(Steve Helber/AP)

The fiscal battle in Washington that led to $85 billion in spending cuts across the federal government has not spared unemployment benefits for almost two million out-of-work Americans, who are being hit by an 11 percent reduction in payments this fiscal year.

The sequester’s effect on unemployment insurance is highlighted in a report from The Pew Charitable Trusts, which is turning its focus to sequestration and the federal-state relationship as all levels of government face financial challenges.

The report, released Friday by Pew’s Fiscal Federalism Initiative, shows the widespread effect of cuts to unemployment benefits, which are administered by the states. As of early March, 1.8 million workers—or 15 percent of the total number of unemployed Americans—received insurance benefits that are completely federally funded.

The potential impact in each varies because the percentage of the workforce receiving  benefits ranges from a high of about 3.1 percent in Alaska to less than 0.1 percent in South Dakota, the report said.

The sequester also cuts by 5 percent the federal grants to the states and the District of Columbia to administer the unemployment insurance program.That’s an estimated $158 million in fiscal year 2013. The estimated cuts range here too, from about $23.6 million in California to around $300,000 in South Dakota.