Baker administration remains vague on UI holdup

DESPITE GROWING pressure from Republican and Democratic legislators, the Baker administration is continuing to offer vague statements on why it is having difficulty producing a financial accounting of the state’s unemployment insurance trust fund.

No monthly report on the trust fund has been issued since June and administration officials have provided no clarity on what the holdup is. The fund pays out unemployment benefits to employees who lose their job through no fault of their own and the fund’s costs are paid by assessments, or taxes, on businesses. The lack of information on the fund’s status means policymakers on Beacon Hill are flying blind in addressing what many believe is a multi-billion-dollar problem for businesses across the state.

Federal records released early last month indicated $2.9 billion is in the account, but most of that money is already spoken for. The fund owes the federal government $2.3 billion for money it borrowed during the pandemic. Businesses who were over-assessed earlier in the year to bulk up the fund are now owed credits — some say that number could hit $500 million. And there are host of other factors that could come into play, but the Baker administration has declined to get into specifics.

A group of eight lawmakers — including Republican Sen. Ryan Fattman of Sutton and Democratic Sen. Jamie Eldridge of Acton, who rarely agree on anything — sent a letter to Baker late last week pressing for a full accounting of the fund or at least an explanation of why the information cannot be produced.

“All of this is creating tremendous uncertainty for our small businesses, who need and deserve this important information,” the lawmakers said.

The lawmakers suggested one cause of the holdup could be fraud and overpayments to recipients. “Based on research conducted by the National Conference of State Legislatures and the US Department of Labor, there could be as much as $1.6 billion in UI overpayments and fraud in Massachusetts. It is important that we know precisely how much of this deficit is due to fraud and overpayment issues which, we should add, should not be up to employers to pay for,” the lawsmakers said.

Geoff Diehl, who is seeking the Republican nomination for governor, jumped into the fray on Monday, urging Baker not to sign the $4 billion American Rescue Plan Act spending bill until the $500 million appropriation already included for the unemployment insurance trust fund is augmented with additional money. Baker previously sought $1 billion in ARPA money for the fund.

In a statement issued late Monday, the Baker administration provided little new information. The statement said the administration was continuing to crunch numbers and offered no timeline for an accounting of the fund. “The Executive Office of Labor and Workforce Development is continuing to reconcile the costs of administering benefit programs in 2020 and 2021,” the statement said.

Despite the lack of information, the statement indicated the Baker administration is moving ahead with plans to borrow as much as $7 billion to put the trust fund on sound financial footing. Interest on the borrowing, authorized by the Legislature in the spring, would be paid by businesses but companies would benefit because the cost would be spread out over the life of the bonds rather than coming due all at once.

“The administration is now working with the treasurer’s office and outside accountants to determine the appropriate amount of bond borrowing,” the statement said. “The final figure will include borrowing in the amount necessary to establish a stabilized trust fund balance at a level sufficient to support ongoing benefits even in the event of a sustained future economic downturn.”

No information was provided on what a stabilized trust fund balance would be, although Gov . Charlie Baker indicated recently that $2 billion might be in the ballpark.