Kansas labor department teams with new federal office on unemployment modernization

Legislators on unemployment improvement council question pandemic response

by Noah Taborda, Kansas Reflector

Topeka — The Kansas Department of Labor is engaging with the federal government to aid in identifying and developing a framework for the modernization of the beleaguered state unemployment system.

Since the onset of the pandemic, the agency has been inundated with unemployment claims for the federal Pandemic Unemployment Assistance program, resulting in a reinvigorated push for system modernization. Department leaders are optimistic that assistance from the U.S. Department of Labor could primarily aid in ID verification and address other areas of need.

Kansas labor deputy secretary Peter Brady told legislators earlier this month on the Unemployment Compensation, Modernization and Improvement Council that the USDOL would be opening a new office to oversee state modernization plans and administer $2 billion worth of funding allocated to them by the American Rescue Plan. Kansas was selected as one of the first six states to be a part of the initiative.

“They have not made grant funds available to states at this time,” Brady said. “However, USDOL has indicated that they will potentially make grant funds available to address some of the issues identified through the engagement which was one of the reasons that we wanted to engage them early is any issues that are identified. We want to be able to fix it sooner rather than later.”

The overwhelming volume of unemployment claims throughout the pandemic has caused significant delays with the department’s archaic computer system and limited resources. Legislators tasked state auditors with addressing what factors caused these KDOL delays and investigating the surge in fraudulent claims made.

The audit reaffirmed beliefs that a historic volume of unemployment claims and a lacking computer processing system where largely at fault and called into question whether additional staff hirings helped process calls.

The report released in late August indicated that because Kansans could apply for the federal program as self-employed, traditional verification through the employer proved difficult, subsequently inviting fraudsters to pounce.

“Our work on this audit showed, you know, about 59% of the roughly 1 million unique claims filed during the pandemic could have been fraudulent,” said Matt Etzel, principal auditor at the Kansas Legislative Division of Post Audit.

An updated estimation in the audit showed the state processed $700 million in fraudulent benefit payments, about half from federal and half from state funds.

The audit raised questions from some legislators about why the state agency waited until February 2021 to install a dual-identification system. The federal government warned in March 2020 of fraud, and funding was made available to KDOL in August 2020.

“You guys have been through a thunderstorm that is just extremely violent … my question and concern is why the gap?” said Sen. Caryn Tyson, R-Parker. “That’s a fairly large gap from your first notice to be in March and then action not to be taken until February next year.”

Brady, who was named deputy secretary in September, said while those discussions precede him, he understood that the agency would have liked to work quicker but had to deal with what the unemployment system could handle. The system is based on 1970s coding, and an attempt to overhaul the technology was halted a decade ago.

“The question was how do we find a way to make this work with our current system,” Brady said. “That just took more time than any of us would have liked it to, but that was the situation we found ourselves in.”

The legislators on the modernization council also aired concerns about progress made in addressing the roughly 7,000 people kicked off benefits because of new state requirements of the My Reemployment Plan. The work search program, inserted into House Bill 2196, required individuals to submit resumes and actively seek employment.

“Hopefully we weed through the 7,000 people that we had to suspend benefits because of the glitch or the fact that they couldn’t all get their resumes to you on time,” said Rep. Sean Tarwater, a Stilwell Republican and chairman of the council.

Mike Beene, director of workforce development at the Kansas Department of Commerce, said the agency was still working to sift through the various reasons someone may have been found in noncompliance. About 1,200 people so far have worked with the agency to get back in compliance.

“I’ve had many conversations about those numbers,” Beene said. “Are they claimants who have found work and not reported they found work? Are they claimants who have just said, ‘OK, I’m done.’ Or are they claimants somewhere still in the pending process or adjudication process?”

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Efforts underway to fix state’s unemployment system, officials say

Gov. Laura Kelly on Monday said efforts are underway to fix the state’s unemployment system.

The unemployment system in the Kansas Department of Labor was swamped when COVID-19 hit and thousands were laid off.

Gov. Kelly said KDOL tried short-term fixes and added hundreds of staff members in the effort to process claims. As were other state unemployment systems across the nation, the KDOL system was under constant attack from fraudsters, she said.

That led to an effort in the past three weeks that added a new identification verification system to the process, that the governor said has stopped more than a half-million fraud claims.

Gov. Kelly said last week, benefits from the federal pandemic program went out to nearly 5,000 clients. Two federal programs required extraordinary coding and testing to get them up and running, she said.

Ensuring Kansans get timely payments can only come with a new modernized system, Gov. Kelly said. She said the state’s technology was put in place in 1977.

The KDOL had started to modernize its technology in 2009, but that effort was ended by the Brownback administration in 2011, she said, as state agencies faced large cuts.

Gov. Kelly said the KDOL was up against a once-in-a-century crisis, and faced challenges from the federal government, from technology and from lawmakers who wanted to further limit the ability to help people. Despite barriers, KDOL acted on short-term fixes available and ramped up the speed at which it was processing claims, handling 4 million claims.

The governor said the KDOL is working on a multi-year process to modernize the technology at the agency, and plans to put the system out for bid by the summer, working on it by the end of the year.

Gov. Kelly said her office and legislators have sent a letter to federal Congressional leaders asking for funds in the next stimulus package to modernize the state’s technology. Kansas legislators are being asked to sign on to a similar letter, she said, but so far, there hasn’t been bipartisan support. The letter was signed by Democratic state legislators

The governor’s letter asks the federal government for assistance in four areas: modernization funding for states; trust fund solvency relief for states; the creation of a state led commission on how to prevent fraud, inefficiency and service-delivery challenges the next time there is a substantial economic downturn; and review of and investment in the interstate unemployment system.

Gov. Kelly said she wanted Kansas residents to know they are doing everything in the power to fix the system and ensure that residents never again experience these obstacles.

She said government can’t lose sight of what happens when they do not maintain and modernize the infrastructure.

Amber Shultz, acting Kansas secretary of labor, said for regular unemployment benefits, there is currently no backlog. For the Pandemic Unemployment Assistance program, which expanded those who are eligible for benefits, there is a backlog of about 12,000 Kansans, she said. There are some claims in which hearings are being held.

Local communities scramble to work around unemployment system delays

As the state has tried to work around various problems with technology, local communities have had to work around the unemployment system to try to get other assistance to residents.

The topic came up during a report on CARES Act funding at the Monday night Unified Government Administration and Human Services Committee meeting.

While CARES Act funding has run out, another federal assistance bill that passed in late December, HR 133, extended unemployment benefits.

Commissioner Melissa Bynum said during the meeting that as commissioners, they have heard countless sad, sad stories, some horrifying, about the inability of the state KDOL to handle unemployment benefits.

“It is really quite pitiful,” Commissioner Bynum said at the meeting. “All I can think about is that person who has truly lost their job. That is their income and the way they are going to pay for their utility bill, their mortgage, their medication. I don’t know what these families are doing. Just wondering what can we do to help them, I don’t know the answer.”

Crystal Sprague, Unified Government CARES Act team leader, said the UG is always advocating for programs to help residents. She advised the commissioners to keep aware of other resources that will be available while the state works the kinks out of the unemployment program. Other resources could be the Kansas Emergency Rental Assistance program, other programs, or the Workforce Development programs, she said.

“This situation really speaks to the critical nature of infrastructure and IT infrastructure to be able to handle situations like this,” she said. “How lucky we were at UG to have nimble staff, also some resources available.”

She hoped they never would have to go through this again, but if some other crisis arises, such as an emergency from storm damage, it is important to have that technology to move forward.

Commissioner Jane Philbrook said when the KDOL crisis hit, the state agency was just caught off guard. The technological system was poor and outdated and had to have money to be updated, and for that it had to get approval, she said.

Some of the delayed claims involve those that are having hearings over the internet, she said. There are a lot of people at the state agency working hard, she said.

Commissioner Christian Ramirez said he, too, was aware of unemployment affecting the community. He said he would do his part to make sure everyone with unemployment issues is aware of other resources that may be available in the community.

Sprague said at the UG committee meeting Monday night that federal assistance after the CARES Act is over included House Resolution 133, which generally would send dollars directly to current federal government programs. These programs would include the Supplemental Nutrition Assistance Program (SNAP) for food assistance and the Kansas Emergency Rental Assistance for housing assistance. Housing assistance applications will open March 15 and close in August for rent and utilities through KERA, she said. Residents will be able to apply for rental assistance at https://kshousingcorp.org/emergency-rental-assistance/ in mid-March.

Another assistance bill in the U.S. House, proposed for $1.9 trillion, could result in $2 billion to the state of Kansas. There could be funds in this bill set aside for state and local governments, Sprague said. This bill, if it passes, would allow for the offset of revenue loss to state, local and tribal governments, she said.

Wyandotte County received $37 million in CARES Act funding allocated through the state, by population. Total community investment through federal assistance was actually $50 million, according to the state recovery office figures.

Sprague said Wyandotte County is wrapping up the CARES Act programs and funding. While almost all the money has been spent, there was 12 percent remaining in health department funding, which was for contracts for staffing through March, she said. The timeline was extended for spending some of the dollars.

Two organizations, one in the public health response and one in human services, did not spend their allocated dollars of $98,740 by Dec. 30, she said. The dollars were reallocated to the local jurisdiction, she said.

To see the governor’s news conference, visit https://www.facebook.com/GovLauraKelly/videos/752313685405284.

Unemployment rate drops to 7.4 percent in Wyandotte County

The unemployment rate decreased to 7.4 percent for September in Wyandotte County, according to figures announced today by the Kansas Department of Labor.

Unemployment was reported at 9.4 percent in Wyandotte County during August, according to the report. One year ago, in September 2019, unemployment was 3.5 percent in Wyandotte County.

In Kansas City, Kansas, unemployment was 7.5 percent for September and 9.5 percent for August, according to the report. One year ago, in September 2019, unemployment was 3.6 percent in Kansas City, Kansas.

It is the second highest rate of the largest cities in Kansas, according to the report. Wichita had a higher rate at 9.1 percent in September.

During a news conference today in Topeka, Gov. Laura Kelly pointed to new job-creating projects, including the Amazon fulfillment center announced today, which will employ more than 500 people, as well as the new Urban Outfitters warehouse project announced next to the Kansas Speedway in Kansas City, Kansas, expected to create 2,000 new jobs. Wichita also will receive a new Amazon warehouse project. The governor referred to other new projects also, including an expanded bioscience project in Lawrence with 270 jobs that is expected to bring ancillary development of 2,500 jobs, and a Salina plant with 250 new jobs.

Overall, Kansas has an unemployment rate of 5.9 percent in September, a decrease from 6.9 percent in August, according to today’s labor report.

While the decline in unemployment numbers is sometimes considered positive news, the Kansas acting labor secretary stated in a news release that similar to national trends, the number of individuals participating in the labor force also has declined. Total Kansas nonfarm jobs decreased by 7,200 statewide, according to the state Department of Labor

“The widespread job growth seen in Kansas throughout the summer slowed in September, with losses in both the private sector and government jobs,” stated Labor Economist Emilie Doerksen, in the news release. “The majority of the over-the-month decrease in jobs can be attributed to government which added fewer jobs than the typical pattern for September, resulting in a seasonally adjusted decline.”

For more information, visit https://klic.dol.ks.gov/gsipub/index.asp?docid=472.