UPDATED: Lawmaker anger toward Labor Department boils over

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(Updated to include that new technology will be added to the state’s unemployment system this weekend to prevent false claims.)

Lawmakers on Wednesday vented their anger toward the state Labor Department amid  mushrooming unemployment fraud claims and a flood of questions from constituents complaining that they can’t reach anyone at the agency.

Members on the House Appropriations Committee took out their ire on the agency, demanding more answers for taxpayers who are swamping them with emails – early in the morning and late at night – about their unemployment claims.

“I’ve had numerous calls from individuals in my district – even people from outside of my district – needing assistance with the Department of Labor and this has been going on for months,” said Rep. Troy Waymaster, chair of the committee.

“The communication, in my opinion, is horrible,” he said. “As somebody who began his corporate career in customer service, it’s detestable. This is not customer service.”

The increasing frustration comes at a time when the Labor Department is seeking $37 million in the state budget for upgrading an aging computer system that’s been blamed for a lot of the agency’s problems coping with the economic fallout of the pandemic.

The issues at the Labor Department are taking on a larger issue as Republican leaders in the House are growing worried about the amount of fraudulent claims the state may have paid out in recent months that could impact Kansas businesses.

House leadership planned to introduce a bill that would hold businesses, universities, school districts and nonprofits harmless for any fraudulent claims paid out on their behalf.

“We have to stop the fraud,” said Republican state Rep. Sean Tarwater, chairman of the House commerce committee.

“We have to figure out how much it is and put the money back into our (unemployment) trust fund,” he said in a statement.

“Our businesses will have to spend more money in unemployment insurance than they pay in taxes.”

Meanwhile, late Wednesday afternoon, the governor announced the state unemployment system would be shut down starting this weekend to install enhanced identity verification tools to stop the filing of fraudulent claims.

Republican lawmakers have pressed the Labor Department repeatedly to estimate how much it has paid out in fraudulent claims without getting an answer.

Labor officials have said they are working to assemble that information as part of a state legislative audit into the fraud claims.

They have said they don’t have the analytics tools to determine how much has been paid in fraud claims, although they expect to have them in a couple weeks.

Meanwhile, Republican lawmakers are worried that fraudulent claims will spend down the state’s unemployment trust fund, forcing the state to borrow millons – albeit at no interest – to replenish the fund.

As of Jan. 16, the trust fund had a balance of $273 million after starting 2020 with about $1 billion in the fund.

The Labor Department has already indicated that the fund would be solvent through June 30, although Republicans question whether that’s sustainable with the sudden soaring number of new jobless claims.

Both Republicans and Democrats are getting increasingly upset over the department’s handling of calls that are coming into the agency in unprecedented numbers, driven by a mix of the pandemic and ongoing fraud claims submitted on behalf of taxpayers.

“My patience has run out,” said Democratic state Rep. Henry Helgerson of
Eastborough. “We want it turned around immediately. We expect things to change.”

Democratic Rep. Kathy Wolfe Moore took a gentler approach, suggesting that the agency would best be served if callers could connect with someone at the department.

“I’m getting lots and lots of emails,” she said. “The main complaint seems to be that they can’t get to a person. I think information would be helpful if they could talk to a person and maybe understand a little about where they are,” she said.

“When they can’t get to anybody at all, I think, that’s what’s causing a lot of the angst.”

Acting Labor Secretary Brett Flachsbarth noted there are a number of issues that factor into processing claims, whether it’s just the sheer volume of needs, the time it takes to resolve eligibility disputes or detecting identity theft.

“I don’t doubt there’s definitely still people in need just because of the high, high volumes of the people that need service,” Flachsbarth said.

“We are getting more benefits out, and we’re getting people service quicker.”

Labor officials told lawmakers the Labor Department’s call center started with 20 employees when the pandemic began last spring.

The agency now has 450 people staffing the agency’s call center.

And even still, it’s not enough to address the increasing number of claims coming into the agency. Kansas had the second highest increase nationally in the number of initial unemployment claims for the week ending Jan. 9.

The state is seeing a surge in initial unemployment claims that exceeds anything recorded since the pandemic started last spring.

For the week of Jan. 16, there were 76,513 initial jobless claims filed, up from 45,743 at the start of the month.

It has been unclear just how much of that increase can be pegged to fraudulent claims, leaving lawmakers worried and concerned.

The Labor Department spokesman has not responded to multiple emails since last fall asking about how much of the increase in claims can be attributed to fraud.

On Monday, there were 250,000 call attempts placed to the agency, another sign of the increasing number of claims burying the department.

Labor officials figure it would need 1,500 people to keep up with the current call volume coming into the agency, a staffing level they said was impossible to meet.

“We hear the critcism. We appreciate it and we are working to address that,” said Ryan Wright, the former acting secretary for the agency.

“At this point if somebody is not going to get paid, there’s a reason for that more likely than not,” he said.

Wright said the agency is setting up a “legislative help desk” to help lawmakers field requests from individual residents.

Wright said the goal is to help lawmakers provide fuller and more timely anwers to their constituents.

He emphasized the agency expects to soon have analysis tools in place that will help verify the identity of people filing claims and root out fraud.

Gov. Laura Kelly on Wednesday acknowledged that the surge in unemployment claims might be related to fraud.

Kelly said the unemployment system will be shut down from Saturday to Tuesday to install the enhanced verificaton technology to help root out the fradulent claims.

She said applicants will be required to provide more personal details that will be harder to steal.

“A number of other states have already done this,” Kelly said.

“We were not able to get to it as quickly because we’ve got this 45-year-old antiquated system that really required a lot of preparation to be able to move over here.”

Wright said that should stop the letters of fraudulent claims that have been going to Kansans that have led to all the questions to lawmakers.

“We’re hoping that will be a game changer,” he said, “and we’ll start clearing out this fraud so that we can really focus on those people that have legitimate concerns that need to be addressed right now.”