TOPEKA — The Kansas Senate gave initial approval Tuesday to a bill aimed at overhauling the state’s maligned and outdated unemployment system.
The legislation would establish a panel to oversee and recommend changes to the unemployment insurance system and the applicant claim process. Completion of these upgrades would be required by the end of 2022. It would also ensure employers are not held liable for any unemployment claims filed in the business’ name.
Employers who have paid for these claims since March 15, 2020, are to be refunded through the unemployment insurance trust fund. Funds from the UI trust fund will be reimbursed through federal funds coming into the state.
The bill was praised by ranking members of both sides of the aisle for ironing out concerning elements included in the version passed by the House 87-36. Sen. Rob Olson, R-Olathe, said the measure may not be perfect, but it was a compromise consisting of much-needed updates to a failing system.
“We tried to put a really good product together that’s going to address modernizing this system and also make it the best for everybody involved,” Olson said. “Once we get done here, we’ll probably have to clean it up just a little bit more, but we’re about there.”
Since the onset of the pandemic, the Kansas Department of Labor has been flooded with a historic number of unemployment claims and is now struggling to resolve a growing number of fraudulent claims. The legislation debated in the Senate would seek to address some of these issues before they can occur again.
The Senate will take a final vote on the measure Wednesday. Olson noted the bill would likely be subject to a conference committee when both chambers can come together to settle differences in their respective plans to address the crisis.
Among the changes made was a reduced ban for those accused of defrauding the state unemployment system. Previously, the ban ran for five years, the nation’s toughest penalty for fraudsters and unwitting mistakes, but under the Senate bill, the ban for a first offense would be reduced to one year.
This will likely be a point of discussion when the two chambers get together as a House provision places the ban at two years.
“When that bill came over to the Senate, there were six or seven major issues hanging out,” said Sen. Tom Holland, D-Baldwin City. “(Olson) did good work in bringing those stakeholders together and crafting out language that those stakeholders can take heart in a good product here.”
Some modifications made to the bill in the Senate Commerce Committee were undone on the floor by Olson, chairman of that panel. He said these changes were made after negotiations with many stakeholders, but several Republican committee members expressed dismay their work was being neglected.
“I thought, well, the chairman’s disregarding what the committee wishes, even though it’s going to slow the project down. I thought hopefully they can deal with it in the conference committee,” said Sen. Caryn Tyson, R-Parker. “We’re the ones in the room. We are the ones sitting at the table. I don’t know who the chairman is referring to about backdoor meetings — closed, behind-the-scenes negotiations. I don’t support those efforts.”
Reducing the initial transfer of federal funds to the unemployment insurance trust fund from $400 million to $250 million initially with subsequent payment of $250 million was among those amendments offered by Olson and approved by the Senate. The amendment was offered to account for federal funds arriving in two separate payments, as well as ensure the Legislature was not overspending to cover fraudulent claims, Olson said.
The Kansas Department of Labor estimated total fraud at close to $300 million and the Legislative Division of Post Audit provided a preliminary estimate of $600 million.
Holland again backed up Olson’s decision to spread out these payments. He said once the payment is made, they cannot get the money back and so should take caution before throwing money blindly at the issue.
Holland also backed an amendment made by Sen. Mark Steffen, R-Hutchinson, creating a harsher felony penalty for those engaging in high-level fraud. Steffen said this would send a strong message to those preying on Kansans.
Steffen’s amendment passed without much debate, although Sen. Jeff Pittman, D-Leavenworth, urged the body to carefully consider creating a new penalty without knowing the full scope of what it would do.
An amendment offered by Senate Minority Leader Dinah Sykes, D-Lenexa, would have extended unemployment benefits Kansans may receive to 26 weeks instead of tying benefits to the state unemployment rate.
Kansans who had lost their jobs could collect unemployment for 26 weeks until 2013, when Gov. Sam Brownback reduced the aid to 16 weeks. Last spring, lawmakers temporarily extended it back to 26 weeks. Under the Senate bill, Kansans could continue to collect unemployment for up to 26 weeks until September, before defaulting back to 16 weeks if the unemployment rate is less than 5%.
“We’ve heard a lot about businesses, and let’s protect those, but I am not hearing about how you protect the people who have been hurt and have lost their jobs,” Sykes said.
Republican Senators did not see the value in extending this lifeline and strongly opposed the amendment. Olson said there are 60,000 job openings in Kansas and that it is time to get people back to work and into those openings.
“There are job openings everywhere,” said Sen. Jeff Longbine, R-Emporia. “Every employer that I talked to is trying to find people who will come to work, so I don’t think the 26 weeks is needed. I think it’s a strain on employers.”