SACRAMENTO (CBS / AP) — Federal officials announced Wednesday that California will receive more than $800 million in funding to help the unemployed as the state struggles to deal with the economy and a huge budget hole.
The U.S. Department of Labor said it will immediately release the money under the American Recovery and Reinvestment Act. The state can use the funds to pay unemployment benefits, provide employment services or administer the state’s unemployment insurance program, the department said in a statement.
“The federal government made these funds available as an incentive for states to strengthen their safety net as our economy continues to recover,” Labor Secretary Hilda L. Solis said.
California was hard-hit by the recession and while the unemployment rate has dropped recently it remains well above the national average of around 9 percent. The most recent tally put the unemployment rate at 11.9 percent in April, down from a modern record of 12.6 percent reached in March 2010.
California also has empty coffers. The state Legislature was trying to close a $9.6 billion budget hole. Lawmakers will not be paid if they fail to pass a balanced budget by Wednesday’s constitutional deadline.
Over the past year, California has borrowed billions of dollars from the federal government to pay for unemployment insurance. It tops the list of 32 states that have borrowed a total of $41 billion.
But the federal money announced Wednesday won’t have to be repaid. It is part of $7 billion in funding available to states that qualify by modernizing and expanding their unemployment insurance programs.
California’s cut of nearly $838.7 million is the most that any state has received.
California qualified by adding provisions dealing with part-time workers, the newly hired and workers who become unemployed because of “compelling family reasons,” the Labor Department statement said.
“I am pleased that California’s leaders took the necessary steps to provide unemployment insurance to an expanded group of deserving workers,” Solis said. “These funds will help people continue to pay housing expenses, buy groceries and take care of their families while they look for full-time employment.”
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