LANSING, Mich. — The Michigan Unemployment Insurance Agency announced on Thursday that it is “highly unlikely” the agency will need to borrow from the federal government to cover benefits in 2021.
It’s based on current unemployment claims activity and economic conditions, according to a news release.
UIA says Michigan currently has one of the healthiest trust funds in the nation, with more than $500 million available for unemployment benefits, and is one of the few states that has yet to borrow from the fund.
Each state maintains its own Unemployment Insurance Trust Fund reserve to pay for state unemployment benefits.
The fund is built from state taxes paid by employers, and states can take on a loan from the federal government if their own reserves are insufficient.
While the UIA has paid more than $29 billion in benefits since March 15, 2020, only $5.1 billion has been paid in state unemployment benefits.
The remaining payments have come from federal programs, including Pandemic Unemployment Compensation and Pandemic Unemployment Assistance.
Payments from these and other federal programs have no effect on the state’s trust fund.
“A key reason for the continued health of the trust fund is our successful work share program,” Acting UIA Director Liza Estlund Olson said. “Work Share saved the UITF over $80 million and helped inject over $500 million into the economy when you include the federal benefits paid to these workers.”
The federally funded Work Share program allows job providers to retain their skilled workforce, avoid layoff or bring back workers at reduced hours while employees collect partial unemployment benefits to make up for their lost wages.