May 14—BOSTON — A state fund that covers unemployment benefits is nearly $3 billion in the hole, and that's squeezing employers who fund the system.
On Friday, a newly created legislative commission met virtually for the first time to begin addressing the massive deficit in the Unemployment Insurance Trust Fund, which has ballooned amid a crush of pandemic-fueled layoffs and business closures.
Rosalie Acosta, secretary of the state Executive Office of Labor and Workforce Development and a member of the panel, said the state distributed about $22 billion in federal and state jobless benefits last year to more than 1 million workers who were sidelined to prevent the spread of the coronavirus.
About $6 billion of that was distributed from the state's trust fund, she said, the remainder from federal programs.
"It has been an unprecedented year," Acosta told the panel. "Never in the history of unemployment has the system paid out $22 billion in benefits."
Gov. Charlie Baker's administration has borrowed more than $2.2 billion from the federal government to continue paying claims during the pandemic. That will push the trust fund deficit to more than $4 billion by the end of the year.
Acosta said the state needs to begin paying down what it owes, otherwise there will be a "long term and obviously negative effect on employers."
"That would increase our employer contributions to unsustainable levels," she said.
The fund's red ink is driving up rates paid by employers. Legislation signed by Baker last month was supposed to ease the fiscal impact on businesses, but many have still been saddled with higher rates.
While the state has seen a decline recently in the number of new unemployment claims, more than 500,000 people are still getting benefits through the system. Acosta said about 90,000 of those workers collect state benefits, while the remainder are on the federal programs.
A $ 1.9 trillion federal relief bill signed by President Joe Biden in March extended federal jobless programs to September, including a $300 per week benefit.
The commission addressing the insurance fund's deficit includes lawmakers and academics, representatives of building trades and business groups, legal aid attorneys, social justice groups, community organizations and policy experts.
Business leaders are hoping the commission will look at overhauling benefits paid out by the system, which are among the most generous in the nation. In the short-term, they want the state to tap into an expected $4.5 billion in federal relief funds to bring down the deficit.
The panel is required to present a report on its findings and recommendations by the end of the year.
Sen. Pat Jehlen, D-Somerville, co-chair of the commission, said the unemployment system "has been central in keeping both individuals and businesses afloat during the pandemic."
"Our job in this commission is to ensure that the unemployment system is strong, solvent and there for future downturns," she said. "We have to find a way to fund the system that was so crucial to our residents in our economy."
Christian M. Wade covers the Massachusetts Statehouse for The Eagle-Tribune. Email him at firstname.lastname@example.org