The Healey administration announced that it has reached an agreement with the U.S. Department of Labor to resolve an Unemployment Insurance Liability that was created during the Baker Administration. The potential liability, totaling $3 billion inclusive of fees and interest, was a result of the Commonwealth incorrectly using federal money to provide benefits that should have been drawn from the state’s Unemployment Insurance Trust Fund. The Commonwealth’s error, dating back to 2020, occurred during the Covid-19 Pandemic at a time when unemployment had escalated. Under the settlement with the outgoing Biden Administration, the Commonwealth has agreed to a settlement that reduces the total cost owed to federal government by just under $1 billion. Specifically, the Commonwealth will repay the federal government a total of $2.1 billion in equal payments spread out over 10 years to resolve the federal claim, or over $203 million per year.
Governor Healey’s officials indicated that employers will not face higher rates on their unemployment insurance payments through at least the end of 2026 due to the settlement. After that, rates will depend on system reforms to the Unemployment Insurance system. The Administration will seek input from business and labor officials as it conducts its assessment of potential reforms to address the solvency of the Unemployment Insurance Fund.