Massachusetts must pay the federal government needs $2.1 billion over the next decade to pay off a debt after the state improperly used federal pandemic funds to cover unemployment benefits under former Republican Party Gov. Charlie Baker.
Current Gov. Maura Healey, a Democrat, and her deputies on Monday released details of a settlement they reached last week with the outgoing Biden administration under which the state will pay back most of the money owed over the mistake , the State House News Service reported.
In 2023, Healey announced that her administration had exposed that the previous administration had improperly used approximately $2.5 billion in federal pandemic relief funds to cover unemployment benefits that should have been funded by the state.
According to Healey’s office, the total liability was more than $3 billion, including fees and interest. Negotiations with the U.S. Department of Labor have reduced total debt to $2.1 billion over the next ten years.
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Maura Healey, Governor of Massachusetts, speaks at Roxbury Community College in Boston, Massachusetts on Wednesday, January 10, 2024. (Adam Glanzman/Bloomberg via Getty Images)
“We were stunned to discover early in our term that the previous administration had misspent billions of dollars in federal relief funds and that our state was facing what could have been a bill of 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, businesses and our economy,” she continued. “Today we have reduced our potential liability by more than $1 billion and agreed to a 10-year payment term to mitigate the impact.”
The governor added that it is “incredibly frustrating that the previous administration allowed this to happen,” but that the current administration “is going to use this as a moment to come together with the business and labor community to make meaningful reforms to the unemployment insurance system.”
Former Massachusetts Governor Charlie Baker speaks during a Juneteenth commemoration in Boston’s Nubian Square, June 18, 2021. (AP Photo/Elise Amendola, File)
Payments will begin on December 1 and continue every year for the next ten years.
The agreement calls for the headline payments to come from the Unemployment Insurance (UI) Trust Fund, which is funded by a tax on employers and also used to cover benefits, according to the State House News Service. The interest payments will come from the state’s General Fund.
Healey’s office said companies won’t face higher rates on their unemployment benefits at least late next year. At that point, rates will depend on system reforms.
Massachusetts Governor Maura Healey answers questions from reporters, January 31, 2024, during a press conference in Boston. (Stuart Cahill/MediaNews Group/Boston Herald)
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The governor pledged to pursue changes to ease the burden on employers, who are already facing higher costs to support a rebound claims during the pandemicThe State House News Service reports this.
Healey directed Secretary of Labor Lauren Jones and Secretary of Finance and Administration Matthew Gorzkowicz to “conduct a comprehensive review of UI’s solvency and assess potential reforms.”
The Healey government projected that the UI Trust Fund would be hundreds of millions of dollars in debt by the end of 2028, before taking into account the $2.1 billion in additional payments.
