Kansas failed to pursue a plan to upgrade its unemployment system; then it was hit with $700M in fraudulent claims

TOPEKA — A software company urged Kansas to upgrade its computer system for handling claims for unemployment benefits, but the state didn’t heed that advice five years before a flood of fraudulent claims across the U.S. during the coronavirus pandemic.

The Topeka Capital-Journal reports that Oracle proposed in 2015 that the Kansas Department of Labor do the upgrade to prevent fraud. The department had put a yearslong modernization project on hold in 2011 under then-Republican Gov. Sam Brownback.

Democratic Gov. Laura Kelly has blamed the department’s aged system, with technology dating back to the 1970s, for problems in processing unemployment benefits and preventing fraud as both legitimate and fraudulent claims surged last year. The state is preparing to launch another modernization project.

The previous modernization project had three contractors in seven years before Brownback’s administration concluded in 2011 that it was seriously off track. That assessment still is debated.

In response to Oracle’s proposal, Department of Labor leaders concluded much of an upgrade could be handled in-house, even though the agency had cut its information technology staff.

Michael Blatchford, an IT architect on the canceled modernization project, said accepting Oracle’s proposal would have minimized fraud. A recent legislative audit estimated that Kansas may have paid roughly $700 million in fraudulent claims from January 2020 through February 2021.

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