The Age of Austerity

States Brace for Coming Cuts
by SHAMUS COOKE


The Great Recession has quietly devastated public services on a state-by-state basis, with Republican and Democratic governors taking turns leading the charge. Public education has been decimated, as well as health care, welfare, and the wages and benefits of public sector workers. The public sector itself is being smashed. Since the recession began, states have made combined austerity cuts of at least $337 billion, according to the Center of Budget and Policy Priorities

The 2012-2013 budget deficits for 34 states resulted in $55 billion in cuts, according to the Center of Budget and Policy Priorities. The coming budgets for 2013-2014 that begins on July 1st is becoming clear as well, and the deficits are rolling in by the billions: Connecticut, Minnesota, Maryland, New York, Oregon, Washington, and many others have large deficits projected.

You’d expect after years of austerity cuts to public services, state politicians would think of new ways to raise revenue from those who can afford it — the wealthy and corporations. Not so. The cuts that began as a consequence of the 2008 recession are set to continue; raising revenue from the wealthy is “off the table” for Republicans and Democrats alike.
The pattern of budget cuts has revealed that the age-old distinction between Republican and Democrat has evaporated on the state level. The state budget trends — what’s getting funded and what’s not — are similarly aligned across the country. Both parties have merged their state-level agendas into a singular focus on “economic growth,” a bi-partisan euphemism meaning “corporate profits.”

Below is the bi-partisan funding trends for the states that began with the 2008 recession and continue to this day:

1) The Attack on Public Employees and Pension “Reform”

It wasn’t long ago that everyone understood that the states’ budget crises was caused in part by the recession, itself caused by the big banks and greedy corporations, and in part by the politicians continuing willingness to lower taxes on the rich. Now the corporate media and politicians have re-written history: suddenly it’s “greedy” public workers and their “lavish” pensions that are bankrupting the states. Two years ago it was the health care of public employees that was bankrupting the states, which resulted in large cuts to workers in many states.

The pre-recession pension system was working fine, but it, too, suffered under the bank-caused financial crisis; pension returns sank and right-wing economists projected ruin for the states in the future (they conveniently assumed that recession era rates would continue forever, thus under-funding the system).

Democratic governors are now as eager as their Republican counterparts to destroy the pensions of public employees. Democratic politicians in Oregon, Washington, California, New Jersey, Illinois, Rhode Island, New Hampshire, Maryland, Massachusetts, and several other states are leading the charge to erode the last bastion of retirement security for working people, while continuing to lay off public employees by the thousands. This national shrinkage of state governments is a long-standing right-wing dream: the smaller the state, the greater the “growth opportunities” for corporations that take over privatized public services and the lower their taxes since a smaller state requires less revenue for operating expenses.

2) Education Reform

The National Governors Association (NGA) spoke for both political parties when announcing a renewed focus on education funding for the states during the annual “state of the states” address. The funding is necessary because schools across the country are expecting an influx of students, while school districts everywhere have been starved funds by the ongoing austerity cuts; the system has been literally crumbling. But the new funding is to be used for the undermining and destruction of public education, since it is based on Obama’s pro-corporate Race to the Top education “reform” where charter schools replace public schools.

Democrats and Republicans are in complete agreement over Obama’s education policy, which closes “failing schools,” (those in poor neighborhoods), opens privately run, non-union charter schools, and fires “bad teachers,” (typically those who teach poor students). The whole system is based on standardized testing, which poorer students will spend most of their education preparing for, (those who don’t drop out from sheer boredom). Bi-partisan education reform targets teacher unions while privatizing education — the Democrats have adopted the ideas from the right-wing think tanks of the 1990s.

3) Raising Revenue – But Not From the Wealthy or Corporations

Many states have implemented — or are planning to implement — a variety of taxes that disproportionally affect working and poor people, including increased sales taxes, alcohol, tobacco and other “sin” taxes, not to mention increases in different fees, from state parks to driver registration.

At the same time that these taxes have been upped, a consistent clamor has been raised by the media and politicians to lower the taxes for corporations, give them new subsidies or “freeze” their already-low taxes so that future tax increases will be impossible. In Oregon the Democratic governor declared a “special session” emergency in order to ensure that NIKE’s super low tax status would be frozen in place for decades, outside the reach of the public, which might want to raise corporate taxes to fund public services.

Democrat and Republican controlled states are equally competing for the adoration of corporations by lavishing a never-ending flow of taxpayer money on them, while “guaranteeing” them “investment security,” i.e., promising low taxes and an open spigot of taxpayer money. This is the basis for several states implementing “right to work” laws that target unions for destruction, while also attempting to “revamp the tax code,” which is a euphemism for lowering corporate taxes.

4) Welfare Reform: Attacking the Safety Net

Waging war against the safety net is like picking a fight with road kill — the states’ safety net is already disfigured beyond recognition, but the bi-partisan assault nevertheless continues. Bill Clinton started welfare “reform” as president, and the 2008 Great Recession accelerated the attack on those in poverty. The year 2011 was a devastating one for welfare, now called Temporary Assistance to Needy Families (TANF).

According to the Center on Budget and Policy Priorities:

In 2011, states implemented some of the harshest cuts in recent history for many of the nation’s most vulnerable families with children who are receiving assistance through [TANF] … The cuts affect 700,000 low-income families that include 1.3 million children; these families represent over one-third of all low-income families receiving TANF nationwide.

But these TANF “reforms” continue, to the detriment of the neediest. Newly released budgets in several states — including California and Oregon — further tighten the program, a relentless boa-like constriction that’s already suffocated millions of the country’s poorest citizens. Typically TANF reform either lowers the monthly payment, shortens the time one can receive benefits, or raises the standards for staying in the program.

Before the giant TANF cuts in 2011, the program was already shrunken such that TANF only assisted 28 families for every 100 in poverty — the ludicrous definition of “poverty” being a family of four that makes only $22,000 or less.

There is a direct link between the assault on TANF and the rising poverty levels in the United States. Cutting TANF in a time of mass unemployment means consciously consigning millions of families to grinding poverty, hunger, homelessness, and the many other barbarisms associated with extreme poverty.

It wasn’t long ago that the Democrats understood that the government can and should create jobs, especially during a recession. But now the Democratic Party has fully adopted the economics of Reaganism. As a result, the only “job creators” now recognized are the corporations. This bi-partisan agreement not to tax the rich and use the revenue for public spending to create jobs — hiring more teachers, firefighters, roads and parks workers, etc. — is unnecessarily prolonging the job crisis, ensuring more years of deficits and a deeper gouging of the public sector.

These cuts are having a devastating effect on public sector unions, the last bastion of union strength in the country. These unions are being weakened to such an extent that stripping them of their right to collectively bargain — the nail in the coffin — becomes a real possibility. No state is safe from this threat.

If unions don’t unite with community groups to demand that public services be fully funded by taxing the wealthy and corporations, the cuts will continue, communities will feel helpless, inequality will continue to spiral out of control, and working people will be further subjected to the policies of the 1%, now implemented in chorus by Republicans and Democrats alike. But, of course, this means that the unions will have to break with the suicidal strategy of relying on the Democrats for handouts. Time and again the Democrats have demonstrated their willingness to sacrifice the needs of working people in order to curry favor with the rich and corporations, their greatest benefactors when it comes to election campaign contributions.

Looming Curses of Privatization

Monday, September 17, 2012 by Common Dreams

by Paul Buchheit

With the breakdown of the private financial industry, and with the decision by corporations to stop meeting their tax responsibilities, and with the dramatic surge in tax haven abuse, less tax revenue is available to state and local governments. Deprived of funding, governments are forced to consider privatization schemes to balance their budgets. But any such scheme comes with adversity and pain.

The futility of diverting public funds into the hands of profitseekers has been well-documented. Here are a few of the gathering curses of privatization.

1. Public treasures sold off for short-term budget needs

In his 2006 budget President Bush proposed auctioning off 300,000 acres of national forest in 41 states. This followed attempts by both the Reagan Administration and Clinton-era Republicans to privatize public land.

Now, with continuing budget shortfalls, the Cato Institute and other libertarian groups are pressing for property deals, with the justification that land should be "allocated to the highest-value use," presumably making it available to the highest bidder for consumption purposes.

That brings us to Paul Ryan's dubiously-named Path to Prosperity, which proposes to sell millions of acres of "unneeded federal land" and billions of dollars worth of federal assets. He's starting in his own backyard: the state of Wisconsin is considering the sale of DNR land for some ready cash. The Path to Prosperity is based in part on Republican Jason Chaffetz' "Disposal of Excess Federal Lands Act of 2011," which would unload millions of acres of land in America's west. Worse yet is Rep. Cliff Stearns' perplexing recommendation to "sell off some of our national parks." Mitt Romney also chimed in, admitting that he didn't know "what the purpose is" of public lands.


2. Infrastructure decaying in the hands of profit-seekers

David Cay Johnston describes the deteriorating state of America's infrastructure, with grids and pipelines neglected by monopolistic industries that cut costs rather than provide maintenance. Meanwhile, they achieve profit margins of over 50%, eight times the corporate average.

The government agencies that are usually blamed for the crumbling infrastructure are often staffed with regulators from the industries they're expected to monitor. If and when accidents happen, the companies responsible can plead hardship and demand rate increases from the public.

It's getting worse as corporations become fewer and more powerful. Almost every American adult can relate to the monopolistic phone and Internet industry that controls our public airwaves. According to the Organization for Economic Cooperation and Development, South Korea has Internet speeds up to 200 times faster than the average speed in the U.S., at about half the cost. Free-market enterprise is simply not working in the U.S. telecommunications industry.

3. Water no longer available for the common good

According to Food and Water Watch, "The finance industry is promoting water privatization as a way to help local governments pay for budget shortfalls and improvement projects." The chief economist of Citigroup concurred: "I expect to see a globally integrated market for fresh water within 25 to 30 years."

But while profits average 12 to 15 percent per year, water and sewer utility rates typically rise 33 to 63 percent, and short-term business ventures are subject to abandonment after just a few years. Desperate local governments often regret their hasty decisions. A Century Foundation report concluded that with privatization "Competition is hard to create and maintain, cost savings (if any) from privatization erode over time, and service quality often suffers."

Numerous examples of water privatization abuse have been documented. In Pennsylvania and California, the American Water Company took over towns and raised rates by 70% or more. In Atlanta, United Water Services demanded more money from the city while prompting federal complaints about water quality. Felton, California privatized its water and received a 74 percent proposed rate increase over three years. Coatesville, Pennsylvania saw an 85 percent increase. Shell owns groundwater rights in Colorado, oil tycoon T. Boone Pickens is buying up the water in drought-stricken Texas, and water in Alaska is being pumped into tankers and sold in the Middle East.

In another ominous note for the future, the House passed the Clean Water Cooperative Federalism Act of 2011, which would deny the Environmental Protection Agency the right to enforce the Clean Water Act. Our water is getting dirtier and scarcer. But a hedge fund advisor put a capitalist spin on it, noting the "serious profit opportunities" in water. "If you play it right," he added, "the results of this impending water crisis can be very good."

4. Our children put at risk with unproven educational methods

The few charter schools with good reviews have functioned with limited enrollments, retention policies favoring likely-to-succeed individuals, and an absence of special needs students. This violates a precept underscored by Chief Justice Warren in Brown vs. the Board of Education: "Education...is a right which must be made available to all on equal terms." Charters aren't even close to that. The Louisiana Believes project, for example, which will eventually be the country's most extensive voucher system, has only 5,000 slots available for about 380,000 eligible students.

But corporations are rushing headlong into this lucrative new market anyway, while paying little heed to the body of research confirming their relative ineffectiveness. This includes studies from Stanford University, the Department of Education, Johns Hopkins University, and the RAND Corporation.

In addition to their poor performance, charters are more segregated, less likely to accept students with disabilities, and conducive to a widening of the racial and rich-poor education gaps.

Still, despite all the damning evidence, the charter myth persists in the American mind. And it's getting worse. The newest blind rush into privatization heralds 'virtual' schools, which offer lessons to homebound kids on their computers, even at the K-12 level. In what seems obvious to most of us, virtual schools don't work for children. A 2009 Department of Education study on blended online and face-to-face instruction reported results that were "significantly positive for undergraduate and other older learners but not for K-12 students."

A lengthy New York Times investigation of one of K12 Inc's online schools concluded that "By almost every educational measure, the Agora Cyber Charter School is failing. Nearly 60 percent of its students are behind grade level in math. Nearly 50 percent trail in reading. A third do not graduate on time. And hundreds of children, from kindergartners to seniors, withdraw within months after they enroll."

5. Colleges gradually being replaced with prisons

America has the highest incarceration rate in the world, and despite a falling violent crime rate, more people are going to jail. As explained by Michelle Alexander, "federal funding flows to those agencies that increase dramatically the volume of drug arrests, not the agencies most successful in bringing down the bosses."

So as education funding drops again this year in most of the states, spending on prisons increases. The U.S. spends over two times as much per prisoner as per public school student. California spends more on prisons than it does on higher education.

The profit motive is hastening prison privatization. Quickly. From 1990 to 2009, the number of prisoners in private facilities increased by more than 1600%, from about 7,000 to over 125,000 inmates. Corrections Corporation of America recently offered to run the prison system in any state willing to guarantee that jails stay 90% full.

Yet studies show that private prisons perform poorly in numerous ways: prevention of intra-prison violence, jail conditions, rehabilitation efforts. A 10-month investigation by the New York Times concluded that "the state's halfway houses have mutated into a shadow corrections network, where drugs, gang activity and violence, including sexual assaults, often go unchecked." Even so, New Jersey Governor Chris Christie insisted that "Places like this are to be celebrated."

The U.S. Department of Justice offered this appraisal: "There is no evidence showing that private prisons will have a dramatic impact on how prisons operate. The promises of 20-percent savings in operational costs have simply not materialized."

Prisons, like public land and utilities and schools, are up for sale in America. Essential public needs are fast becoming the newest products on the market.

Stealing From The Mouth of Public Education to Feed the Prison Industrial Complex

Tuesday, February 28, 2012 by Institute for Policy Studies
We are witnessing a systemic recasting of education priorities that gives official structure and permanence to a preexisting underclass comprised largely of criminalized poor black and brown people.
by Adwoa Masozi

States across the US are excising billions of dollars from their education budgets as if 22% of the population isn’t functionally illiterate.According to the NAAL standards of the National Center for Education Statistics 68 million people are reading below basic levels. The Center on Budget and Policy Priorities found that “nearly all states are spending less money (on education) than they spent in 2008 (after inflation), even though the cost of providing services will be higher.” On top of cutting 4 billion dollars from their budget, Texas has also eliminated state funding for pre-K programs that serve around 100,000 mostly at-risk children. North Carolina has cut nearly a half billion dollars from K-12 education resulting in an 80 percent loss for textbook funds and a 5 percent cut in support positions like guidance counselors and social workers among numerous other cuts. Decisions like these leave little reason to wonder why both those states are facing 27% drop out rates.

Closing public schools has so become the rage that the state of California has even produced a best practices guide on how to close and make them fit for turn-around. Why not promote a ‘best practices guide for keeping a school going’ instead? Why make these decisions when we know that a lack of education decreases access to quality (and legitimate) employment opportunities, increases the likelihood of encounters with the criminal (in)justice system, negatively impacts health outcomes, and altogether limits one’s ability to determine her or his own future?

What we’re witnessing is a systemic recasting of education priorities that gives official structure and permanence to a preexisting underclass comprised of largely criminalized poor black and brown people. Certainly having a prominent underclass isn’t new to the US as it has quite the track record of denying fill-in-the-blank people fill-in-the-blank rights. But the material outcomes of this shift are as communally and economically devastating as were the outcomes of the Black Codes in the 1800s and subsequent Jim Crow laws that persisted until 1965; both of which were legal, with implementation that varied from state to state and still impacts communities today.

The collusion between this government and private interests are not new either. It is not a coincidence that at the same time neighborhoods with high incidences of black people are being destabilized and displaced through fast track urban-land grabs, or gentrification, by developers empowered by local municipalities states are divesting from the public school infrastructure serving them. This is an insidious process that forces the hand of communities. Public education is something more than a right, a liberty, or a privilege. It is a need. One as basic and inarguable as the land we must walk on, food we must eat, water we must drink, and air we must breathe to live. For absolutely nothing will or can be done in human society without it. So who would want to send their children to schools that have police presence and metal detectors in place of books? Or to overcrowded schools with teacher to student ratios of 1 to 30 and little to no extra curricular activities or wrap-around services? These are the material consequences of divestment from public schools. Who wants to send their children to schools in neighborhoods that are mini-police states? If it can be helped, no one.

Charter schools by definition aren’t the real problem. They have been practical and creative solutions to educating children when needs go unmet. Forming alternative centers of education has been a norm practiced in communities across the country since the 1800s. But what we have today is something very different. Charters now elbow out established public schools in part or completely. Corporations like Wells Fargo, BOA, JP Morgan, and Wal-Mart, all major investors in private prisons and players in corporate education reform, have extraordinary influence on education policy at the state and federal levels.

Parents, students, teachers, and other relevant stakeholders are manipulated into making a false choice, drawing a line in the sand where the wrong group of people is on the opposing side. Whether for public schools or charters, both sides want the same outcomes - creative, critical thinking students who are equipped to participate fully in their community and society at large. Instead of charters continuing to operate as creative workarounds, especially for communities in crisis, sharing in the resources for the public, they’ve been co-opted. Now taking an antagonistic role towards traditional public schools.

While these turf wars are being fought, the children who don’t make it into the tier one schools or roll sevens in the charter lotteries are left behind and to their own devices in these poorly administered, under resourced and overcrowded schools.

Forty-six percent of the 2.3 million people incarcerated are without a high school diploma and the skills to compete in an ever-shrinking job market. This means roughly a million people won’t ever get a shot at what should already be low-hanging fruit—a low-waged, skill-lite, benefit-deplete, socially unrewarding job with a work environment that’s likely to be mentally and spiritually stifling.

Little guesswork is needed around what will happen to these unskilled and undereducated millions who have been failed by these schools that continue to be eroded. It is the prisons that will have them; for these youth are the preferred meat of the criminal (in)justice system.

This is why we can have record closings of public schools throughout the country, and at the same time witness the rise of corporate backed charter schools and private prisons. The message to the people being that a select few will be educated and the rest will be locked in struggle against their own commoditization. This is why we must continue to fight.

The Market Won’t Fix States’ Woes

Sunday, January 23, 2011 by The Boston Globe
by Nicole Gelinas

Bond-market brinkmanship and bankruptcy threats can't save the states from themselves.

As budget season opens, many states - including Massachusetts - face their toughest choices yet on education, social services, and public-worker costs, plus the taxes needed to pay for them. Federal stimulus money is running out, and Washington doesn't want to offer more cash. But Washington can help in another way: by dropping the increasingly fashionable notion that the workings of the bond market can solve states' problems for them.

This notion is rapidly gaining traction in conservative circles. The thinking is that, in many state capitals, special interests from unions to hospital lobbies have taken over the political process. The only thing that can force states to change course, in this account, is fear among the states' lenders. If bondholders worry that states won't repay their debt, then they'll jack up interest rates or just stop lending money.

And the way to scare the bondholders is for Congress to change federal law so that states can legally declare bankruptcy. That's what GOP leaders and advisers, including Newt Gingrich, have suggested.

Congressional leaders are making their intentions clear to bondholders. "We are not interested in a bailout," GOP Representative Paul Ryan, the new House budget chief, said recently. "Should taxpayers in frugal states be bailing out taxpayers in profligate states?'' His answer: No.

Some governors, too, have welcomed such talk, figuring that fear helps them with their legislatures and unions. New Jersey Governor Chris Christie has warned that public-worker costs "will bankrupt" his state. If Christie wanted to scare the bond market, it worked: a state agency had to alter its plans to borrow after interest rates rose.

But enthusiasts of a "market" solution to state woes should be careful what they wish for. What if bondholders listen to the hawks - as they've been doing in recent weeks?

If officials want investors to worry that a state can go bankrupt, the same officials must run the risk that banks, too, will suffer big losses. Banks, after all, own more than $229 billion in state and municipal debt. Banks worried that these holdings are no good would conserve money by lending less to businesses, stalling the recovery.

That's an optimistic scenario. Another $332 billion of municipal debt sits on the books of money-market funds. Many ordinary people believe such investments are as safe as bank accounts. A municipal-bond crisis could spur investor fear here. Similar panic in 2008 spurred a blanket bailout of these investments, but most members of Congress oppose more "Wall Street" bailouts.

A muni-bond crisis, then, would create new dilemmas for Washington. Lawmakers would have to consider: does the public want to see losses in "safe" investments, especially when Congress, in 2008, protected investors in supposedly riskier ventures, from Goldman Sachs debt to AIG stock? With the economy in such a fragile state, is Washington ready to test out its new fix for financial panics, the Dodd-Frank law - and risk blame for job losses if Dodd-Frank doesn't work?

Neither will "markets" solve political problems within state houses.

Case in point: Many voters, in Massachusetts and elsewhere, don't want their representatives to hike taxes. But if you're a bondholder, you often prefer tax hikes to spending cuts. Indeed, Illinois just increased its taxes to comfort bondholders. In the here and now, higher taxes give the state more money to pay its debt. Sure, over several years, tax hikes may drive business away. But many bondholders don't think that far ahead. Spending cuts take time and depend on bondholders' willingness to wait.

A bondholder revolt won't force smarter spending choices, either. The Bay State's public-sector pension funds, although in better shape than many around the nation, will require billions in taxpayer money over the coming decades, more if the state doesn't raise future workers' retirement ages. As it happens, Governor Patrick and legislative leaders have proposed such a reform. But suppose it stalls. They could maintain the status quo for a few more years or longer, and starve infrastructure investment instead.

These are political decisions, not "market'' decisions that bondholders can make. In fact, just as on taxes, a crisis likely would lead to the answer that taxpayers don't expect. Terrified pols would slash infrastructure investment to shore up those pension funds and quell bondholders' fear.

Politicians and voters dreaming of a muni-bond disaster as the cure for state-budget nightmares should realize this: Markets are markets. They aren't fairy godmothers.

No Fracking Way to Balance a State Budget

Friday, January 21, 2011 by The Progressive
by Elizabeth DiNovella

More than half of all states are getting a new governor this year, making this incoming class one of the largest in American history. The Republicans made huge gains in the states, with 18 new GOP governors taking office.

The Midwest took an especially hard hit, as most Great Lakes states now have Republicans in their governor's mansions.

But in Pennsylvania, Ohio, Michigan, and Wisconsin, the new GOP govs are being greeted with protests.

Here in Madison, a few hundred people demonstrated outside the Wisconsin State Capitol on January 3, the day Gov. Scott Walker took office. Walker has created a stir by threatening to cut wages and benefits for state workers, and has even suggested eliminating collective bargaining rights for them.

The Defend Ohio campaign marched at Gov. John Kasich's inauguration on Saturday, January 8, in Columbus. Kasich, a former investment banker who ran under the tea party label, is considering leasing the Ohio Turnpike to a private company, hiring a private company to run the state's prisons, and limiting the ability of state and local workers to bargain collectively. (In a poll released this week, all of these ideas lacked support among voters.)

They chanted "No fracking way" at Gov. Tom Corbett in Harrisburg. More than 300 hundred people protested at the Pennsylvania governor's inauguration against hydraulic fracturing in oil and gas industry on Tuesday, January 18.

And the Moratorium Now Coalition held a demonstration at the Michigan State Capitol steps during Gov. Rick Snyder's first State of the State address on January 19.

These four states, like so many others, are facing huge budget shortfalls. (According to the National Conference of State Legislatures, states face a collective shortfall of $72 billion for the next fiscal year.)

These new govs have made it clear that they intend to cut wages and benefits for public workers, privatize state functions, and slash funds for schools and social services. They say it's to resolve the financial mess, but the budget crises give the GOP a new way to market its pro-privatization and anti-union agenda.

33 states out of money to fund jobless benefits

33 states out of money to fund jobless benefits

By Hibah Yousuf, staff reporter
April 9, 2010

NEW YORK (CNNMoney.com) -- With unemployment still at a severe high, a majority of states have drained their jobless benefit funds, forcing them to borrow billions from the federal government to help out-of-work Americans.

A total of 33 states and the Virgin Islands have depleted their funds and borrowed more than $38.7 billion to provide a safety net, according to a report released Thursday by the National Employment Law Project. Four others are at the brink of insolvency.

Quirky budget cuts

From police horses to fireworks to wrangling stray chickens, these cash-strapped cities are eliminating all kinds of services.

Debt-challenged California has borrowed the most, totaling more than $8.4 billion, followed by Michigan and New York, which have loans worth more than $3 billion. Nine other states have borrowed at least $1 billion from the federal government.

"The nation's financing system for jobless benefits is under unprecedented stress," said Andrew Stettner, deputy director of the New York-based advocacy group for the unemployed. "While the recession has certainly made things worse, this funding crisis has been developing for years."

At the onset of the recession, only 19 states met the recommended funding level, which is one year of reserves equal to the highest amount of unemployment insurance paid out during prior recessions.

Financing experts suggest that states build up their jobless benefit coffers during strong economic times so that they can draw from them during downturns.

Federal and state governments collect money for unemployment benefits by taxing employers on a small portion of their employee wages. While total wages and weekly jobless benefit levels have been rising, governments haven't increased the taxable base wages at the same pace.

Instead, they adopted a "pay as you go" approach, keeping taxes and fund levels low during good times and raising taxes and cutting benefits when strapped for cash. That left many states with insufficient jobless funds to weather the recession.

Jobless claims soar
Of the 13 states that will likely be able to fund jobless benefits without borrowing from the feds, 10 of them followed the recommended financing tactic. That readied them for the recession, the National Employment Law Project concluded in its study.

"The current crisis should compel policy makers to forge a new path to forward financing of the unemployment insurance program," Stettner said. "As the broke funds of 33 states makes clear, unemployment insurance reserves need to be stocked up before recessions hit so that states are prepared."

States out of $$$ for the jobless
Here's how much they’ve borrowed from the federal government.

State Borrowed
California $8.40 billion
Michigan $3.78 billion
New York $3.00 billion
Pennsylvania $2.81 billion
Ohio $2.23 billion
North Carolina $2.14 billion
Illinois $2.06 billion
Texas $2.03 billion
Indiana $1.81 billion
New Jersey $1.55 billion
Florida $1.50 billion
Wisconsin $1.34 billion
South Carolina $851 million
Kentucky $760 million
Missouri $687 million
Minnesota $638 million
Connecticut $422 million
Georgia $337 million
Nevada $331 million
Arkansas $318 million
Virginia $317 million
Massachusetts $279 million
Alabama $268 million
Rhode Island $204 million
Colorado $186 million
Idaho $181 million
Maryland $104 million
Kansas $65 million
New Hampshire $23 million
South Dakota $23 million
Vermont $23 million
Arizona $22 million
Virgin Islands $13 million
Delaware $1 million