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The Honolulu Advertiser

Posted on: Wednesday, October 3, 2001

The September 11th attack
State unemployment fund may face 50% depletion

By Susan Hooper
Advertiser Staff Writer

The state's $334 million unemployment insurance fund could be cut in half if all who have filed unemployment claims between Sept. 11 and yesterday collect their full six months worth of benefits, a state labor department spokesman said yesterday.

"It's usually a very large fund, but a lot of it is for contingencies — and this is that," said Tom Jackson, a spokesman for the state Department of Labor and Industrial Relations. "Projecting out, if these people stay on it for the full six months, it will take half of it, probably."

A proposal by Gov. Ben Cayetano to temporarily extend unemployment benefits beyond their current six-month limit would further deplete the unemployment insurance fund. If benefits are extended for 26 weeks, the fund could be pushed beyond its capacity, Jackson said.

The Sept. 11 terrorist attacks on the East Coast, which involved the hijackings of four commercial jets and the deaths of thousands of people, have wreaked havoc with the airline and tourism industries worldwide. With travelers canceling trips in droves, airlines, hotels and other businesses that cater to tourists have seen their revenues plunge and have been forced to lay off thousands of workers.

In Hawai'i, 8,803 people filed claims for partial or full unemployment benefits in the 15-day period from Sept. 17, the Monday following the attacks, to Monday, Oct. 1, Jackson said. The labor department estimates 80 percent of those claims are from workers in tourism, the state's top industry. Another 80 percent of the tourism worker claims are for partial layoffs, the department has said.

On Monday alone, 1,012 workers filed claims statewide. Before the attacks, the average number of filings was 1,400 a week, the department has said.

Lawmakers are expected to consider approval of the governor's proposal to extend jobless benefits in a special session from Oct. 15-19.

To inform lawmakers of the effect of approving additional benefits, the labor department calculated what the cost would be to the Unemployment Insurance Trust Fund if the benefits remained at six months or were temporarily extended 13 weeks or 26 weeks, Jackson said.

A bill the Labor Department has prepared for the governor gives him the authority to extend benefits up to 26 weeks, although the department favors the 13-week extension, Jackson said. In the bill the department has prepared, the benefit extensions would end next June, he said.

The department based its calculations on claims being filed at the current rate, with the same ratio of partial and full layoffs, and with no one returning to work, he said.

"Right now the fund is in good shape," Jackson said. "It may not be if this carries on for a long time. If the benefits are extended over 13 weeks, it won't be in good shape. ... If we go out to 26 weeks, then it could be in the hole. We could be overdrawn. We could have to borrow money."

Money for Hawai'i's unemployment insurance comes solely from employer contributions and interest on those contributions, Jackson said. The Hawai'i state tax department collects employer payments that go directly into the fund, while the federal government collects employer contributions that pay for the cost of administering the program.

Yesterday the state received some help from the federal government: the U.S. Department of Labor said Hawai'i's unemployment insurance fund will receive $523,439 as part of a $100 million special distribution from the federal government to the 50 states.

The money is the last of three annual $100 million nationwide distributions to bolster unemployment insurance required by the Balanced Budget Act of 1997.