About 1,100 Maine residents will lose their extended unemployment benefits as a result of automatic federal spending cuts and the state’s improving job market, the Maine Department of Labor said Wednesday.
The change, set to take effect the week of July 14, will reduce the total duration for which Mainers can claim unemployment benefits from 63 weeks to 46 weeks, the department said in a news release.
Maine’s traditional unemployment system provides the initial 26 weeks of benefits, paid via the state’s Unemployment Trust Fund. Those benefits will not change, the department said.
The cuts will be to Maine’s allotment from the federally funded Emergency Unemployment Compensation Program, which currently provides up to 37 additional weeks of jobless benefits to Maine residents.
Those benefits are divided into three tiers, for a beneficiary’s first 14 weeks, second 14 weeks and final 9 weeks on the federal program.
The compensation program’s rules dictate that a state loses benefits for the final tier if its unemployment rate drops below 7 percent, as Maine’s has done, based on preliminary U.S. Department of Labor estimates for March, April and May.
The number of tiers a state can have under the federal program is determined by a three-month average of its unemployment rate.
Maine’s unemployment rates for March, April and May were 7.1 percent, 6.9 percent and 6.8 percent, respectively, for an average of 6.9 percent.
In May, beneficiaries in their last weeks of eligibility had their benefits cut off eight weeks early because of reductions required by automatic federal spending cuts knows as sequestration.
Now that the rolling three-month average for Maine’s unemployment rate has dropped below the 7 percent threshold, those benefits, known as Tier 3, will be eliminated, according to the department.
That change will force sequestration-mandated spending cuts in Maine to come out of the next level of benefit payments, known as Tier 2.
Therefore, beginning the week of July 14, Tier 2 beneficiaries will be eligible only for six weeks of benefits instead of the current 14 weeks, the labor department said.
The federal sequester mandated that benefits be cut to achieve an overall savings of 10.7 percent of benefits for the federal government’s 2013 fiscal year, which ends Sept. 30.
The U.S. Department of Labor gave states a handful of specific options to achieve the savings.
The elimination of one tier of benefits because of an improving job market does not qualify as sequester-related savings, the department said.
About 15,000 Mainers currently claim unemployment benefits. About 12,550 are receiving state-funded and Tier 1 federal benefits. The new reduction will affect about 1,100 of the 2,450 jobless residents collecting Tier 2 and Tier 3 benefits, the department said.
J. Craig Anderson can be contacted at 791-6390 or at: [email protected]
Correction: This story was revised at 12:12 p.m., June 27, 2013, to state that about 12,550 Mainers are receiving state-funded and Tier 1 federal benefits.