The state made its first in a series of interest payments on $2 billion in federal unemployment insurance debt.
The Department of Workforce Development paid the $60.4 million to the federal government Sept. 30, the close of the federal fiscal year. The state expects to continue making those annual interest payments until principal on the debt is paid off, a target work-force development officials expect to hit in 2018.
Next year’s payment will be closer to $80 million, said Valerie Kroeger, a spokeswoman for the department. This year’s was lower because it covered only nine months from the time the payments went into effect in January.
The state’s unemployment insurance trust fund, which holds the money that pays unemployment benefits, had a surplus a decade ago. But years of taking out more for unemployment benefit payments than it collected from employers in taxes led Indiana to borrow from the federal government to make benefits payments.
State lawmakers revamped the system’s structure during the last legislative session by passing a law that increased employers’ state unemployment insurance taxes from a total of $555 million last year to $723 million this year. The law simultaneously cut benefits 25 percent.
Employers also must pay an additional $21 per employee in federal taxes to whittle down the principal on the federal debt, which stands at $1.8 billion, down from $1.9 billion a year ago.