Kansas Department of Labor deputy secretary Peter Brady touts a new program administered by the U.S. Department of Labor for potential resources to identify issues within the current unemployment system. He said there was a possibility of getting funds through the program down the line. (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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