State unemployment trust funds drying up

COLUMBIA — Missouri's unemployment insurance trust funds are in danger of drying up by March, according to a national report.

The National Employment Law Project, an employment rights advocacy group, released a report last week that indicates Missouri only has enough money in its trusts to pay unemployment insurance for the next five months - and that's if unemployment rates stay the same.

"We're definitely in an unemployment recession," said Rick McHugh, the advocacy group's Midwest coordinator and attorney. "Every month this year, unemployment has risen."

Although Columbia's unemployment rate is significantly lower than the state's, the city hasn't been immune to national declines. The unemployment rate was 4.3 percent in January and rose to 4.7 percent by August, according to Bureau of Labor statistics data.

The unemployment rate in Missouri started at 5.5 percent in January of this year and rose to a 17-year high of 6.6 percent by August.

McHugh says a 1 percent change may not seem like much, but it's a 25 percent increase in unemployment and can mean a matching increase of unemployment insurance claims applicants.

 "People are going to be laid off and they're going to draw unemployment, and that's going to put a strain on unemployment trust funds," McHugh said.

But the Missouri Department of Labor and Industrial Relations says the state's trust funds aren't in as much danger as the advocacy group thinks.

"We have projections that we follow from the state level and also from the state Department of Labor and we see no indication of insolvency," said Wanda Seeley, a spokeswoman with the department.

Missouri has seen dwindling funds before. The state turned to the federal government in 2003 when the reserves were tapped out because of a rise in unemployment claims coming off the 2001 recession. The state sought federal help again in 2004 and early 2005.

The Missouri legislature attempted to back its unemployment insurance funds by passing bills in 2004 and 2006 that protect the trust from being tapped out. When the fund gets low, Missouri employers are taxed at a higher rate.

But McHugh says the state's policy doesn't provide the right cushion.

"They seem to be defining success as not having to borrow money from the federal government," McHugh said. "We're defining success as keeping enough money in your trust fund as not only not having to borrow, but not having to tax employers more in a recession."

There are 2,944 employers in Boone County paying into the trust, employers who will be taxed more to fill the gap as unemployment levels rise, Seeley said.

Deanne Stubblefield manages the Missouri Career Centers' Columbia office and says the number of unemployed people coming to the office has dramatically increased since 2007.

"Right now we're trying to serve anywhere between 2,200 to 2,400 people every month, versus a year ago when there were 1,500 to 1,600," Stubblefield said.

In September alone, a little more than 32,000 new unemployment insurance claims were filed in Missouri, according to the Labor Department.

The advocacy group's report ranks Missouri higher than in its May report of this year. In May, Missouri was ranked one of the four lowest states in terms of trust fund solvency. McHugh said Missouri rose to its rank of "nearly insolvent" because policies seem to be working and because other states' funds are deteriorating more rapidly.

"It does seem that the changes that they have passed have made their situation not get as bad as other states," McHugh said.

Stubblefield said she's no expert, but Columbia won't be able to foresee its unemployment future until there's a trickle down from the national level.

"I hope it doesn't get worse than it has been, but what we've been seeing now, it's pretty high," Stubblefield said.