With just two months left in the Biden administration, it’s still not clear if Massachusetts will need to repay the federal government roughly $2.5 billion in erroneously disbursed federal relief funds.
“The U.S. Department of Labor is in the process of addressing this matter with the Commonwealth of Massachusetts,” a Labor spokesperson told GBH News. “A final determination has not been reached, and the process remains open and ongoing.”
Matthew Kitsos, a spokesperson for the state’s Executive Office of Labor and Workforce Development, struck a similar note in a statement emailed to GBH News.
“The Healey-Driscoll Administration has been and continues to be in discussions with [the U.S. Department of Labor],” Kitsos said. “The administration’s priority is and always will be arriving at the best outcome for Massachusetts, its residents, and the business community.”
Kitsos declined to comment on whether the Healey administration has been told it may need to repay the funds; whether plans are in place or being developed in the event that repayment is required; or if Gov. Maura Healey will broach the topic when she joins the Boston Celtics for a visit with President Biden Thursday.
The costly mistake, which was publicly revealed by the state comptroller in May 2023 and first reported by the Boston Globe in June of that year, began in the first half of 2020.
At that time, Republican Charlie Baker was still governor of Massachusetts and COVID had caused significant job losses. The Baker administration was also implementing new federal unemployment programs that both augmented state benefits and replaced them for individuals who were no longer eligible.
Essentially, the state erred by using federal relief funds to provide unemployment benefits that should have been drawn from the state’s unemployment insurance trust fund instead. Benefit recipients were not paid extra as a result of the error.
In terms of scale, the mistake was a substantial one. For example, a sweeping economic development bill passed by the Legislature last week will cost about $4 billion, and the state’s most recent budget totals approximately $58 billion. Still, the misstep went unnoticed in the state’s regular financial review process in both 2021 and 2022.
After the error was revealed, Massachusetts’ all-Democratic congressional delegation wrote to the Department of Labor, blaming the error on Baker and urging the Biden administration to work with Healey to “address the problem while minimizing the impact on hardworking people and small businesses in the Commonwealth.”
Healey, for her part, called the error “avoidable” and a “big surprise” in a June 2023 interview with the Globe. She also suggested that Massachusetts might not have to reimburse the federal government for the misspent funds, a possibility echoed by legislative leaders.
If Massachusetts is ultimately required to repay the money, several options would be available, including drawing from the state’s rainy-day fund and asking the state’s business community, which pays into the state’s unemployment trust fund, to foot some or all of the bill.
