DALLAS - Arizona marked another step in its financial recovery with the payoff of a $44 million federal loan to cover unemployment claims.
Arizona Department of Economic Security Director Timothy Jeffries said the loan was taken out a year ago. The state needed to borrow as much as $600 million to cover unemployment claims since the financial collapse of 2008.
As of May 6, Arizona repaid approximately $44 million in outstanding borrowing and the State's Unemployment Trust Fund was solvent for the first time since June 2014. Prior to June 2014, the trust fund had been borrowing from the federal government since late 2010.
"We made good on our promise to repay federal unemployment borrowing by fulfilling our obligation," Jeffries said.
Arizona DES anticipates the trust fund will remain solvent through the remainder of 2015 and beyond barring any unforeseen economic downturn, Jeffries said.
States with outstanding loan balances from the Federal Unemployment account include California, Connecticut, Indiana, Kentucky, Ohio, South Carolina, the Virgin Islands. California has the largest outstanding balance of $6.2 billion.
Arizona's special trust fund used to pay unemployment benefits went broke in 2010. The fund, made up of taxes on each worker's earnings, once held $1 billion in deposits.
Arizona unemployment rose from 3.7% in 2007 to more than 11% in 2009. At last report, the state's jobless rate had fallen to 6.2%, which remains higher than the national rate of 5.4%.
