photo by: Kansas Reflector screen capture of Kansas Legislature video

Amber Shultz, the secretary of the Kansas Department of Labor, tells legislators at a Jun. 10, 2025, hearing about the status of the funds recovered after an unprecedented amount of fraudulent unemployment payments during the pandemic.

TOPEKA — A small percentage of funds stolen from Kansas’ unemployment system during the pandemic have been recovered, the state labor secretary says, but time is running out to find the rest.

The Kansas Department of Labor processed hundreds of millions of dollars in fraudulent unemployment payments during the COVID-19 pandemic, more than half of which came from state funds.

Amber Shultz, the state labor secretary, called it an “extremely stressful and unfortunate part of our agency’s history.”

She told legislators at a Jun. 10 hearing that the state has recovered about 2.4% of fraudulent funds, or $11 million.

The state labor department processed about $460 million in fraudulent payments during the pandemic, said Derek Helms, a department spokesman. An initial 2021 audit put the number at $700 million in processed fraudulent claims, which was deemed incorrect when the department refined the numbers, Helms said.

Of the $460 million lost, $292 million were from state funding, and the remaining $168 million were federal funds, he said.

The onus of recovering lost funds has fallen on banks and law enforcement. The labor department works with them but there are limits to its investigating power.

“The department can only prepare and recommend cases for prosecution,” Helms said. “Once we do that, we’re out of the mix.”

Sen. Rick Billinger, a Goodland Republican, wondered at a meeting of the Senate Committee on Government Efficiency why Kansas lost the money it did when other states had similar computer systems and didn’t lose nearly as much.

He pointed to Colorado, which had a similar computer system to Kansas and reportedly paid out around $73 million in fraudulent claims. He called it a “drop in the bucket” compared to Kansas’ total.

“That’s why this bothers me,” Billinger said.

The U.S. Department of Labor estimates it processed between $100 billion and $135 billion in fraudulent claims across the country. About 1.2% of that has been recovered

As the five-year statute of limitations on fraud prosecution looms, the possibility of fraudsters being held accountable wanes, but Shultz was realistic about federal lawmakers making a change. The U.S. House passed the Pandemic Unemployment Fraud Enforcement Act in March, which could extend the statute of limitations, with all four of Kansas’ House members voting in favor of the bill. It has stalled in the U.S. Senate, however.

Shultz said sophisticated international crime rings filed the majority of fraudulent claims, making investigations and prosecutions even more difficult.

Before the pandemic, she said Kansas saw little unemployment fraud. The unparalleled surge in unemployment claims during the COVID-19 pandemic overwhelmed the state’s 1970s-era system, leading to millions in lost payments.

“The scammers thought, ‘This is pretty good money,’ ” Shultz said. “And so what we started seeing is people either stealing identities, or they would hijack claims.”

Now, that fraud is once again “incredibly rare,” Helms said.

The department launched a long-awaited new system in November, which has seen early success. It has reduced claims processing times and the number of calls to the agency’s contact center, and it has increased people successfully filing claims online without staff assistance, according to agency data.