KY HOUSE OF REPRESENTATIVES
As we are all well aware, Kentucky's Unemployment Insurance (UI) Program has been riddled with issues since the state shutdown in mid-March last year. Through the use of executive orders, the Governor put thousands of Kentuckians out of work without any apparent consideration of how a system designed to serve a relatively low caseload would handle skyrocketing claim numbers. As a result, there are still more than 100,000 claims that remain unprocessed, communication with the UI Office is virtually non-existent, and there are more questions than answers.
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The Audit focused on several problems, the most infuriating of which was that the UI Office archived more than 400,000 unread emails. Yes, you read that correctly, more than 400,000 emails were ignored without any regard for the people who sent them. These are messages from Kentuckians inquiring about their applications for benefits, many at the end of their financial rope and likely still wondering why their claims have not been processed.
In addition to the unread emails, the UI Program also appeared to have violated federal law and sacrificed program integrity by adopting an auto-pay approach that allowed benefits to be paid without requiring claimants to report the weekly wage information required to determine eligibility. That’s right, claims were paid without verifying whether or not they were eligible. In fact, more than $655 million in claims were paid while the UI
Office was using auto-pay. Many of these claims were valid, but many were not.To get a sense of how big a problem the auto-pay approach was, the Auditor’s Office sampled 37 cases and found that 16 people were paid unemployment benefits for the loss of part-time jobs despite still being employed. The net over-payment in this sample was more than $116,000.
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The Auditor’s Office also found multiple issues with security and data processing. Basic security protocols like vetting employees and requiring password resets were far too relaxed. This may help to explain the security breach that was discovered only after someone filing a claim reported they were able to see social security numbers and other personal identity information belonging to other people. Sadly, this happened more than once.
The number of unprocessed claims and the Auditor’s report are disturbing enough on their own. Add to that the fact that employers now face a $100 per employee increase in their unemployment insurance premiums, despite the fact the pandemic and the state’s response to it caused the job losses. This increase is automatically triggered when the UI fund is depleted as it is now. The Governor took out loans from the federal government to shore up the UI Trust Fund and these loans must be repaid. Those loans already stand at more than $700 million and are expected to grow as unemployment numbers continue to remain high. Ultimately, this means already struggling employers are going to have a much more difficult time making ends meet, which could easily lead to more businesses closing or eliminating positions.
The legislature is limited in what can be done to address the unprocessed claims, but the Auditor’s Office has already focused on areas of improvement in how the UI fund is administered. Legislation is being considered that is aimed at keeping people off of unemployment by preserving jobs. I sit on the House Economic Development and Workforce Investment Committee and we passed House Bill 413 (HB-413) this past week. The bill suspends an increase in the taxable wage base per employee which is used by employers to determine the amount of UI tax to be paid, keeps that rate at the same level for two years, and suspends the state UI surcharge for two years. The bill would also require that unemployment insurance claims that are the direct result of state and federal emergencies be paid out of a pooled account, rather than the employer’s account. I voted Yes and the bill has been sent to the full House for action.
