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Budget cuts to reduce federal jobless benefits

Sandra Chereb, Associated Press

CARSON CITY, Nev. (AP) -- Tens of thousands of Nevadans receiving federal extended jobless benefits will see their weekly checks dramatically reduced because of automatic budget cuts known as sequestration, the state announced Tuesday.

Weekly benefit checks to more than 20,000 Nevadans will be reduced 59 percent beginning this week through the end of September. Weekly benefits in Nevada average $290, with a maximum benefit amount of $407. Under the cuts, the weekly average will plunge $171 to $119, while those receiving the maximum benefit will get $167.

But the steep weekly cuts would have been less severe if Nevada's antiquated computer system could have been programmed to make the changes at the end of March, when automatic federal budget cuts of 10.7 percent were scheduled to take effect. If the cuts were implemented then, the decline in the average weekly benefit would have amounted to $31.

Many states, including Nevada, had problems programming computer systems to make the necessary changes by that earlier deadline, said Renee Olson, administrator for the Nevada Employment Security Division.

Because of that, the state is now forced to make much bigger cuts in the remaining weeks of the federal fiscal year to comply with the federal law.

Olson, in an email to The Associated Press, said reprogramming Nevada's existing system would have taken more than a year — well beyond the timeframe for enacting the automatic federal budget cuts.

She said it also would have required hefty funding that would have been wasted because of efforts already underway to replace the state's 30-year-old unemployment insurance computer system — a $35 million project being paid for by the federal government.

That new system is expected to launch in September, the agency also announced Tuesday.

Olson said even if the new system had been in place back in March, the automatic federal budget still would have required new programming and could not have been implemented immediately.

Officials note that the total amount deducted from claimants' benefits is the same over the six-month time frame, whether the reductions were instituted in March or August. Still, the immediate hit of a 59 percent cut will be painful to the thousands of Nevadans receiving benefits in a state with the highest unemployment rate in the nation. Nevada's jobless rate was 9.5 percent in July, well above the 7.4 percent national jobless rate.

People receiving extended benefits were notified of the coming cuts about four weeks ago, the agency said.

Once the new federal budget year begins Oct. 1, a big chunk of the cuts will be restored, though benefits will be reduced by 8 percent from previous levels until the program ends Dec. 31, Olson said.

Cuts only affect federal emergency unemployment compensation, which begins when regular state jobless benefits expire after 26 weeks. Emergency Unemployment Compensation, paid entirely by the federal government, is available for up to 47 weeks.

"We understand the significant burden this reduction will cause for many of our clients, however this unfortunate circumstance is the result of federal budget cuts," Olson said. "We have no choice but to comply with the federal mandates required of all state unemployment insurance programs."

The agency's unemployment insurance system was taken offline Monday and will not be available again until Sept. 1. During that time, Nevadans will be unable to file new jobless claims, file weekly claims or check the status of claims. Agency staff will assist claimants over the telephone and guidance will also be available on the agency's website.

"We hope to make the transition to the new system as smooth as possible, with as few disruptions as possible," Olson said. "However there may be a delay in payments during the time the system is not available."

She said the new system will be released in phases, with the claims portions targeted for released in September. The unemployment insurance tax system should be up and running by the end of the year, while the system for handling appeals will be released by October.