photo by: Anna Kaminski/Kansas Reflector

Kansas Gov. Laura Kelly, left, and Kansas Department of Labor secretary Amber Shultz, right, announce the launch of the state’s new online unemployment system Nov. 22, 2024, at the Statehouse in Topeka.

TOPEKA — A Kansas program aimed at preventing unemployment fraud has been caught in the crosshairs of the Trump administration’s crusade against diversity, equity and inclusion initiatives.

The U.S. Department of Labor in May canceled $400 million in unemployment insurance grants across the country. Included within the grant funding was language that the Trump administration associated with DEI initiatives, such as studying the “equity of the unemployment system” and an “equitable access director.”

A spokesperson for the department said the cuts were “part of the administration’s ongoing effort to remove unlawful DEI programs across government.”

But at the Kansas Department of Labor, the rescission didn’t eliminate any DEI programs.

Instead, it defunded a program that implemented identity verification tools, fraud analytics and safeguards to prevent criminal attacks and system failures, which were crucial in the wake of record volumes of fraudulent claims during the COVID-19 pandemic.

Amber Shultz, Kansas labor secretary, wrote a letter Thursday to U.S. Labor Secretary Lori Chavez-DeRemer, expressing her “deep concern and disappointment” over the federal government’s decision, which she called “both confusing and contradictory.”

“The rationale of canceling a grant specifically intended to detect and prevent fraud is, frankly, counterproductive,” Shultz said in the letter.

Kansas forfeited $1 million of the $1.7 million total without forewarning.

“Revoking this support now leaves states more vulnerable to the very threats we were all called to confront,” Shultz said.

She called the funding loss “a huge blow,” and said she anticipates that employers and claimants will feel the impacts, which could mean slower claims processes.

The termination notice the state received from the federal government reasoned that the grant “no longer effectuates the department’s priorities for its grant funding.”

Communication between the state and federal departments has been nonexistent. Shultz said in a phone call that she and department staff have been attempting to communicate with the federal department, without any response.

A statement to Kansas Reflector attributed to a U.S. Department of Labor spokesperson said America’s unemployment system is in an “infrastructure crisis, riddled with waste, fraud and abuse.”

The statement said the Biden administration squandered its opportunity to fix the system by focusing “on equitable access rather than advancing access for all Americans in need.”

Shultz said none of the funding for Kansas’ unemployment insurance fraud prevention grant program was used for DEI initiatives.

The federal department is fulfilling its goal, Shultz said, “if they want fraudsters to have equitable access to our funds.”

A different grant from the U.S. Department of Labor under the Biden administration, called the equity grant, gave Kansas more than $4.5 million, which the state used to ensure all Kansans could access the unemployment system. That meant focusing on rural Kansans without broadband access, Shultz said.

With the federal funding, the state fraud prevention program was able to conduct investigations and recover funds lost to fraudulent claims. During the COVID-19 pandemic, Kansas and many other states faced extreme volumes of unemployment fraud, largely from international crime rings, which took advantage of aged and vulnerable claims systems. Kansas recently recovered $11 million in fraudulent claims, which totaled around 2.4% of the $460 million in state and federal funds lost during the pandemic.

The federal department’s Office of Inspector General and the Government Accountability Office have pressed states across the country to improve fraud prevention and recovery efforts.

“Yet now we are asked to do so with fewer tools, fewer resources, and diminished federal partnership,” Shultz said in the letter to Chavez-DeRemer. “That not only undermines the substantial progress already made, but it also weakens our readiness for future crises.”

— Anna Kaminski reports for Kansas Reflector.