Massachusetts must pay the feds $2.1 billion after pandemic funds were mistakenly used to cover unemployment benefits

Massachusetts must pay The federal government is offering $2.1 billion over the next 10 years to settle debt after the state administration under former GOP Gov. Charlie Baker mistakenly used federal pandemic funds to cover unemployment benefits.

On Monday, the current Democratic Party Governor, Maura Healey, and her deputies published details of the settlement they reached with the outgoing Biden administration last week, in which the state will pay most of the money it owes due to the error, State Council News Service I mentioned.

In 2023, Haley announced that her administration had revealed that the previous administration had improperly used about $2.5 billion in federal pandemic relief funds to cover unemployment benefits that should have been funded by the state.

Total liabilities exceeded $3 billion, including fees and interest, according to Healey’s office. Negotiations with the US Department of Labor reduced the total outstanding debt to $2.1 billion over the next decade.

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“We were dismayed to discover early in our tenure that the previous administration had misspent billions of dollars in federal relief funds and that our state was facing what would have been a bill of more than $3 billion to pay,” Healey said in a statement. on monday.

“Over the past year and a half, we have been 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 reduced our potential liability by more than $1 billion and negotiated a decade-long repayment window to mitigate the impact.”

the The governor added He said it was “extremely disappointing that the previous administration allowed this to happen” but that the current administration “will use this as a moment to come together with the business and labor community to make meaningful reforms to the unemployment insurance system.”

Payments will begin on December 1 and continue every year for the next decade.

The agreement stipulates that the base payments must 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 House News Service. The interest payments will come from the state’s general fund.

Haley’s office said businesses will not face higher rates on unemployment insurance payments until at least the end of next year, at which point rates will depend on reforms to the system.

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The governor pledged to continue the changes to ease the burden on employers, who already face higher costs to support the increase Claims during the pandemicAccording to what was reported by the State Council News Service.

Healey directed state Labor Secretary Loren Jones and Administration and Finance Secretary Matthew Gorzkovich to “conduct a comprehensive review of UI’s solvency and evaluate potential reforms.”

The Healey administration has projected that the UI Trust Fund’s debt will reach hundreds of millions of dollars by the end of 2028, even before taking into account $2.1 billion in additional payments.