[Excerpt] During some recessions, current taxes and reserve balances were insufficient to cover state expenditures for unemployment compensation (UC) benefits. UC benefits are an entitlement, and states are legally required to pay benefits even if the state account is insolvent. Some states may borrow funds from the Federal Unemployment Account (FUA) within the Unemployment Trust Fund (UTF) in order to meet UC benefit obligations. The 2009 stimulus package (The American Recovery and Reinvestment Act of 2009, P.L. 111-5 § 2004) temporarily waives interest payments and the accrual of interest on these loans to states from the FUA. This report summarizes how insolvent states may borrow funds from the federal account within the UTF in order to meet their UC benefit obligations. Outstanding loans listed by state may be found at the Department of Labor’s website: http://www.workforcesecurity.doleta.gov/unemploy/budget.asp#tfloans. Michigan has just completed its first year of a credit reduction. As a result, the credit reduction was applied retroactively to tax year 2009 earnings and the net FUTA tax during 2009 for Michigan employers is 1.1% on the first $7,000 of each employee’s earnings. No other state currently has a credit reduction; thus, in all other states the net FUTA 2009 tax was 0.8%. This report will be updated to reflect major changes in state UTF account solvency.