Dunleavy administration officials have deposited $24 million in unobligated federal relief funds in the Alaska Unemployment Insurance Trust Fund, which has been hard hit by thousands of claims from jobless workers since the novel coronavirus began impacting the state.
That $24 million in funds from the Coronavirus Aid, Relief and Economic Security Act will go a long way toward rebuilding the solvency of the IU Trust Fund, while lowering costs for Alaskan employers, said Gov. Mike Dunleavy.
“This is an important step to getting Alaskan businesses and the economy back up and running again,” he said.
Just how much those federal dollars will save Alaskan employers won’t be known, however, until state labor officials announce in December the new effective rate of unemployment insurance for 2022.
“We can’t change the rate process during the year,” said Patsy Westcott, director of the Labor Department’s Division of Unemployment and Training Services.
Tax revenues collected by the state that are paid by employees and employers on wages are
deposited into a fund which pays out unemployment insurance benefits to eligible workers.
Since the pandemic hit, the state’s IU Trust Fund has distributed over $1.3 billion in state and federal funds, Dunleavy administration officials said. Temporary federal programs extended eligibility periods and made unemployment insurance payments available to the self-employed for the first time ever. The balance of the fund, now at $280 million, has declined by about 40% since March 2020.
The IU Trust Fund was slammed at the height of the pandemic in May of 2020, with 65,000-70,000 filers, said Westcott. That compares with active filings in June 2021 by just over 24,000 people, she said.
Pre-pandemic, the fund had about $480 million, said Cathy Munoz, deputy commissioner of labor. The recently deposited $24 million has helped to replenish the fund so that the solvency charge added to the rate paid by employers is lowered.
“Alaska’s IU system is unique,” said Alaska Labor Commissioner Tamika Ledbetter. “State law allows for a solvency adjustment during extreme fluctuations I the economy. Our priority is to keep tax burdens low and support small business to the best of our ability, especially now as the economy is rebounding.”
Alaska’s IU Trust Fund managed to weather the COVID pandemic, an unprecedented drain on state trust funds all over the country, Westcott said. “It’s been a busy year, for sure. The fund is now 40% lower than it was pre-pandemic.”
However, Alaska’s employment numbers are now rising, with an average monthly employment of 305,000 jobs for May 2021, compared to an average of 334,600 jobs in May 2019, Munoz said.
