Unemployment trust fund to go insolvent in 2027, a year earlier and with twice the deficit, than previously forecast
The Healey Administration has revised long term unemployment estimates upward
Last week the Healey administration quietly issued a new unemployment insurance trust fund report that advanced the projected insolvency date of the fund from 2028 to late 2027, mostly based upon upwardly trending unemployment data since April 2024.
As recently as the April 2025 quarterly report, the UI trust fund was forecast to tumble into the red by $51M at the end of 2028, but now Healey-Driscoll admits that a shortfall of more than double that size - $134M - will develop by end of 2027.
Driving the dramatic shift is a significant revision in unemployment rates going forward. The April quarterly report projected unemployment rates to drop below 4.0% in 2025Q1 and hover in the upper 3% range for years to come.
But unfortunately the Massachusetts unemployment rate surged past the national 4.2% average to 4.8% causing a significant revision in the expected financial burden on the trust fund.
Side to side the charts offer a remarkable comparison, in the August projection Healey’s Executive Office of Labor and Workforce Development now predicts unemployment will remain above 4% until sometime in late 2029.
Business group NFIB asserted that the Commonwealth’s comparatively generous benefits package is an contributing factor, especially the 30 week benefit, which was recently triggered by state law, rather than the more common 26 weeks.
Experts we spoke to said the impact of the additional four week benefit might not yet be reflected in the UI fund projections until Q3 or Q4 of 2025, which might result in a new, even more dire default date.
The UI fund last went into the red in 2020 and the state legislature borrowed via the bond market to cover the deficit. Typically states borrow from the federal government, in either case employers are assessed a fee to cover the shortfall.
Employers are also struggling with paying back $2.1B after the Baker administration made a “monumental error” and “misspent federal pandemic relief funds on unemployment benefits.”
