Kansas legislators seek quicker fix to labor department’s woes amid rise in fraudulent claims

photo by: Screenshot/Kansas Department of Labor

The Kansas Department of Labor unemployment benefits website is pictured Tuesday, Sept. 29, 2020.

TOPEKA — State legislators expressed displeasure Thursday with timeliness of the response from the Kansas Department of Labor to a record number of fraudulent unemployment claims surfacing during the COVID-19 pandemic.

Unemployment fraud has spiked in recent months across the nation, and Kansas has been no exception. This year, KDOL experienced upwards of 125,000 of these claims while operating under an outdated computer system.

The department is currently undergoing the arduous task of modernizing its computer system that manages unemployment benefits, but legislators on the Joint Committee on Information Technology said that does not account for issues Kansans are facing now.

Rep. Jeff Pittman, a Leavenworth Democrat, acknowledged a national issue might make the root of the problem harder to pinpoint but said KDOL must come up with a better strategy to protect people pending completion of a computer system overhaul.

“I have people that are stuck in the fraud search cycle that I know inside of my community, who’ve been redirected to the fraud department, and it doesn’t seem to be a very consistent way of dealing with those folks,” Pittman said. “We need to have some path before modernization to take care of those folks that are either victims of fraud or are being accused of fraud but aren’t.”

Pittman and two other legislators on the committee expressed concern with rising unemployment insurance fraud cases during testimony from KDOL’s deputy secretary. They also addressed the department’s progress digging out from a sizable backlog of unsettled unemployment claims.

In response to the rise in fraudulent claims, the labor department has instituted several IT patches to help stabilize the network, doubled the size of its fraud team and expanded digital tools on the back end.

While efforts to mitigate the problems are appreciated, they are insufficient, said Sen. Caryn Tyson, a Parker Republican. She said the timeline to institute widespread system modernization is too slow.

“You’ve heard the term analysis paralysis. Well, it seems to me that we might be there because you guys have been looking at this for over two years,” Tyson said. “This has become one of the major, if not the major issue for the state of Kansas, and I cannot sit back as a legislator, knowing the calls that we have received. The identity theft is out of control.”

In response to the senator, KDOL deputy secretary Brett Flachsbarth said the agency was working aggressively to push ahead with modernization. He cautioned against cutting corners for the sake of expediency.

“We understand the need for speed, but we also need to understand the need to get it done right, in a way that will produce a viable project,” Flachsbarth said. “In terms of the fraud component, you are correct. Identity theft is rampant. But again, this is not an issue that is isolated to Kansas. This is a nationwide problem.”

He said KDOL has been in frequent contact with the U.S. Department of Labor and the National Association of State Workforce Agencies on how to address this issue. Even with a fully modernized computer system, Kansans would be susceptible to potential fraud, but upgrades would increase the state’s verification capabilities and responsiveness to fraud claims.

It would also help responsiveness to the unemployment claim system in economic crises like the one Kansas is currently experiencing as a result of the pandemic. KDOL has been working to recover from a chaotic few months where the unemployment compensation system became overwhelmed by the number of new claimants seeking benefits.

The departmental crises was a factor in the resignation of Labor Secretary Delia Garcia. When Garcia’s replacement, Ryan Wright, was appointed the backlog of claims stood at 25,000. Wright vowed to get that number reduced significantly.

Now that number is tentatively closer to 8,000, Flachsbarth said.

While it is not quite back to baseline numbers yet, Sen. Kevin Braun, a Kansas City Republican, acknowledged the KDOL’s effort to come through on its goal of eliminating the backlog.

“That is significant. That is appreciated,” Braun said. “It’s still not going to be enough until we get back to baseline, but I believe you’ve delivered on your commitment.”

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