The pandemic hugely disrupted the state’s economy and workforce, as unemployment rates jumped from 3.1 percent in February 2020, one of the lowest in state history, to 17.8 percent in April 2020, the highest in over four decades. During the pandemic, state and federal unemployment benefits were expanded to address the unprecedented spike in unemployment, and billions in federal loans were used to keep the Unemployment Insurance (UI) program solvent. Following the pandemic, the state issued a $2.68 billion bond to repay outstanding federal loans, improve the solvency of the fund, and avoid a sharp spike in solvency assessments paid by employers. The debt service on the bond is currently being paid by an employer surcharge scheduled to sunset in 2031. After the issuance of the bonds, it was discovered that more than $2 billion in federal UI resources were misapplied during the pandemic. The state is now responsible for repaying $2.1 billion to the federal government over the next ten years. 

In order to understand the impact of this $2.1 billion obligation and to assess options for moving forward, these Policy Fact Sheets provide an overview of how the state’s UI system is structured and financed, the impact of the pandemic on the UI Trust Fund, and the opportunity to reform the UI system.