovery and benefits drop off,  the trust fund debt can be eliminated without bond.