New York owes the federal government nearly $3 billion which it borrowed to fund unemployment insurance payments, according to figures compiled by the National Conference of State Legislatures.
In January 2009, at the height of the recession, New York began borrowing from the Federal Unemployment Account. The account provides loans to states to ensure the continue flow of benefits during economic downturns.
New York is one of 20 states currently borrowing and as of August 6 had an outstanding loan balance of $2.7 billion. That’s more than every state except California, which has a balance of $9 billion. New Jersey’s balance is just over $563 million; Connecticut’s is $632 million.
In total, states have borrowed more than $25 billion.
According to the U.S. Treasury, the current interest rate for the loans is 2.94 percent. Treasury figures show New York will be assessed interest charges of $91.5 million for the 2012 fiscal year.
A sizable chunk of unemployment insurance payments are the result of fraud, according to Gov. Andrew Cuomo’s office. In a news release last month announcing an investigation that uncovered $1.5 million in fraudulent claims in New York City, the office said:
Over the last three years (Dept. of Labor) has uncovered over $150,480,451 in fraudulent unemployment insurance overpayments and referred more than 2,600 cases to district attorneys and law enforcement agencies, including 750 last year alone.
In May, Cuomo said $51.2 million in fraudulently-collected unemployment insurance benefits had been returned to New York State’s Unemployment Insurance Trust Fund through the Treasury Offset Program (TOP), which intercepts tax refunds to repay the debts.
Last year, more than 1 million people in New York received unemployment benefits totaling nearly $7.7 billion. In 2009, 1.2 million people received payments of $9.2 billion.