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FRANKFORT, Ky. – Gov. Steve Beshear announced the formation of a bipartisan task force to recommend long-term changes to the Unemployment Insurance (UI) Trust Fund to ensure its long-term viability.

Due to the enormous demands of the global economic crisis, Kentucky, like many states, is now depleting its UI Trust Fund at an accelerated rate. Kentucky now has about $50 million in the fund, representing more than two weeks of payments on claims. That’s down from $116 million in December and $175 million in October, a reflection Beshear said of the rapid decline in the national economy.

Under provisions of the Social Security Act, the federal government makes funds available to states so that unemployment insurance benefits are not interrupted. As a first step, Beshear has asked the U.S. Department of Labor to prepare a line of credit that would be made available to Kentucky when the time is appropriate.

“This is merely a short-term solution to a long-term complex issue,” said Beshear. “By taking this initial step, we can assure those who are eligible for unemployment insurance benefits will continue to receive assistance. No one will see a disruption in their benefits. “

Since 2002, Kentucky has paid out more in unemployment benefits each year than it has taken in through employer contributions. The difference has been made up by drawing down reserves that were accumulated in earlier years in the UI Trust Fund.

To address this challenge, the governor is creating a task force to study the UI system. The group – consisting of employers, employees and members of the General Assembly as chosen by leadership of both houses – will make recommendations to enable the system to generate sufficient funds to temporarily assist displaced workers; provide a cushion for future economic downturns; and treat employers equitably while positioning them to be competitive with those in other states. Its goal will be to restore the UI system to solvency and stability.

The taskforce will be chaired by Helen Mountjoy, secretary of the Cabinet for Education and Workforce Development. It will begin meeting in February and is expected to have recommendations delivered to Beshear this summer that may be considered by the legislature in 2010.

“This will not be an easy task,” the governor said. “No effective solution can be crafted solely on decreasing employee benefits or on raising employer contributions. Both employers and employees must be part of the solution.”