DWD: Wisconsin could exhaust state’s $1.8B Unemployment Insurance Trust Fund by October

MADISON, Wis. — State workforce officials said Wisconsin could exhaust its more than $1.8 billion unemployment benefit fund because of claims related to people out of work during the coronavirus shutdown.

Wisconsin could run out of money to pay benefits to workers who lost their jobs because of the pandemic as early as October 11. As of May 6, the state’s Unemployment Insurance Trust Fund balance stood at $1,862,656,170.

The state Department of Workforce Development released that worst-case scenario Thursday. Two other projections, which assume fewer unemployment payments, show the fund being depleted in January or September 2021.

Department spokesman Ben Jedd said if the state runs out of money, it could borrow from the federal government, so the unemployed still receive benefit checks. That is what happened during the Great Recession more than a decade ago.

DWD said that unemployment insurance is experiencing unprecedented claim volume with more than 300,000 weekly claims. That is 194% higher than the average number of weekly claims received during the first year of the Great Recession.

“Due to the uncertain future impacts of COVID-19, it is unknown if Wisconsin will continue to experience this high volume of claims and for how long this may occur,” DWD said in a news release. “For this reason, it is difficult to project when or even if the UI Trust Fund may exhaust and Wisconsin will need to borrow from the federal government in order to pay benefits, as it did during the Great Recession.”

When, or if, Wisconsin exhausts the Unemployment Insurance Trust Fund depends on the level of weekly claims going forward. The three hypothetical scenarios range from a high of 255,000 payable claims per week to a low of 85,000 payable claims per week. The impact of a third, middle scenario, is also included, which assumes 170,000 payable claims per week. Exhaustion dates range from approximately October 2020 in the high claim scenario to September 2021 in the low claim scenario. The scenarios are based on an assumed level of weekly claims, however, don’s represent a projection of claims levels by the department.

DWD said the analysis is based on the following assumptions:

• An average weekly benefit amount of $325;
• 85% of claims will be paid from state regular unemployment insurance; and
• 94% of benefits will be charged to the fund.

Officials said the analysis doesn’t include future employer-paid unemployment insurance tax revenue, which would be deposited into the fund, prolonging the viability of the fund beyond the scenarios.

Nationally, about 33.5 million people have filed for jobless aid in the seven weeks since the coronavirus began forcing millions of companies to close their doors and slash their workforces.