That’s essentially the message the Baker administration sought to deliver Thursday as it belatedly provided details on efforts to claw back billions of dollars in unemployment payments it later determined shouldn’t have been paid.
In a bid to soften its image as it duns hundreds of thousands of people, the Department of Unemployment Assistance disclosed for the first time that it has dropped nearly $1.2 billion in repayment demands issued since the pandemic triggered a tsunami of layoffs in March 2020. It backed off after claimants provided additional proof they were truly eligible for benefits. The DUA said it has also approved $600 million financial hardship or equity waivers.
But even after those moves, the department has $2.6 billion in “apparent outstanding overpayments,” the first time it has said how much money is currently in dispute. About 85 percent of that amount came from federal pandemic programs, the rest from the state.
More on that split momentarily. But first some background for those of you who feel like you’ve walked into a movie 20 minutes late.
On Monday I reported on the clawbacks and said there must be a way to lessen the burden on all the folks who applied for jobless benefits in good faith. I noted that while overpayments were routine before the pandemic, the dollars involved today are much larger. That’s because the DUA took a long time to catch up with its mistakes and because benefit amounts were boosted by pandemic payments from Washington.
Two days later I followed up with an online column asking whether some or all of the overpayments could be repaid with a mix of federal pandemic relief aid and state budget surplus dollars. That was an idea suggested to me, independently, by the leaders of three big employer groups in the state.
Until this point, the DUA had declined to provide any data on overpayments beyond what Rosalin Acosta, secretary of the Executive Office of Labor and Workforce Development, told a legislative hearing last month. Acosta, who oversees DUA, said there were 383,000 claimants with open cases but didn’t provide a total dollar amount the state was trying to reclaim.
Luckily, the DUA sends a lot of data to Washington, which the Labor Department puts into various reports. An employment attorney at Community Legal Aid, which provides free legal help in Western Massachusetts, analyzed those reports. The bottom line: from March 2020 to September 2021, DUA made $2.7 billion in overpayments — excluding any reversals or waivers — with $1.1 billion, or 42 percent, attributed to the state unemployment program, which is funded by employers through taxes.
Yes, that’s not exactly what the DUA is saying now. But that’s because the Labor Department presents the numbers differently from the state. It’s apples and oranges. At least that’s the state’s explanation, and it says it wasn’t aware of the discrepancy until this week.
Either way, it’s a lot of money. And the big question is whether it makes sense for the state to cut a break for anyone who wasn’t at fault for the overpayments — even if the DUA is entitled to get it back.
My colleague Shirley Leung talked with state Auditor Suzanne Bump, who said she doesn’t think the state should forgive the debt and move on.
”Program integrity is essential for government trust,” she said. “Overall the program of clawing back is appropriate and required under the law.”
But the situation is a mess.
The number of open overpayments is huge. Clawbacks take money that would otherwise be largely spent in the local economy, putting it back in the trust fund or sending it to the US Treasury.
And penalizing unemployment recipients for the DUA’s errors just doesn’t seem fair. It often took months for the department to notify these folks, many of whom were relying on jobless benefits to cover necessities like food, housing, and utilities.
For its part, the DUA “has a robust process in place to work with claimants to resolve apparent and actual overpayments,” according to a spokesperson. And the department plans an outreach campaign, including a new waiver request Web page and a letter to all claimants with an overpayment to promote the option to seek a waiver.
Still, hitting the pause button to sort everything out seems like the right thing to do even if, as Bump said, the US Office of Inspector General is pushing Massachusetts and other states to recover the overpaid federal claims.
“I would absolutely support a freeze,” Senator James Eldridge, cochair of the Senate Post Audit and Oversight Committee, told me on Thursday.
It’s time for the Legislature and the Baker administration to take action.