State Unemployment Funds Run Low and Fraud Increases.

14 states, faced with empty unemployment fund coffers, have borrowed from the Federal government's unemployment trust fund (funded by FUTA taxes) as of the end of May. More are expected to by summer end. Outstanding trust fund loans currently total over $9 billion

According to Wayne Vroman, an economist at The Urban Institute, the current recession is more severe than the 2001 and 1991 periods, and more closely resembles the back to back recessions of 1980 and 1982. Most states are now considering increases to either their taxable wage bases (the amount of earnings per worker subject to the tax) as Rhode Island just recently did or increases to the employer's contribution rates.

Integrity operations, designed to combat fraud, including overpayment detection and collection examinations, fraud and special investigations units, and reemployment activities are working in high gear. Overpayments are primarily identified via new hire reporting systems in place in all states and examination of employer quarterly reports which include the names and SSNs of all employees. States are leaning heavily on employers with delinquent quarterly tax reporting, in some cases increasing the per quarter late filing penalty to $1000 per quarter!