THE BAKER ADMINISTRATION said on Monday that it still hasn’t completed a financial accounting of the state’s unemployment insurance trust fund and may not be ready with one anytime soon.
At a virtual meeting of a commission set up to recommend changes in the way the state handles unemployment insurance, several members of the panel said they needed basic information on the financial status of the fund in order to make decisions about its future. The Baker administration hasn’t issued a monthly financial report on the fund since June, and officials on Monday were vague about when basic information on the fund’s balance would be forthcoming.
“I hope to have a more concrete timeline in the near future,” said Rosalin Acosta, the secretary of labor and workforce development and a member of the commission.
Sen. Patricia Jehlen of Somerville, the co-chair of the commission, pressed Acosta on whether an accounting would be ready by January. “I’m hoping so, chair. As soon as I hear from the team, I will confirm,” Acosta responded.
The long delay is starting to have major policy implications, with billions of dollars at stake. The unemployment insurance trust fund collects assessments from businesses and uses that money to pay benefits to workers who lose their jobs through no fault of their own. The fund nearly ran out of money during the pandemic, when unemployment soared, and remained solvent only with the help of federal loans.
Since May, federal data indicate the fund’s financial status has improved. Federal data released earlier this month indicated the fund holds $2.9 billion but owes the federal government $2.3 billion for loans provided during the pandemic. Commission officials indicated on Monday that another $500 million is owed businesses in Massachusetts who were overassessed earlier this year.
What’s unclear is whether the trust fund needs additional financial support – or how much. Lawmakers have set aside $500 million for the unemployment insurance trust fund in an American Rescue Act Plan spending bill – half as much as Gov. Charlie Baker sought and a quarter of the amount sought by businesses. Gov. Charlie Baker also signed legislation allowing his administration to borrow as much as $7 billion to put the fund on sound financial footing going forward.
The unemployment insurance trust fund commission is also debating whether to make changes to the way the fund operates, which could affect what are essentially taxes on businesses. The commission, which consists of representatives from more than 20 stakeholder organizations, voted unanimously on Monday to embrace over time a federal standard for financial solvency for the fund but couldn’t agree on whether to make assessments on small businesses more equitable.
The commission determined on Monday that it won’t finish its work on schedule next month, and several members said it would be difficult to take votes on policies without a basic financial accounting of the fund.
Baker indicated earlier this month that his administration would probably issue bonds to bolster the trust fund in December, but Jehlen indicated that’s now unlikely because of the holdup in determining the financial status of the fund.
Issuing bonds could also cut short the policy debate over the future operation of the fund because bond holders would have to be assured of the terms of payback before the bonds go on sale. Those terms could lock in benefits to unemployed workers and assessments on employers.
It’s unclear what the holdup is in determining the financial status of the fund. Acosta and Baker have said more than $20 billion flowed through the fund during the pandemic, most of it federal money, and accounting for all that money is proving difficult.
Jon Hurst, president of the Retailers Association of Massachusetts and a member of the commission, said fraud and overpayments to recipients – and what to do about them – may also be delaying the accounting. He said some have estimated the fraud and overpayments could total $2 billion.
“They’ve got to get a handle on this,” Hurst said. “It’s a lot of dough.”