California's UI Trust Fund Trend

source: http://www.edd.ca.gov/about_edd/pdf/qsui-Fund_Balance.pdf

When the Great Financial Fraud recession hit in 2007, the California UI Trust Fund had about $2 billion. This is money paid by businesses to fund unemployment checks when workers get laid off. It is a joint federal/state program, but the state collects and pays the lions share. The Trust Fund ran out of money in January, 2009. It was only able to continue paying unemployment claims by borrowing money from the federal government. When the recession was declared over in the summer of 2009, the Trust Fund had a negative $2 billion balance, and it continued to dig a giant hole over the next few years bottoming in April, 2011 with a balance of over NEGATIVE $11 billion.

That is not the kind of Trust Fund you want to inherit. California continues to rely on federal assistance to pay any unemployment claims at all, and it also now gets to pay interest on all the borrowed money. Look at the recent crowing about how strong California is doing financially. From CNN,

After multi-billion dollar shortfalls in recent years, the state's budget has finally straightened out. California expects to take in $2.4 billion more in revenue than it will spend this fiscal year, which ends June 30. After paying off a shortfall from last year and setting aside funds for upcoming obligations, it's on track to end the year with a $36 million surplus.

Wow! Except for that $8.6 billion hole in the UI Trust Fund. If it stays on (polynomial) trend AND there is no new recession, the Trust Fund will no longer be insolvent by early 2016, and will recover to the 2007 level by mid-2016. The crowing seems a little premature to me. Let's celebrate when the state gets back to even.