By: Walter F. Roche Jr.
Faced with the possible cutoff of an estimated $122 million in federally funded benefits for 22,000 unemployed residents, Tennessee labor officials have delayed a planned cut in special benefits for the unemployed who have dependent children until next year.
The cutoff of benefits for dependents of the unemployed had been scheduled to go into effect July 1 but was delayed at the last minute when state officials said they first learned such a move would trigger a cutoff of aid to the 22,000 getting federally funded supplemental benefits.
The U.S. Department of Labor told the state that cutting the $15-per-child payments would automatically trigger a "non-reduction rule" that would make Tennessee ineligible for the federally funded benefits program.
In a statement issued Friday, state Labor and Workforce Development Commissioner Burns Phillips called the delay "part of the balancing act with federal funding."
State officials said they were advised by the U.S. Department of Labor in late June that cutting the $15-per-child payments, which are capped at $50 a week, would automatically trigger a much larger cut in federally funded benefits known as emergency unemployment compensation. The dependent benefits are expected to cost the state about $12 million for the rest of the calendar year.
The cutoff of funding to dependents was approved by the Tennessee General Assembly under a measure passed during the recently ended session.
"It is critical that the unemployment insurance trust fund is sustainable," Phillips said in announcing the decision. "In this situation, we had to balance the potential savings to the trust fund with the total impact of those receiving federal unemployment benefits."
According to department spokesman Jeff Hentschel, the extra benefits for dependents were initiated in 2010 through a one-time federal grant of $141.8 million from stimulus funding, but that grant has now been depleted.
State officials said the federally funded program is set to expire at the end of the calendar year, so the cut in dependent benefits can go into effect Jan. 1 without any federal funds being at risk.