INDIANAPOLIS (AP) — When Rosalie Ashworth was laid off from Whirlpool Corp.'s Evansville plant in December, she was making "quite a bit more" than the maximum $390 in unemployment benefits she now collects every week.

For Ashworth, a 69-year-old with grown daughters, the money is enough to cover her modest mortgage and bills, even with $40 withheld for taxes. But she worries about others in her situation who have young children to support.

"We're living on a shoe string," she said. "People that are living on this with a family are hurting."

Those on unemployment may think Indiana needs to raise its benefits, but lawmakers could consider cuts instead.

The state's unemployment insurance fund is bankrupt. Last year the account took in $579 million but paid out $986 million in benefits. Indiana is relying on federal loans to issue unemployment checks, and the state could owe the federal government more than $1 billion by the end of the year.

Lawmakers agree that something must be done to fix the enormous and ever-growing problem. But political sparring sidelined the General Assembly's first attempt, and it's unclear what the next proposal could bring.

Many think a final compromise will be a combination of raising employer taxes, tightening eligibility and cutting benefits.

"It's clear that there has to be adjustment all the way around," said House Minority Leader Brian Bosma, R-Indianapolis.

Business groups have suggested cutting benefits to make employer tax increases more palatable. Union leaders say they don't want to harm companies during the recession, but say benefits keep families out of poverty.

Both sides can use numbers to back up their cases.

For those resisting benefit cuts, $390 a week doesn't seem like a lot. Indiana's maximum benefits are lower than all surrounding states except Michigan, which tops out at $362 a week. Indiana workers have to earn about $37,000 a year while employed to receive the maximum once they're out of a job. The average benefit paid in Indiana is about $290 a week.

Benefits of $390 a week may be better than nothing, but it won't sustain families for long, said Ken Zeller, president of the Indiana AFL-CIO.

"People cannot live on that kind of money, especially if they've got children or other family," Zeller said. "It's tough."

Those who want to trim benefits point out that Indiana's unemployment benefits replace about 55 percent of the state's average weekly wage. That's a higher replacement rate than all but two states, according to 2007 data from the Indiana Department of Workforce Development. The state's average weekly wage increased 68 percent since 1990, while the average weekly unemployment benefit jumped 168 percent.

Businesses know their unemployment taxes will likely rise as lawmakers try to restore the fund, but say benefits and eligibility should also be adjusted.

"No one will come out of this unscathed," said Indiana Chamber of Commerce President Kevin Brinegar.

It's hard for politicians — especially those in the narrowly divided House — to support proposals that cause much pain, either by burdening companies or hurting out-of-work residents.

The House proposed raising taxes on employers — a bill they called a starting point. But both minority Republicans and majority Democrats feared that votes for tax increases could be used against them in future elections. The bill died when sponsor Rep. David Niezgodski, D-South Bend, pulled the proposal without a vote.

Lawmakers say the issue will be revived in the Senate. Senate President Pro Tem David Long, R-Fort Wayne, said his chamber is willing to "do the heavy lifting."

In the mean time, those on unemployment will be getting a little extra. Benefits are going up $25 a week, possibly through the end of 2009, because of the federal stimulus package. Lawmakers are waiting to see whether the federal money can also help the unemployment fund.

Ashworth hopes she can return to her Whirlpool job soon if the economy picks up and demand for the company's products increases. She's pinching pennies and keeping an optimistic attitude.

"There's needs and wants," Ashworth said. "You just take care of your needs first and save back for your wants."

For lawmakers, repairing Indiana's broken unemployment fund might fall into the first category.

"It needs to be fixed," Niezgodski said. "It's going to take extremely difficult decisions. But we have no choice."