Labor Cabinet Testifies on Claims, IT System Concerns

Members of the Unemployment Insurance Reform Task Force questioned Labor Cabinet officials Thursday morning about plans to update the state’s computer systems, process backlogged claims, and prosecute employees accused of fraudulently filing reports.

Kentucky Labor Cabinet Secretary Jamie Link explained that the request for proposals (RFP) for a new unemployment insurance (UI) computer system closed on October 26. He described the current system as “woefully outdated.” Link previously testified about increasing efficiencies and security with the new system, and legislators set aside $47.5 million for the project. Link expects it will take 18 to 24 months to design, build, and implement a new system once the state accepts a proposal.

Representative Phillip Pratt (R-Georgetown) questioned why Kentucky would request to build a new system from the ground up instead of buying “off of the shelf.”

“I want to make sure that we spend our taxpayer dollars wisely in doing this because this is a lot of money,” Pratt said. “We’re getting ready to spend on a new system when, in my opinion, there’s a cheaper way to go.”

Link defended the decision because the process allowed the commonwealth to own the code and make future updates on their timeline. He added that UI is currently taking other steps to improve the existing system due to the time expected to get a new option in place.

“We are taking every measure we can to improve upon the existing system with fraud prevention measures and other efficiencies that we can find and updating the current system because we have a year-and-a-half to two years before the new system will be implemented, and we need to make improvements now,” Link said.

Office of UI Executive Director Buddy Hoskinson testified about the current number of unemployment claims. Hoskinson reported 84,000 claims with about 60,000 for regular unemployment insurance, 3,800 for Pandemic Emergency Unemployment Compensation (PEUC), and the remainder consisting of Pandemic Unemployment Assistance (PUA) claims.

When asked how long it will take to clear the backlog of claims from 2020, Hoskinson said UI is working on clearing those claims while not delaying new claims. He explained that current staffing levels could close approximately 12,000 claims per month.

Questions remain about the 37 employees accused of filing fraudulent claims during the pandemic. Representative Pratt reported results of an open records request that showed the Cabinet terminated one employee and suspended eight. “How can we let these people off?” Pratt asked. “They have stolen money from taxpayers, and they’re still getting paid by taxpayers.”

Cabinet General Counsel Sam Flynn stated that the Cabinet referred all cases involving potential wrongdoing to law enforcement officials who chose not to prosecute.