Vermont lawmakers told trust fund at about $310 million but benefits rise as contributions plateau

The Vermont House Committee on Commerce & Economic Development heard April 17 from Matthew Barowitz of the Vermont Department of Labor that the state's unemployment insurance (UI) trust fund held about $310,000,000 at the end of 2024, but rising benefit payouts and flattening contributions have narrowed the fund's cushion against a downturn.

"My name is Matthew Barowitz. I am the director of the economic and labor market information division at the Vermont Department of Labor," Barowitz said as he opened his presentation and reviewed weekly claims, employment and the trust fund's recent performance.

Barowitz told the committee that weekly regular UI claims remain at historic lows compared with pre-pandemic patterns, with current weekly claims near 4,000 and 2025 slightly higher than 2024 but still low by historical standards. He said Vermont's population and employment are at record levels — roughly 648,000 residents and record employment — while the labor force remains below its 2009 peak because of long-term demographic shifts.

Why it matters: the trust fund is meant to accumulate reserves in good times so benefits can be paid during economic contractions without borrowing. Barowitz said three components drive fund growth: the difference between employer contributions and benefits paid, interest earnings, and one-time receipts. Interest income rose from about $4 million in 2022 to roughly $8 million as the fund grew, and the fund received a $15,000,000 one-time federal reimbursement in 2024 tied to pandemic-era first-week payments — a payment Barowitz described as money the state was owed and that bolstered the fund that year.

Committee members and Barowitz discussed statutory mechanics that determine employer tax schedules and employer-specific experience ratings. Barowitz explained the contribution system uses five tax schedules (1–5) and an employer-level experience-rating array of about 21 classes; healthier reserves keep the state at lower schedules. He said a legislative change prevented the extraordinary 2020 pandemic year from being used in the tax-schedule calculation. "Absent that legislative change, instead of being at schedule 1, we would have been at schedule 5," Barowitz said, adding that without the carve-out employers would have faced roughly two to three times higher taxes.

The committee also reviewed trends that erode the fund's margin: contributions plateaued and in 2024 were lower than 2023, while benefits continued to rise. Barowitz attributed part of the drop in contributions to reduced job churn after the pandemic and said benefit increases reflect statutory changes (including an added $60 weekly rider applied to maximum benefits) and annual indexing of maximum weekly benefit amounts. He cautioned that the prior experience of Vermont shows how quickly payouts can rise in a severe recession: during the 2007–09 downturn, Vermont paid about $200,000,000 in benefits in a single year and had to borrow from the federal government; Barowitz said the state borrowed once in his 15 years at the department and historically repaid the loan more quickly than anticipated.

Committee members asked whether the statutory calculation and the timing of taxable-wage-base and schedule changes create a midyear fiscal risk. Barowitz said taxable-wage-base adjustments operate on a calendar-year cadence and schedule determinations take effect in July; some levers are therefore not instantaneous but can be changed through statutory action when necessary. He also noted other states handle repayment and reserve policies differently, and that borrowing from the federal government remains a backstop if reserves were exhausted.

The committee requested follow-up materials. Barowitz said he would provide historical taxable-wage-base data and the employer array report showing where employers fall in experience-rating classes, and he offered to return for further discussion of seasonals, reimbursable employers and "negative balance" employers.

The presentation and committee discussion focused on information rather than legislative decisions; lawmakers signaled interest in additional modeling of recession scenarios and in examining how statutory levers would operate if benefits rose substantially or contributions fell.

Looking ahead: the committee did not take formal action at the hearing but asked the Department of Labor for the supplemental data to inform possible future policy discussion about taxable wage bases, tax schedules and benefit formulas.