How is unemployment paid in California?

In ordinary times, California pays jobless claims with money from an Unemployment Insurance Trust Fund that collects taxes from employers. At the beginning of last year, that trust fund had about $3 billion in it. But by October, the state’s employment agency said in a financial forecast that the fund was poised to plummet to a $48.3 billion deficit by the end of 2021.

To help fill the void, the federal government stepped in with an alphabet soup of new emergency programs: the self-employed worker program Pandemic Unemployment Assistance (PUA); benefit extension program Pandemic Emergency Unemployment Compensation (PEUC); plus the temporary $600-a-week supplemental payment program known in California as Pandemic Additional Compensation (PAC) and others.

States can also borrow from the federal government to fill gaps in unemployment funding. Though California just paid off its unemployment tab from the Great Recession in 2018, it planned to borrow at least another $21 billion from the feds during the pandemic. The big questions now: Will Congress keep writing bigger checks to keep unemployment money flowing? And even if they do, how much will California have to pay back as state and local government agencies face their own pandemic-induced budget uncertainty?