TOPEKA — The unemployment reform package unanimously passed by the Kansas Legislature dedicated $500 million to reimburse employers for fraudulent claims, extended the pandemic-inspired, 26-week jobless benefit into September and built momentum for overhaul of a decrepit computer system used to distribute assistance.
The bill sent to Gov. Laura Kelly would reduce the toughest-in-the-nation sanction for unemployment fraud from a five-year eligibility ban to a one-year prohibition for first-time offenders, while retaining the stiffer penalty for repeat offenders. In addition, it increased the number of claimants connected to employment services at the Kansas Department of Commerce and outlined a path for employers to report people on unemployment who refused job offers.
The Legislature created the Unemployment Compensation Modernization and Improvement Council to usher in change over the next three years in the way Kansas handled unemployment. One of the council’s first tasks would be an audit to reveal what led to hundreds of millions of dollars in fraudulent claims in Kansas — a calamity that visited other states as the Congress pushed relief funding with expectations of quickly getting it in hands of out-of-work people.
The Legislative Coordinating Council, which includes House and Senate leaders from both parties, also would be expected to play a role in monitoring the unemployment system in the future.
“This is a long-term, forever fix,” said Stilwell GOP Rep. Sean Tarwater, a frequent critic of the governor and the chairman of the House Commerce, Labor and Economic Development Committee. “It insures the modernization will happen. It gets to the bottom of the fraud issues with a forensic audit. I don’t know how you couldn’t support this bill.”
Indeed, none had the audacity to vote no on House Bill 2196. The tally was 122-0 in the House. The vote in the Senate: 38-0.
Baldwin City Sen. Tom Holland, ranking Democrat on the Senate Commerce Committee, said the bill was an “incredibly important piece of legislation” that carved unusually detailed provisions into the woodwork. He said the auditing system would properly reimburse employers that bore the brunt of fraud from March 2020 and through December 2022. A total of $500 million in federal funding was earmarked for the cause, but it would be released in $250 million increments.
“We put in the right amount of money that we need,” Holland said. “Nothing more, nothing less.”
Provisions of the bill were hammered out by House and Senate negotiators working with Department of Labor officials and the governor’s office. The Legislature is scheduled to return to the Capitol in May to close out the session and deal with possible vetoes by Kelly.
Kelly said she was pleased legislators collaborated with her administration to move ahead with replacement of the 40-year-old computer network for the unemployment system that proved too fragile for a wave of claims prompted by the COVID-19 pandemic. One estimate put the cost of a new IT system at more than $40 million.
“Throughout it all,” Kelly said, “the pandemic has taught us an important and expensive lesson. It is critical that we invest in and maintain our safety net so that they are available to citizens when they need it most. This legislation will ensure that we complete the work we started and replace the state’s antiquated unemployment system.”
The governor said passage of this legislation made clear the state government’s commitment to Kansas businesses and workers.
Sen. Rob Olson, an Olathe Republican and chairman of the Senate’s commerce committee, said another piece of the bill required that after three consecutive weeks of unemployment benefits a person would have to submit a resume to the Department of Commerce. The idea is to use the labor department’s information about job vacancies to help the commerce department match people with employment opportunities.
The bill anticipated a stepped-up effort for reporting to state government people on unemployment who refused job offers. In addition, the labor department would be expected to expand security reviews on claimants by cross referencing Social Security numbers, verifying citizenship and immigration status, monitoring prison and jail databases and tracking computer addresses from applicants that appeared to be outside the United States.
Tarwater, the Stilwell Republican, said he would have preferred to restore the regular unemployment benefit maximum of 16 weeks given the state’s 3.2% unemployment rate.
He said the Legislature held off because the labor department predicted flipping the switch from 26 weeks to 16 weeks would drag down the computer system and slow payments to the jobless and “none of us really wanted to be responsible for that.”
One consequence of the extended benefit period, he said, was that people would milk the extra 10 weeks of benefits rather than looking for employment.
Sen. Jeff Pittman, D-Leavenworth, said the bill would lower the state’s penalty for making a fraudulent unemployment claim from five years to 12 months. He said the existing level two felony for fraud was outrageously high and slicing it to a level five crime might not be sufficient.
“I’m still a little bit bothered by this,” said Pittman, who indicated the state’s criminal sentencing grid needed attention to remove inconsistencies.
The 13-member unemployment council would be appointed by the House, Senate and governor each selecting an employer and an employee member. Republicans in the Legislature would hold four seats on the council, while Democrats would have two.
In addition to the fraud audit, the council would make recommendations to the labor department on reform of rules and regulations relevant to the unemployment system.
“I think there’s going to be a lot of eyes on this,” said Holland, the Baldwin City Democrat. “We’re going to have a successful implementation.”