Employment program representative Mark Robbins (L) explains unemployment insurance payments to a client at the Employment Development Department of California service office in San Francisco, January 6, 2012. REUTERS/Beck Diefenbach State agency that helps the unemployed warns of job cuts amid $150M shortfall in funding

SACRAMENTO, Calif. (AP) — The state Employment Development Department plans to begin cutting staff to address declining funding from the federal unemployment insurance program, state officials told employees.

A memo sent to employees said the department expects a $150 million shortfall through June 15, The Sacramento Bee reported Tuesday (http://bit.ly/14ZP31j ).

Ongoing underfunding in the federal unemployment insurance program and congressional budget cuts were listed as the main reasons for the move.

"We strongly encourage staff to explore other employment opportunities within EDD that don't rely on (unemployment insurance) funding," or in other state agencies, Chief Deputy Director Sharon Hilliard said in the memo.

The department cannot maintain staffing and services to keep up with demand, spokeswoman Patti Roberts said. It already has reduced telephone service hours, moved staff to other programs and restricted overtime.

Federal funding also has fallen as California's unemployment rate, now at 8.7 percent, has steadily declined for the past two years after hovering in double digits for most of the recession.

The state also owes the federal government billions of dollars that it borrowed to continue paying the unemployed when California's own unemployment insurance fund ran out of money.