04/01/2013 03:54 pm ET

Sequestration Unemployment Cut Delayed In California And Elsewhere

Jobless people in California and many other states won't have their unemployment compensation cut on schedule this month.

States are supposed to trim long-term jobless pay 10.7 percent thanks to federal budget cuts known as sequestration, but California's Employment Development Department and workforce agencies elsewhere have been unable to reconfigure their benefit systems to implement the cut.

"These are very complex reductions to program into state systems," the California department said on its website Friday, adding that benefits won't change until the state "resolves how to implement the cuts."

Only 17 states had expected to meet the March 31 deadline, according to a recent survey by the National Association of State Workforce Agencies. Six states said they'd start the cut in April, two in May, six in June, and three after June. Some states might drop the benefits altogether.

The U.S. Department of Labor issued guidance to states last month, and states will have an opportunity to get some extra cash to finish the process faster.

"Every state has received $40,000, and today we are announcing the availability of additional administrative funding," an agency spokesman said Monday. "The Department is working with states that have significant challenges in implementing the sequestration reduction and helping them identify implementation options."

The cut applies only to Emergency Unemployment Compensation -- federal benefits available to workers who use up the standard six months of benefits provided by states (state-funded benefits are not subject to sequestration). Roughly 2 million Americans received the federal benefits last week.

The delayed cut is not a reprieve for the unemployed. The bad news is that the longer a state takes to implement the cut, the bigger the cut will need to be to achieve the required savings. Pamela Harris, director of the California Employment Development Department, told state lawmakers last month that if the sequestration cut couldn't be implemented until June, benefits would be reduced by 16.8 percent instead of just 10.7 percent.

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What Sequestration Would Cut
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