State's unemployment insurance fund hits record deficit

Minnesota's unemployment insurance fund recently hit a record deficit level but officials say it is poised for big improvements this year.

Earlier this month, the fund's deficit reached nearly $772 million. Lee Nelson, the state's chief attorney for jobless benefits, said payments from employers will shrink the deficit by about $440 million in the coming weeks. Employers pay into the fund four times a year.

Nelson said the picture will improve even more dramatically later this year as the economy improves and payouts for benefits taper off.

"Revenue is going to exceed payouts in 2011, which is much better than we had predicted," Nelson said. "Actually about a year ago, we expected that revenue wouldn't exceed payouts till '12. So, it's getting better. Things are getting better for the trust fund."

Once a year, Minnesota pays the federal government interest on the average daily deficit for the trust fund. So the lower deficit will mean lower unemployment costs for employers.

Nelson said the fund will likely have a positive balance in 2013.