The state's unemployment-compensation fund is expected to spit out its last few dollars today or Monday, triggering a federal bailout to ensure that weekly benefits to jobless Ohioans continue.

Skyrocketing job losses and years of collecting less in unemployment taxes than the fund paid out in benefits are to blame, state officials said.

"There are just a crushing number of claims," said Bob Welsh, deputy director of Ohio's unemployment-compensation system.

The state paid claims to 248,000 jobless workers in the last week of December, a 63 percent increase from the same week a year earlier.

But borrowing from the feds can come with a hefty price tag. The state projects that if changes are not made to Ohio's unemployment-compensation system, the fund's deficit will grow to nearly $3.3 billion by 2016, and after nine years of borrowing, the state will owe $1 billion in interest.

Earlier this week, the state Web site for filing claims electronically crashed and phones lines were jammed, besieged by more than 10 times as many requests as usual. Yesterday, the state extended its hot-line hours, bringing in dozens of temporary workers to staff phones.

"Claims will be higher in January," Welsh said. "We are in peak season. January, February and March are our highest-paying months of the year."

Ohio is not the first state to deplete its fund in the economic recession. Indiana, Michigan, New York and South Carolina also are borrowing from the federal loan fund, according to the U.S. Labor Department. California and Missouri are expected to drain their funds early this year.

States operate unemployment-compensation systems under federal guidelines. If funds are depleted, states are required to borrow from the federal government to allow unemployed workers to continue to receive benefits.

Welsh stressed that "there will be no interruption in the payment of benefits."

Ohio notified federal regulators Nov. 21 that it would need up to $500 million from the loan fund to cover January and February payments.

When Ohio's fund reaches zero, federal dollars will be transferred into the account the same day, Welsh said.

Separate from the loan, Gov. Ted Strickland and other governors are asking President-elect Barack Obama for billions of dollars to help shore up their unemployment-compensation funds. Like Ohio, many other states face massive shortfalls in their state budgets.

State officials have known for years that the fund was in trouble.

Since 2001, the fund has collected less in taxes than it paid out in benefits in every year but one. During that time, the balance has decreased by nearly $2 billion.

States set their benefit amounts and tax rates. Nationwide, employers on average pay on the first $11,700 earned by each employee. In Ohio, it's the first $9,000, a level unchanged since 1995.

The state's Unemployment Compensation Advisory Council, a panel of business and labor leaders, agreed in 2006 to a compromise aimed at shoring up the fund, at least temporarily. The panel proposed increasing the taxable wage base to $9,500, freezing benefits paid to workers and eliminating extra compensation for dependents.

Ohio lawmakers, however, refused to approve the plan.

With the fund in a deeper hole last fall, the council tried unsuccessfully to reach a compromise and told Strickland and the General Assembly that it was leaving the issue for them to decide.

Strickland spokesman Keith Dailey said yesterday that the governor is pushing the panel, which has representatives of business and labor, to try again to reach a compromise on how to fix the problem.

A consultant hired by the advisory council recommended increasing the tax base by as much as $3,000, linking the tax base to earnings so that it goes up as wages increase, and freezing benefits for three years.

The consultant, Wayne Vroman of the Washington-based Urban Institute, projected that Ohio's unemployment will peak in 2010 at 8.3 percent. He said his proposal, if fully implemented, could make Ohio's fund solvent again by 2016.

Welsh said, "If the system remains unchanged, we will be in a permanent borrowing situation. Benefits have continued increasing, and the tax rate has stayed the same since 1995. Without some kind of change, there is no way we can cover benefits."

Ohio last borrowed from the federal fund from 1980 to 1988.

To avoid hefty interest payments, Ohio must repay the federal loan by the end of the federal fiscal year, Sept. 30, and not borrow again for 90 days afterward.

"That will be impossible for Ohio," Welsh said.

If the loan is not repaid within two years, federal law mandates a mandatory tax increase on Ohio employers.

ccandisky@dispatch.com