Feb. 7--With the nation's jobless rate scraping the rafters at 7.6 percent, Minnesota officials confirmed that the state's unemployment benefit trust fund is on course to run out around Christmas.

The scenario would send the state scurrying to the feds to borrow cash so that payments to laid-off Minnesotans can continue.

The state paid out $1 billion in unemployment insurance benefits in 2008 and had about $500 million left in the trust fund as of Jan. 1.

But thousands of more claims are on the way. Minnesota's unemployment rate hit a staggering 6.9 percent in December as more manufacturers, construction firms and retailers let workers go. Officials expect about $1.3 billion in unemployment claims this year, which would leave a $30 million deficit by year end, said Lee Nelson, the chief attorney for the Minnesota Department of Employment and Economic Development (DEED).

Nelson and other state officials downplayed the significance of having to tap federal funds. The state and federal unemployment insurance programs were designed to work in tandem and have been used together many times to see laid-off workers through lean times, they said.

In fact, the state's trust fund is expected to dip in and out of a deficit until 2013, Nelson said. "The fund has run dry before and the sky didn't fall. We just kept paying benefits," he said.

With headlines stating that New York, Michigan, Indiana and Wisconsin trust funds, have, or soon will, run dry, Americans are getting unnecessarily anxious, said DEED spokeswoman Kirsten Morell.

Minnesota's Dislocated Workers Program, which provides counseling and job training, won't run short of funds, Morell said. The program, which gets $43 million a year in state and federal funds, has $12 million left for the rest of this fiscal year, which ends in June, she said.

"We really want to assure people that all unemployment insurance benefits will be paid in Minnesota," Morell said. "There will be enough money to pay those benefits even if we have to borrow from the federal trust fund, which we will have to do and have done before in previous recessions," she said. "The whole program was set up to handle these slowdowns in the economy."

Minnesota tapped the federal unemployment benefit trust fund in 1975, 1984 through 1986, and from 2002 to 2005, Morell said. In 1984, the deficit was close to $1 billion based on today's dollar. "And as recently as March 2003, we were $443 million in debt," Nelson said.