Massachusetts must pay $2.1B after wrongly using pandemic funds for unemployment benefits.
Massachusetts must pay the federal government $2.1 billion over the next 10 years to settle debt after the state, under former GOP Gov. Charlie Baker, mistakenly used federal pandemic funds to cover unemployment benefits.
Incumbent Gov. Maura Haley, a Democrat, and her deputies released details on Monday of a deal they struck with the ousted Biden administration last week, in which the state will repay most of the money it was wrongly owed in 2015. State House News Service He reported.
In the year In 2023, Haley announced that the administration had discovered that the administration had misused nearly $2.5 billion in federal pandemic relief funds to cover unemployment benefits that should have been funded by the state.
The total debt, including fees and interest, exceeds $3 billion, according to Haley’s office. The deal 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 Haley speaks at Roxbury Community College on Wednesday, Jan. 10, 2024, in Boston, Massachusetts. (Adam Glanzman/Bloomberg via Getty Images)
“We are deeply saddened to learn early on in our time that the previous administration misappropriated billions of dollars in federal aid funds and our state is facing potentially more than $3 billion in repayments,” Haley 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 liability by more than $1 billion and negotiated a ten-year payment window to reduce the impact.”
“It’s incredibly disappointing that the previous administration allowed this to happen,” the governor added, “but the current administration is using this as an opportunity 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 Juneteenth commemoration at Nubian Square in Boston, June 18, 2021. (AP Photo/Elise Amendola, File)
Payments begin December 1 and continue annually for the next decade.
The agreement says major payments must come from the Unemployment Insurance (UI) Trust Fund, which is funded by taxes on employers and used to cover benefits, according to the State House News Service. Interest payments come from the state’s general fund.
Haley’s office said businesses won’t face higher unemployment insurance rates until at least the end of next year, at which point rates will depend on system reforms.
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Massachusetts Governor Maura Haley takes questions from reporters during a news conference in Boston, Jan. 31, 2024. (Stuart Cahill/Media News Group/Boston Herald)
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The governor has pledged to make changes to ease the burden on employers who face high costs to support claims during the pandemic, the State House News Service reported.
Haley directed Labor Secretary Lauren Jones and Management and Finance Secretary Matthew Gorzkowicz to “conduct a comprehensive review of the UI solution and evaluate potential improvements.”
The Haley administration had projected that the UI Trust Fund would be hundreds of millions of dollars in debt by the end of 2028, before considering additional payments of $2.1 billion.
