The state of Wisconsin owes the federal government about $1.18 billion in funds used to pay for unemployment benefits during the recession.

During the recession time period, Wisconsin received an unusually large amount of claims for unemployment benefits, John Dipko, spokesperson for the Department of Workforce Development, said in an email to The Badger Herald. 

Wisconsin depleted the funds in the unemployment insurance trust fund and began borrowing from the federal trust fund in February 2009, he said. The borrowed funds were used to continue to pay unemployment benefits.

“More than $4.1 billion in unemployment benefits were paid during the 2008-2010 recession,” Dipko said. “That compares to $2.6 billion in benefits paid during the 2001-2003 recession.”

Eric Peterson, chief of staff for state Sen. Lena Taylor, D-Milwaukee, said the Legislature and Gov. Scott Walker agreed the state should borrow money to continue to provide unemployment benefits. Peterson said the benefits act as a social net people have come to depend on.

According to Dipko, the recession resulted in record claims and benefit payments unprecedented in Wisconsin. The federal government approved extended benefits to continue assistance to unemployed individuals after Wisconsin depleted its own unemployment funds.

He added individuals who are unemployed through no fault of their own can receive benefits for up to 26 weeks.

Dipko commented on the steadily improving climate of Wisconsin’s economy and said the number of unemployment benefits claims has declined since last year. Dipko also said the state has added 29,300 private sector jobs since the first of the year.

On the Job Center of Wisconsin website, there are currently around 34,000 job postings available for individuals looking for work.

“We are now working to bring the fund into balance and strengthen the program,” Dipko said.

Dipko said under legislation approved in 2007, the amount Wisconsin employers pay into the unemployment fund is increasing. Currently, an employer pays unemployment insurance taxes on each employee’s taxable wages. An employer can pay up to the first $13,000 of each employee’s wages, compared to $10,500 in 2007.

Sen. Luther Olsen, R-Ripon, said asking employers to pay more into the unemployment fund is affecting businesses and school districts negatively. Olsen said if businesses are asked to pay a higher unemployment tax, there is less money available to fund the business and allow it to run effectively.

Olsen said businesses that recently laid off workers because of increasing expenses are facing another cost with the unemployment tax.

“What you wind up doing as an employer is paying an unemployment tax to pay off the federal government, but it really adds on to the cost of doing business,” Olsen said.

Dipko said the state is working to repay the loan and also improve the unemployment insurance program through new legislation. The state recently enacted a one-week waiting period for an unemployed individual to receive benefits. The waiting period will take effect next year, he said.

Wisconsin is one of 37 states to enact a waiting period for unemployment benefits. According to Dipko, the one-week wait will save Wisconsin $45.2 million a year.