As backlog of unemployment claims decreases, Kansas Department of Labor leader looks ahead to system improvements
After Kansas’ unemployment system was overwhelmed by a backlog of claims amid the worst of the coronavirus pandemic, the number of people waiting on benefits has now fallen substantially, and state labor department officials say new programs and system improvements are underway.
When unemployment claims were at their height during the coronavirus pandemic, the Kansas Department of Labor was overwhelmed with both legitimate and fraudulent claims, and many people with valid claims were unable to get through on the phone as they waited for weeks or in some cases months for their benefits, as the Journal-World previously reported. As the pandemic has eased, claims, calls and backlogged applications have fallen substantially. Amber Shultz, the secretary for the Kansas Department of Labor, says the backlogged claims will continue to be addressed, as will the problems with the department’s system that the pandemic highlighted.
“We still have a long road to go, but we’ve made a lot of progress,” Shultz said. “I still understand that people are not getting paid and there’s a lot of frustration, so we will not stop working until every single penny is paid to those legitimate claimants.”
Shultz, who lives in and also grew up in Lawrence, started at the Department of Labor as the acting secretary in early 2021. She took over after a tumultuous 2020, in which the department’s top leader resigned amid problems distributing unemployment benefits and inadequacies with the department’s approximately 40-year-old computer system. Before Shultz was appointed, multiple people held the post at different times in an interim capacity.
Shultz has worked in her field for 25 years. Before becoming labor secretary, she worked for a year and a half as the general manager of the City of Lawrence Municipal Services and Operations Department. Prior to that, she was the deputy director of public works for the City of Topeka and the assistant IT director for Jackson County, Mo.
Now, she’s served approximately 90 days at the Department of Labor, and in addition to the continued effort to address backlogs, she is excited about the recent relaunch of the department’s re-employment program, a planned $40 million upgrade to the department’s computer system and other efforts.
At the height of demand during the pandemic, the labor department had approximately 50,000 backlogged unemployment claims — about 25,000 in regular unemployment claims and 25,000 in the federal unemployment relief programs related to the pandemic, according to data the department provided the Journal-World. The backlog in regular unemployment claims was eliminated in January, and as of June 1 the number of pandemic-related claims that still need to be adjudicated is approximately 590. KDOL communications manager Becky Shaffer said in an email to the Journal-World that regular unemployment claims were now in line with the timelines set in state statute.
“If there are no issues with a person’s unemployment claim, the average turnaround time for paying out on a regular (unemployment) claim is approximately six days,” Shaffer said. “If a claim is disputed and needs to be adjudicated, it could take up to a month.”
As the Journal-World reported, many struggled to afford basic needs while waiting for their benefits amid the worst of the pandemic. Further complicating matters, many could not contact the department to resolve issues with their claims, because thousands of people were trying to get through on the phone and staffing was limited. Staffing has since been increased at the department, and the number of calls has also fallen. Over the last eight weeks, the average number of unique callers per day has gone from more than 150,000 to about 35,000, according to KDOL data.
Shultz said the labor department does not yet have an estimate for when the backlog of pandemic-related claims will be worked through, but the department is working to ensure it identifies all outstanding claims and what issues need to be resolved.
“We still have a lot to do for sure, but we’ve really come a long way. We can definitely see the light at the end of the tunnel,” Shultz said.
Part of the problem has been the high level of fraudulent claims. At its worst, the influx of fraudulent claims — many of which Shultz said came from sophisticated and sometimes internationally based crime rings — overwhelmed the system and prevented the department from getting to legitimate claims in a timely manner. Fraudsters used stolen identities to file illegitimate claims and also broke into the system and hijacked legitimate claims by rerouting payments to different addresses or bank accounts. An internal department analysis estimates the department paid $290 million in fraudulent unemployment claims in 2020, and the department temporary shut down the system in January for a few days to install a new identity verification component to the login process. Outside inquiries into the fraud are ongoing, and a legislative audit estimated that number could be as high as $600 million, though the department disputed that and has asked that the report be withdrawn due to factual errors, as The Associated Press has reported.
Shultz said fraud was a nationwide issue, and the department has referred about 50,000 fraudulent payouts to law enforcement for investigation. She also said some funds have been recouped and an announcement will be made in the future to provide an update. Although some would-be fraudsters appear to have moved on since the stronger fraud protections were put in place, she said the system was still blocking fraud attempts.
“We’ve now stopped over 500,000 fraud attempts, and if those had been paid out, it would be about $22 billion,” Shultz said.
There have been three federal unemployment relief programs related to the pandemic, and the most recent program, enacted under the American Rescue Plan, is scheduled to end Sept. 4. Since March 15, 2020, KDOL has paid out over 4.5 million weekly claims totaling over $2.9 billion in both regular unemployment claims and the federal pandemic relief programs, according to KDOL data.
Some states have chosen to end the most recent extended benefits, claiming they are discouraging people from rejoining the workforce, and some businesses have called for Kansas to do the same amid workforce shortages. However, Kansas Gov. Laura Kelly has argued the reasons for the workforce shortage are multifaceted and include several factors that predate COVID-19, such as low wages and a lack of health care and child care coverage, according to a news release from her office. Kelly has also noted that even if the estimated 33,000 people still on the extended unemployment program in Kansas immediately joined the workforce, there would still be shortages, because the state currently has 57,000 job vacancies.
However, there are recent changes to requirements for those receiving unemployment benefits. An executive order waiving a work search requirement has expired, and the department began communicating that change to claimants in February, according to KDOL communications director Jerry Grasso. Additionally, on March 25, Kelly announced the relaunch of the Reemployment Services and Eligibility Assessment program, which refers those receiving benefits to the Kansas Department of Commerce for services that can help them reenter the workforce. The Continued Assistance Act also mandated additional requirements.
Shultz said one of those requirements is that beginning June 1, any person who has received three consecutive weeks of unemployment benefits must participate in the My Re-employment Plan program. The program is a collaboration between the labor department and the Kansas Department of Commerce and requires those receiving benefits for three consecutive weeks to provide the Department of Commerce a resume or work history, a skills list and a job search plan to remain eligible for benefits. Shultz said if they chose not to search for work or participate in the program, they could lose benefits.
“We’re going to send them over to (the Department of) Commerce, who is going to provide them tools and training and coaching so that they can reenter the workforce,” Shultz said.
Shultz said the new law also expanded the department’s shared work program, which is meant to help businesses avoid layoffs by allowing employees whose hours have to be reduced to claim partial unemployment benefits. Apart from working on those programs, Shultz said her major goals for the next 90 days or so will be taking steps toward the replacement of the department’s aging computer system.
“Aside from getting those back payments out and legitimate claims paid, we’re really going to start focusing on modernization,” Shultz said.
About $40 million was included in the state’s budget to modernize the system, and Shultz said a request for proposals recently closed. Once those proposals are evaluated and a new system is selected, Shultz said it won’t be a quick fix; because the system is so large and complicated, elements of the new system will have to be phased in. She said it’s estimated that process will be complete by the fall of 2023.