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Is Federal Unemployment Help A Problem Solver Or Trojan Horse?

Last updated on Thursday, March 5, 2009

(STATEHOUSE) - Indiana is studying whether an offer of federal help with its bankrupt unemployment fund is a gift or a Trojan horse.

Governor Daniels has voiced skepticism about a stimulus-bill offer to wipe out a third of the $450 million the state has borrowed from the government to keep the unemployment fund above water.

To take the money, the state would have to loosen its rules on how long you have to work to qualify, a change that would increase the number of Hoosiers eligible for benefits. Legislators are already trying to agree on a package of payroll-tax hikes and benefit cuts to make the fund solvent again.

The fund has run a deficit in 16 of the last 18 years, and has been steadily losing money since 2001, when the General Assembly cut payroll taxes on employers while at the same time increasing benefits.

Workforce Development Commissioner Teresa Voors says her department is studying whether the eligibility changes would end up costing more than the state would collect from the stimulus.

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