INDIANAPOLIS -- Cutting benefits and raising taxes for employers are among the options members of the Senate are considering in an effort to shore up the state's unemployment fund.

The fund has been has been described as "insolvent," paying out millions of dollars more than it collects and relying heavily on federal loans, 6News' Norman Cox reported.

Senators said they were anxious to take on the issue Tuesday, a week after a proposal to help balance the fund was derailed in the House.

"This problem is growing by the day, and our deficit is growing by tens of millions of dollars every week," said Sen. Dennis Kruse, R-Auburn.

Kruse proposed a three-pronged attack that would raise taxes on employers, cut benefits for workers and further restrict who qualifies for state help.

Reducing benefits could take the form of a straight cut in payments, a sliding payment scale that would reduce benefits the longer a person is on unemployment to encourage people to look for work, a co-pay for people receiving payments or a tax on people who are still at work.

One small businessman pleaded with lawmakers to not put the entire burden on employers.

"What is happening is that small businesses are getting buried between the regulation and the increased taxation on us," said Joseph Sergio of South Bend.

Lawmakers could also change the way seasonal plant shutdowns are handled, so that if a factory closes twice a year, workers would have to go through the one-week period with no benefits both times.

On Monday, money from the federal economic stimulus program boosted the maximum unemployment payment in Indiana from $390 to $415 a week, or about $25 more per week.

Indiana Gov. Mitch Daniels said he hasn't decided yet if he will accept a portion of the stimulus funds that requires the state to expand the program to include those who were previously ineligible for benefits, like those who had only worked part time.

The Senate will resume discussions on the issue on Wednesday.