More than five years after the onset of the Great Recession in late 2007 the unemployment insurance (UI) programs in the states continue to face major challenges in restoring their trust funds to adequate levels. This paper will examine the differing financing situations of states arrayed by size prior to the Great Recession and state financing responses to the Great Recession.

The paper will have two main sections. 1) A background section will describe the financing situation prior to the Great Recession. This will note pre-recession reserve adequacy of individual states and the correlates of high and low reserves. The description will emphasize the poor financial positions of the largest states.  2) The paper will describe the differing responses (both automatic responses and policy responses) of the states to the recession-related UI trust fund drawdowns. The responses range from activist responses to offset the drawdowns, reliance on automatic responses through experience rating, do-nothing responses and issuance of municipal bonds to repay federal loans to state trust funds. The text will be supplemented by a state-level regression analysis of the determinants of borrowing and the determinants of large scale borrowing.