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US gives $54m to state unemployment fund

Federal money will help keep employers' contribution rate stable

By Matt Viser and Andrea Estes
Globe Staff / April 21, 2009
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The US Department of Labor yesterday said it will contribute $54.2 million in federal stimulus money to the Massachusetts unemployment insurance fund, helping to prevent an increase in the taxes employers pay to cover benefits for the jobless.

"If the economy continues as it has, . . . then we're definitely going to need this extra cushion," Governor Deval Patrick said yesterday on a conference call.

Starting in the last quarter of 2008, the state began paying more in benefits than it was collecting from employers in unemployment insurance taxes. According to Suzanne Bump, the administration's Secretary of Labor and Workforce Development, the state fund, which now carries a balance of $900 million, will have enough money in the account to cover this year's payments to the roughly 250,000 workers who are collecting benefits.

But without federal money offered yesterday, Bump said, employers next year would probably have to pay more into the unemployment fund to prevent it from running dry. Employers are expected to pay $1.5 billion into the fund in 2009 - at an average cost of $620 per employee - and benefit payouts are projected to hit $2.3 billion.

The federal stimulus legislation approved by Congress and signed by President Obama this year provided $7 billion for such payments to states that include certain eligibility provisions. To date, Massachusetts, Connecticut, Illinois, New Hampshire, New Jersey, and South Dakota have been certified by the Labor Department to receive a share of the funds.

Massachusetts provides the highest weekly benefits in the country, according to Alison Harris, spokeswoman for the Executive Office of Labor and Workforce Development. Besides the benefits to the unemployed worker, Massachusetts also pays $25 a week for each of the worker's dependents.

The funding comes in addition to $19 million that the federal government provided earlier this year to help boost staffing levels and training programs for unemployed residents.

Unemployed workers can qualify for up to 59 weeks of unemployment benefits. The first 26 weeks are paid for by the state, the rest are paid for by the federal government. Workers earn up to half of their previous salary, to a maximum of $650 a week.

The state, which currently pays an additional 18 weeks' unemployment to workers in retraining programs, could also be eligible for another $108.5 million in federal funds if it increases the additional benefits to 26 weeks, Bump said.

A bill that would make the change is pending in the Legislature, Bump said. Unemployment in Massachusetts hit 7.8 percent in March, up from 7.7 percent in February. With a workforce of 3.4 million, Massachusetts has approximately 282,000 unemployed residents, according to Bump.

Andrea Estes can be reached at estes@globe.com, Matt Viser can be reached at maviser@globe.com.