Now that official Washington has recognized what much of the country has long known -- that we are in a recession -- attention is again being focused on an often misunderstood part of the social safety net, unemployment insurance.

Designed to help tide people over when they lose their jobs, unemployment insurance is a joint state-federal program under which employers pay taxes into a group of trust funds. When a worker is laid off, he or she can claim benefits that are paid out of the funds.

But like a lot of other parts of the safety net, unemployment insurance has problems. At the same time that the system is staggering under a wave of new applicants, it is actually serving a smaller percentage of the overall unemployed than it did during the 1970s.

The system remains financially sound overall, and eligible workers eventually do get their checks. But its problems are another example of how disruptive the budget deficit and the fiscal games that both Congress and the White House play to minimize it are to the workings of government.

A major issue involves assistance that the federal government is supposed to provide states in the processing of claims.

When employers pay their unemployment taxes, all of the money goes into the U.S. Treasury. But there it is divided into several trust accounts. Some goes into an account specifically for the employer's state. That money is used to pay the actual benefits to the jobless. Some $40 billion is now piled up in those accounts, enough, Labor Department officials believe, to cover expected costs of benefits during the recession.

The rest of the employer tax money goes into three other trusts. One makes loans available to states that overdraw their state accounts. Another provides money for extended benefits if the economic situation becomes bad enough to trigger them. The third contains money to help states pay for administrative costs of the program.

But the administrative assistance payouts are not automatic. They require an appropriation from Congress. For the past several fiscal years, the Bush administration has underestimated the demand for unemployment insurance and Congress has gone along, even though both presumably could see that the estimates were out of date. As a result, inadequate assistance has been forthcoming.

The shortfall currently is estimated at about $200 million, and the administration has said it will ask for a supplemental appropriation of $100 million.

Labor, states and some employer groups are pressing for a reserve fund that could be used during sudden economic downturns, avoiding the delay inherent in the appropriation process.

Further inhibiting the appropriation process is the fact that spending the money counts against the federal budget ceiling and adds to the federal deficit. Holding on to it, however, works real hardship in many states.

Rep. Sander Levin (D-Mich.) told a House Ways and Means subcommittee hearing last week that it took him four hours just to get through on the phone to a state unemployment office in his district and that people there are having to wait five to six weeks for their first benefit check.

Closer to home, the District's benefits office has recently been so overwhelmed that some would-be applicants were forced to come back a second time when the office closed while they were in line. City officials said last week, though, that by pulling clerks from other duties they are currently able to avoid sending anyone away. "We're doing pretty well now," a spokesman said.

Ron Montgomery of the Virginia Employment Commission noted that his agency is unable to staff some offices fully even though Virginia has one of the fastest-growing workloads in the nation.

According to the Interstate Conference of Employment Security Agencies here, problems have also surfaced in Arizona, Arkansas, Connecticut, Iowa, Kansas, Maine, Montana, Minnesota, Nevada, New Mexico, New York, Ohio, Tennessee, Texas, Washington and West Virginia.

At the same time, a smaller portion of all unemployed workers are drawing benefits than was the case 20 years ago. At one point, more than half of all jobless workers got unemployment benefits. By the early 1980s, though, states and the federal government had substantially tightened the rules. "There seemed to be a perception that the program was too liberal" and benefits too easy to get, said Cheryl Templeman of the interstate conference.

During the '80s, the number receiving benefits fell off sharply, dipping to below one-third of all jobless workers for most of the decade.

Part of the drop stems from the way the program works. Meant as temporary aid to people who have lost their jobs, the program excludes new entrants to the work force as well as people who have left the work force and are returning. In non-recessionary times, these people make up a higher proportion of the jobless.

Some studies suggest that the entrance into the work force of a large number of young people during the '80s accounted for much of the gap, but others also indicate that a large number of jobless people don't apply for benefits because they believe they are not eligible. It is not clear, however, whether they are really ineligible.

Labor Department officials noted that the number of eligible applicants is rising again as more "job losers" seek benefits.

Failing to apply if you are eligible can be costly. While the benefits won't put you on easy street, they help put food on the table. Locally, benefits range up to $293 a week in the District, $215 in Maryland and $198 in Virginia, according to officials of those jurisdictions. The exact weekly amount and duration is determined by a formula related to recent earnings. Those eligible can receive benefit checks for 12 to 26 weeks.

Eligibility requirements vary by state, but in general, workers must have earned a minimum amount in the past year or so -- a total of at least $3,000 in two recent quarters in Virginia, for example -- and they must be unemployed through no fault of their own. Workers also must be willing and able to work and actively seeking work.

YEAR.......JOBLESS COVERED....TOTAL JOBLESS........PERCENT COVERED

.......... (IN THOUSANDS).....(IN THOUSANDS)

1973..........1,745..............4,365.................40.0

1974..........2,382..............5,156.................46.2

1975..........4,174..............7,929.................52.6

1976..........3,148..............7,406.................42.5

1977..........2,852..............6,991.................40.8

1978..........2,463..............6,202.................39.7

1979..........2,483..............6,137.................40.5

1980..........3,414..............7,637.................44.7

1981..........3,110..............8,273.................37.6

1982..........4,130.............10,678.................38.7

1983..........3,487.............10,717.................32.5

1984..........2,472..............8,539.................28.9

1985..........2,604..............8,312.................31.3

1986..........2,648..............8,237.................32.1

1987..........2,327..............7,425.................31.3

1988..........2,118..............6,701.................31.6

1989..........2,151..............6,528.................32.9

1990..........2,525..............6,874.................36.7

Jan. 1991.....3,969..............8,595.................46.2

Jan. 1990.....2,863..............7,256.................39.5

NOTE: Figures on who is covered by unemployment insurance do not include Puerto Rico or the Virgin Islands. Extended benefit and supplemental benefit programs also are not included. Latest monthly figures are not seasonally adjusted. SOURCE: Bureau of Labor Statistics