To Replenish UI Fund, DUA Issues COVID-19 Recovery Assessment Rate for 2023

As you may recall, the Massachusetts Department of Unemployment Assistance (DUA), which administers the state’s unemployment insurance (UI) fund, processed a significant and unexpected number of claims during the height of the COVID-19 pandemic. As a result, the Commonwealth’s unemployment insurance funds ran extremely low. Utilizing the Federal Social Security Act, which allows states to receive loans (“Federal Advances”) from the federal government if the state’s unemployment insurance trust fund is depleted due to an economic crisis, the Commonwealth received $2.268 billion in Federal Advances in early 2020.

To pay back this federal loan, Chapter 9 of the Acts of 2021 authorized the Commonwealth to issue a new type of special obligation bond, the proceeds of which would be used to repay outstanding Federal Advances received by the Commonwealth under the Federal Unemployment Insurance Program. On August 30, 2022, the Commonwealth is -

John sued $2.68 billion in special obligation bonds; proceeds were used to re-pay $1.77 billion in federal advances with an interest payment of $33.5 million. The remaining $867.61 million was deposited to the Unemployment Insurance Trust Fund (UITF), improving the fund’s solvency, and thereby helping to drive down the UI Rate Schedule to “A” for 2023 for most employers.

In an effort to replenish the UI fund while paying for the aforementioned special bonds, however, legislation was enacted on May 28, 2021 to create the COVID-19 Employer Relief Account, which removed all COVID-related charges from the solvency fund. At the same time, related legislation created a new employer charge, the COVID-19 Recovery Assessment. In 2021 and 2022 the COVID-19 Employer Recovery Assessment was used to recover the charges that were moved to the COVID-19 Employer Relief Account. Following the bond issuance in August 2022, the COVID-19 Recovery Assessment is now being used to cover debt service costs.

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According to the DUA, most employers’ combined rates for 2023 are similar to the rates they paid in 2021. The two primary components of an employer’s future combined rate are the projected state UI tax rate and the COVID-19 Recovery Assessment, which is a fixed percentage of the employer’s UI tax rate. The UI tax rate schedule in effect for a year is driven by the net reserve balance as of September 30. Each employer’s COVID-19 Recovery Assessment Rate will be communicated to it in the annual rate notice, which is typically delivered on or before March 1 of the assessment year. Rate notices for 2023 should have been received at the end of December 2022.

The DUA has published “frequently asked questions” (FAQ), which may be found at: www. mass.gov/CRA.

Legislative Update continued from page 13