PA officials looking at securing federal loan to bolster state Unemployment Compensation Trust Fund

The COVID-19 pandemic is having a major impact on Pennsylvania’s Unemployment Compensation Trust Fund.

Pennsylvania is looking to obtain a federal loan to help bolster the UC Trust Fund now facing unprecedented jobless claims due resulting from job layoffs due to the pandemic, said Jerry Oleksiak, secretary of the Department of Labor and Industry, on Monday in a conference call with reporters.

It’s a far cry from the UC Trust Fund’s fiscal situation before the pandemic, the secretary said. The fund was on track to become solvent this summer having completed the repayment of Pennsylvania’s UC bond debt last Jan. 1, he added.

“The trust fund will be impacted,” said Oleksiak referring to a wave of UC payments to claimants since mid-March when Pennsylvania shut down all but “essential” business activity due to the spread of the COVID-19 virus.

Since March 15, Labor and Industry has made nearly 9 million payments to claimants to cover nearly $4 billion in jobless benefits from the regular state UC program.

The UC Trust Fund is considered solvent when its level reaches two and a half times (or 250 percent) the average annual benefit payout over the last three years.

Gov. Tom Wolf announced last January that Pennsylvania had repaid its UC bond debt as of Jan. 1. A 2012 state law provided for refinancing of Pennsylvania’s federal UC loans through the sale of bonds to get a lower interest rate.

Under federal law, states are required to pay UC benefits promptly as provided for under their own laws. States can obtain loans through the federal Unemployment Trust Fund to meet their obligations if their own reserves are insufficient to meet obligations.

Oleksiak is scheduled to testify Tuesday at a joint hearing of the Senate Labor and Industry Committee and Senate Communications and Technology Committee on the impact of COVID-19 on the UC system. The hearing will focus on delays in processing claims and problems with the UC computer system, said senators.