Massachusetts will repay $2.1 billion of $2.5 billion in federal funds misspent during former Gov. Charlie Baker’s administration, under a settlement announced by Gov. Maura Healey’s office. The state can spread payments over 10 years starting Dec. 1, avoiding additional penalties.
The misspent funds, meant for pandemic relief, were improperly used to cover unemployment benefits. Healey revealed the issue months after taking office in 2023. Affected individuals won’t need to repay benefits.
Most repayment will come from the Unemployment Insurance Trust Fund, funded by employer taxes. Employers’ tax rates won’t increase until at least 2026, and $73 million will come from the state’s budget to cover interest. Healey ordered a review of the system’s solvency and reforms.
Critics, including the National Federation of Independent Business, call for overhauling Massachusetts’s unemployment insurance system, citing burdens on small businesses.
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