Massachusetts must pay feds $2.1 billion after misusing pandemic funds to pay unemployment benefits
Massachusetts must pay $2.1 billion over the next 10 years to address the federal government’s debt after it mistakenly used federal pandemic funds to pay unemployment benefits under former GOP Gov. Charlie Baker’s administration.
Incumbent Gov. Maura Healey, a Democrat, and her deputies announced Monday the details of a deal they reached with the Biden administration last week. State House News Service informed.
In 2023, Healey announced that his administration had discovered that the previous administration had used nearly $2.5 billion in federal pandemic relief funds to pay unemployment benefits that should have been funded by the state.
The total liability, including fees and interest, exceeded $3 billion, according to Healey’s office. Negotiations with the US Department of Labor reduced the total debt to $2.1 billion over the next decade.
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Massachusetts Governor Maura Healey speaks at Roxbury Community College on Wednesday, January 10, 2024 in Boston, Massachusetts. (Adam Glanzman/Bloomberg via Getty Images)
“Early in our tenure, we were horrified to discover that the previous administration had spent billions of dollars in federal aid funds, and that our state could require more than $3 billion to pay it back,” Healey said in a statement. on monday.
“Over the past year and a half, we have engaged in extensive negotiations with the U.S. Department of Labor to minimize the impact on Massachusetts residents, our businesses and our economy,” he said. “Today, we have reduced our potential liability by more than $1 billion and negotiated a ten-year payment window to mitigate the impact.”
The the governor added “it’s incredibly disappointing that the previous administration allowed this,” but the current administration “will use this as an opportunity to come together with the business and labor community to make meaningful reforms to the Unemployment Insurance system.”
Former Massachusetts Gov. Charlie Baker speaks at the Juneteenth Memorial in Boston’s Nubian Square, June 18, 2021. (AP Photo/Elise Amendola, File)
Payments will begin on December 1 and continue annually for the next decade.
According to the State House News Service, the agreement states that the primary payments must come from the Unemployment Insurance (UI) Trust Fund, which is funded by employers’ taxes and also used to pay benefits. Interest payments will be paid from the state’s General Fund.
Healey’s office said businesses won’t face higher rates on unemployment insurance payments until at least the end of next year, when rates will depend on system reforms.
Massachusetts Governor Maura Healey takes questions from reporters during a news conference on January 31, 2024 in Boston. (Stuart Cahill/MediaNews Group/Boston Herald)
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The governor has promised changes to ease the burden on employers who already face higher costs to support growth. claims during a pandemicThis was reported by the News Service of the State House.
Healey ordered state Labor Secretary Lauren Jones and Secretary of Administration and Finance Matthew Gorzkovich to “conduct a comprehensive review of UI’s solvency and evaluate potential reforms.”
The Healey administration projected that the UI Trust Fund would be hundreds of millions of dollars in debt by the end of 2028, even before taking into account $2.1 billion in additional payments.
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