RALEIGH, WAKE COUNTY -

North Carolina is cutting unemployment benefits for new claims beginning Sunday, a move that also makes it the first state disqualified from a federal unemployment compensation program for the long-term jobless.

State officials in February adopted a package of unemployment benefit cuts and increased costs on companies to repay $2.5 billion borrowed from Washington.

North Carolina needed the money after the Great Recession created a flood of jobless who needed benefits, draining the state's unemployment fund.

But benefits cuts on those making unemployment claims on and after Sunday also disqualify North Carolina from receiving federal funds that kick in after state unemployment compensation runs out. The U.S. Labor Department says about 170,000 workers whose six months of state benefits expire between July and January will lose more than $700 million.