California Governor Schwarzenegger Urges Congressional Leaders to Extend Unemployment Insurance Benefits

04/21/2008 -- California Governor Arnold Schwarzenegger today sent a letter to key Congressional leaders urging them to enact a federally-funded emergency extension of unemployment insurance benefits for people who have lost their jobs in the economic downturn. The Governor also requested additional funding for administration of the unemployment insurance program to address several years of significant federal funding cuts.

Arnold Schwarzenegger: Photo courtesy California Governor's office

The Governor has taken a number of actions to stimulate various jobs sectors, provide extra assistance to unemployed individuals and protect California's economy this year, including:

Construction:

* Announced $10.5 million to train workers displaced by the housing slump

Housing/Mortgages:

* Awarded $73 million for affordable housing projects in Proposition 1C and Proposition 46 funds to help more than 1,600 California families rent or purchase affordable housing
* Announced $69.5 million in permanent low-interest loans from the Proposition 1C housing bonds to jumpstart 14 affordable multi-family projects up and down the state, helping more than 1,000 California families and individuals realize the dream of an affordable rental home
* Led efforts urging Congress and the Bush Administration to raise federal loan mortgage limits. Last fall, the Governor sent a letter calling on Congress to increase those limits and sent a similar letter earlier this year. After Congress and the President approved a temporary increase, the Governor asked them to make the increase permanent. In February, the Governor met with U.S. Department of Housing and Urban Development Secretary Alphonso Jackson in Washington D.C. to reiterate the importance of a permanent loan limit increase.
* Announced an agreement with major loan servicers to streamline the loan modification process for subprime borrowers living in their homes
* Awarded $5.6 million to help displaced mortgage and banking workers find new jobs

Ports/Transit:

* Announced $394 million in Proposition 1B bond funding for 106 transit projects statewide
* Announced $40 million for port security from Proposition 1B bond funding

Veterans:

* Awarded more than $6 million in grants to help more than 1,500 newly discharged veterans as they return to the civilian workforce

Overall:

* On Friday, the Governor's Labor and Workforce Development Agency announced that $2.5 million in job training grants will be directed to regions of California that have been hardest hit by the economic downturn.

Text of the letter to Congressional leaders follows:

April 21, 2008

Dear Senator Reid, Senator McConnell, Madam Speaker, and Mr. Boehner,

I am asking for your leadership in enacting an emergency extension of unemployment insurance (UI) benefits for people who have lost their jobs in the economic downturn, as well as in securing additional funding for the administration of the UI program.

California has been hit especially hard by the national housing slump and subprime crisis. In the past year alone, we have lost 131,000 jobs in the construction and financial services sectors. California's unemployment rate now stands at 6.2 percent, and it is clear that states cannot fully address the consequences of the national housing downturn on their own. It is critical that Congress enact an extension of unemployment benefits as soon as possible to mitigate the impact of the downturn and fully fund administrative expenses.

For the 12-month period ending March 2008, more than 444,000 unemployed workers had exhausted their regular UI benefits in California. Our state's benefits exhaustion rate is 45 percent, compared to the national rate of 35 percent. Nationwide, the percentage of UI beneficiaries exhausting their benefits is already higher than at the beginning of the 2001 and 1990-91 recessions.

There is widespread agreement among economists that extending UI benefits is one of the most effective ways to stimulate a distressed economy. The money will go into the hands of unemployed workers, who will spend it immediately to meet pressing needs. If legislation extending UI benefits by 13 weeks were enacted today, those payments would infuse approximately $1.7 billion into California's economy.

While unemployment claims have soared, funding for administration of the UI program is at historic lows and no longer adequately supports the cost of program operations, including collecting taxes, paying benefits and adjudicating claims. Workers, employers and states bear the burden of this federal funding shortfall through reduced access to services, higher taxes and delays in processing claims.

Federal funding for unemployment insurance administration has not been adjusted for inflation since 1995. For the last three years alone, the federal funding shortfall to states is approaching $1 billion. For fiscal year 2008, the national UI administrative funding appropriation has been reduced by an estimated $110 million. Roughly $30 million would have come to serve unemployed workers in California.

I am committed to working with Congress to ensure that unemployed workers receive assistance in a timely manner and for a sufficient period as reflected by the national and local employment picture. Thank you in advance for your leadership, and please let us know how we can be of assistance.

Sincerely,

Arnold Schwarzenegger

Source: California Governor

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