WASHINGTON (PNN) - July 16, 2012 - Already struggling to cut budgets and pay for services like health care and education, nearly half the 50 states owe the federal government billions of dollars in outstanding loans.

Over the past three years, states have exhausted their unemployment insurance trust funds as they paid out benefits to the large number of unemployed Amerikans, who can get up to 99 weeks of unemployment benefits in some states.

Unemployment insurance is jointly run by the federal government and the states, and employers and employees pay taxes to both federal and state governments. The program is administered by the states while the federal government reimburses the states for administrative expenses. When unemployment is high, benefits are extended, and states unable to pay benefits out of their reserves may borrow from the federal government to do so.

States aren’t expected to pay back these loans for several years, but businesses and employees in many states now face increases in their federal unemployment insurance tax rates because of them.

However, the federal credit disappears the longer a state’s unemployment insurance program remains insolvent. The 90% credit is reduced by 0.3 percentage points each year of insolvency.

When the Depression began in 2008, only 17 states, District of Columbia, and Puerto Rico had sufficient funds for one year of “high-cost” benefits, while 20 states couldn’t even afford half a year of benefits.

According to the Department of Labor, more than $30.2 billion in outstanding loans from the Federal Unemployment Account (FUA) exist as of July 11, 2012. The FUA is a loan fund for state unemployment programs to ensure unemployment benefits can continue during an economic downturn.