An officer

from the Pulaski County sheriff’s office gives out numbers to people waiting in line Thursday at the Arkansas Workforce Center on South University Avenue in Little Rock. Payouts from the state’s Unemployment Insurance Trust Fund soared last week to nearly $17.6 million.

The covid-19 pandemic sent payouts from Arkansas’ Unemployment Insurance Trust Fund soaring to nearly $17.6 million last week, or nine times the average rate of benefits the state paid out last year.

A week earlier, benefits paid totaled $12.4 million, according to Zoe Caulkins, spokeswoman for workforce services, a division of the Arkansas Department of Commerce.

The average weekly payout since March 1, the beginning of the pandemic was $4.5 million. The state jobless rate was about 4.5% in mid March, which was before the coronavirus forced businesses across the state to close and led to a wave of furloughs and layoffs.

The $17.6 million disbursed last week contrasts with the $1.9 million in average weekly payouts the state made in 2019 when it paid a total $98.5 million in benefits and collected $180 million in unemployment insurance taxes, Caulkins said.

It is unclear how the state’s trust fund will weather the pandemic that has led to the spike in unemployment claims but it began the period with a balance almost $845 million.

In less than two months, the state’s trust fund balance has fallen to $813.7 million. A Tax Foundation report found that Arkansas had a trust fund balance large enough to cover 33 weeks, or through the end of the year, before it would have to tap other sources of state revenue or seek an advance from the federal government.

Arkansas received socalled Title XII advances from the federal government totaling $360 million from

2009 through 2011 to cover unemployment benefits during a recession that began in 2008. The state exhausted its trust fund balance in 2009 for the first time since 1984, Caulkins said. Those advances were repaid by Oct. 2, 2014.

The dire numbers worry state Senate Pro Tem Jim Hendren, R-Sulphur Springs. Hendren, a small-business owner, said he has participated in efforts to build up the trust fund balances since joining the Senate in 2013.

“We were determined to build it back and eventually when we got to a point where we were healthy enough we gave employers a little bit of a break on the tax,” he said Thursday. “We’ve made almost a billion-dollar swing.”

But whether it is enough remains to be seen. One economist, Michael Pakko of the Arkansas Economic Development Institute at the University of Arkansas at Little Rock, said last week that the statewide unemployment could rise above 9%. A year ago, the Arkansas joblessness rate was 3.5%.

“[The fund] should be pretty solvent,” Hendren said. “It’s designed to have a balance for such a time as this. But I don’t think anybody expected the kind of unemployment numbers in the short span we’ve had like this. This is not like a typical recession that you slide into

and slide out of. This is more like a catastrophic event that no one was expecting that has immediate consequences.”

Already, New York has applied for an advance totaling $4 billion to cover its state unemployment benefit payouts. California could exhaust its trust fund by the end of next week, according to the Tax Foundation analysis. Ohio and Texas aren’t far behind.

Arkansas is one of 31 states that have a reserve ratio of 1.0 or greater, which is a ratio seen by the U.S. Department of Labor as adequate enough to weather a recession, the Tax Foundation said.

That ratio, which compares the trust fund balance as a percentage of the state’s total annual wages, also allows Arkansas to qualify for the interest-free advances. If states take too long to repay the loans, employers will face

higher federal unemployment insurance taxes to compensate for the indebtedness, according to the Tax Foundation.

The unemployment insurance tax rate varies. Some individual rates likely increased because more benefits were being paid in the recession years starting in 2008, Caulkins said.

The taxes are calculated by applying an employer’s individual tax rate to the taxable wage base, she said. The taxable wage base was raised in 2009 from $10,000 to $12,000. The taxable wage base was reduced to $10,000 in 2017.

“The taxable wage base changed again in 2019 to be dependent upon the [unemployment insurance] trust fund balance and is currently at $7,000,” Caulkins said.