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State at Risk of Losing Millions in Federal Dollars?

February 24, 2009

Pierre, SD – South Dakota labor leaders say just minor changes in state law would ensure that the state's unemployment insurance trust fund doesn't run dry at a time when more workers are losing their jobs. Mark Anderson, president of the South Dakota State Federation of Labor, says the state could be eligible for millions more stimulus dollars if some outdated unemployment laws were tweaked.

"To be able to qualify for that money, the state of South Dakota would have to modernize its unemployment laws so more people are covered. Those changes in the law would allow an extra 1,020 or so people to qualify. If they're made, South Dakota could qualify for $17 million in additional benefits for the state's unemployed workers."

Anderson has been told that 600 more workers were laid off in different parts of the state last week, which he says is bound to put more pressure on the state's unemployment trust fund. Since 2002, the fund pool has been drained by nearly half, to about $25 million at the end of 2008.

According to Anderson, South Dakota businesses also would benefit from the new stimulus dollars, because a surcharge kicks in for employers if the fund drops below $11 million.

"By getting these funds, we should be able to keep the unemployment fund above $11 million. Potentially, that would save employers $24 million. The fund would have to cover an extra thousand people, but there's enough money in the stimulus package to cover those benefits for a little bit over 12 years."

State officials have expressed confidence they won't need to tap into the federal dollars because enough money is coming in through unemployment insurance payroll taxes to keep the fund solvent. However, Anderson contends, it's important for the legislature and governor to take action this year in order to avoid a big employer burden next year.

David Law, Public News Service - SD