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KY Passing Up Feds' $90 Million Bonus Bucks for Jobless Workers?

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 By Renee ShawContact
February 14, 2011

BEREA, Ky. - The state's safety net for jobless workers could reel in more federal bucks for the cause, but only if Kentucky modernizes its unemployment insurance system before an August deadline. A report by the newly-formed Kentucky Center for Economic Policy (KCEP) finds the state will forfeit a $90 million federal incentive, unless it updates eligibility rules for unemployment.

Center Director Jason Bailey says 38 other states have already accessed at least part of their federal Recovery Act money by updating their systems to better reflect today's labor market.

"This is an opportunity to access much-needed money at a time of high unemployment, and to also assure that workers whose employers are now paying into the system but can't access benefits are able to do so."

Kentucky's jobless rate is at 10.3 percent, the eighth-highest in the nation, and the state has borrowed close to a billion dollars from the federal government to shore up the unemployment insurance trust fund. Last year, Kentucky passed legislation to make the fund whole over time without raising unemployment taxes on businesses. But, so far, policymakers have not presented a plan to modernize the system's eligibility rules.

According to the report, many other states that borrowed federal money modernized their unemployment insurance programs at the same time. Bailey says the updates make the system align better with many workers' new realities.

"Those include part-time work, high-turnover jobs, situations where people are having to leave their job because they have a spouse that moves or they have a sick family member, or they're a victim of domestic violence."

Bailey calls the state's existing eligibility system a relic from a bygone era of paper processing and significant delays. The result, he says, is a rejection of those most in need of jobless benefits.

"A lot of workers, particularly those who are in high-turnover jobs - and those tend to be low-wage workers - don't qualify for that reason."

Bailey says only one in four out-of-work Kentuckians collects state jobless benefits, ranking Kentucky near the bottom of states that financially assist the unemployed.

The KCEP report is online at www.kypolicy.org

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