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Unemployment Tax Control Associates Addresses UI Hikes Related to Solvency Assessment

SPRINGFIELD — Working with several active employer and professional organizations, Unemployment Tax Control Associates (UTCA) has taken a leadership role in addressing the ‘surprise’ rate escalations triggered by the 2021 Massachusetts solvency assessment (9.23%, a roughly 16-fold increase over the 2020 rate.)

This uniform solvency assessment is designed to cover the cost of benefit charges that are not the responsibility of individual employers. This rate is computed annually in accordance with the statutory requirements of M.G.L. Chapter 151A and is not within the discretion of the Department of Unemployment Assistance.

“While we have been working diligently to raise awareness of this issue with employers, numerous media outlets, and the State House, we have all awaited guidance from the U.S. Department of Treasury as to whether any funds from the American Rescue Plan (ARP) could legally be used to alleviate this cost,” said Suzanne Murphy, CEO of UTCA, noting that the Deapartment of Treasury released a statement addressing the use of $350 billion in coronavirus state and local fiscal recovery funds. The release includes links to descriptions of permissible uses and the allocation of funds by state and county.

States should expect to receive funds twice, with 50% beginning this month and the balance delivered 12 months later. States that have experienced a net increase in the unemployment rate of more than 2% from February 2020 to the latest available data as of the date of certification will receive their full allocation of funds in a single payment; other states will receive funds in two equal distributions.

The fact sheet includes a statement that funds may be used, among other purposes, for rebuilding public-sector capacity, rehiring public-sector staff, and replenishing unemployment-insurance trust funds, in each case up to pre-pandemic levels. Recipients may also use this funding to build their internal capacity to successfully implement economic relief programs, with investments in data analysis, targeted outreach, technology infrastructure, and impact evaluations. Click here for a detailed list of state-by-state allocations.

“We encourage all employers to reach out to their legislators and advocate these monies be allocated to replenish the Massachusetts Trust Fund to directly offset the 2021 solvency assessment impact and return it to pre-pandemic levels, as per the federal guidelines,” Murphy said. “Bay State employers have made it very clear they have little capacity to withstand the substantial and unexpected financial burden of this catastrophic rate increase. Our legislators must also be reminded how critical it is for Massachusetts to compete with other states using ARP funds to relieve employers of the economic ravages of the pandemic. Time is of the essence, so please act now.”

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