State auditors say Colorado needs to overhaul the way it funds unemployment benefits if it wants to avoid repeated shortfalls.

Lawmakers held a hearing on the audit yesterday.

The Colorado Unemployment Insurance Trust has borrowed $188 million from the federal government after becoming insolvent in January.

The state Labor and Unemployment Department says it could be 2013 or 2015 before the debt is repaid.

Auditors are recommending that the state increase the amount of wages subject to unemployment-insurance premiums and raise the base rates it charges.

Republican state Sen. David Schultheis of Colorado Springs, chairman of the Legislative Audit Committee, says any overhaul of the system should include an examination of benefits.

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Associated Press