On July 2, 2012, Governor John Hickenlooper announced that the State of Colorado had sold $640 million in bonds to help lower the associated costs to business owners related to unemployment costs. Since the recession began in 2007, job losses across Colorado have depleted the unemployment fund. As a result, the state has borrowed close to $600 million from the federal government to cover benefits. Historically, the unemployment account that is funded by employer premiums generally covers the first 26 weeks of benefits for workers’ who have lost their positions at no fault of their own. However, the increase in claims during this most recent economic downturn has depleted all reserves. Without the loan, increases to premiums and special assessments, the situation would have been worse.
The funds generated from these bond sales will be used to pay back a remaining $95 million federal government loan and replenish the funds reserves. Governor Hickenlooper estimated that employer savings would be anywhere between $20 and $120 per employee starting in 2013 when a solvency surcharge employers have been paying since 2004 is eliminated. The fixed-rate bonds will be repaid over the next five years through a scheduled repayment plan. Employers who experienced high levels of layoffs will receive special assessments in September to help cover the bond repayment costs. All additional employers will receive premium notices come November.
Information sources: Denver Post & NCBR