TOPEKA — The Kansas Department of Labor said Thursday the state experienced a resurgence during recent weeks in fraudulent attempts to rip off the unemployment insurance trust fund.
Peter Brady, deputy secretary at the labor department, told a joint hearing of the House and Senate commerce committees of an uptick in suspicious initial claims for benefits that numbered between 1,000 to 1,500 per week. It doesn’t compare to the tens of thousands of corrupt attempts made early in the pandemic resulting in an estimated loss in Kansas of $700 million in state and federal unemployment benefit dollars to domestic and international crooks.
“The scale is drastically lower, but also an indication that we need to remain vigilant,” Brady said.
He said installation of sophisticated layers of security had diminished the ability of criminals to dip into the state’s jobless trust fund. That stopped millions of bot attacks from Africa, Asia, Eastern Europe as well as the United States on the state’s unemployment insurance computer system, he said.
In addition, Brady said, renewal of the one-week waiting period on jobless claim applications provided the Department of Labor more time to evaluate initial claims for potential deception. At outset of the pandemic, the one-week delay was suspended in an attempt to speed financial aid to people out of work.
The state Department of Labor since March 2020 has paid out $3.3 billion in regular and supplemental jobless benefits on 5.2 million weekly claims.
Labor secretary Amber Shultz told senators and representatives that much had changed at the agency and in the economy during the past 22 months to help the state deal with the challenges. She said the agency would be more capable of grappling with an unemployment rate that spiked to 12% early in the pandemic and left 187,000 people without a job in early 2020. The U.S. Bureau of Labor Statistics says the Kansas unemployment rate fell to 3.3% in December with 50,000 people in the market for a job.
“I’m not going to sugar-coat — 2021 was a very, very difficult year,” she said. “We are in a much, much better place, but we still have a ways to go.”
Rep. Ken Rahjes, a Republican from Agra, said he was grateful two top officials appeared before the committee and addressed shortcomings in the state’s work to move jobless benefits to Kansans. The work shouldn’t be political, he said, because “we’ve got to be a team. The key word is trust.”
Members of the House and Senate commerce committees met jointly to gather insights in the Kansas Department of Labor’s work to improve the system for delivering unemployment benefits in accurate and timely manner. (Screen capture/Kansas Reflector)
House and Senate commerce committee members met to gather insight into the Kansas Department of Labor’s work to improve the delivery of unemployment benefits in an accurate and timely manner. (Screen capture/Kansas Reflector)
The state’s unemployment trust fund held $671 million at close of 2021, but that amount would be insufficient to meet benefit demand for one year assuming the state fell into a major recession or the pandemic intensified. The U.S. Department of Labor’s solvency measure looks at three years of extremely high payouts by a state, which in Kansas would be 2009 and 2010 during the so-called great recession and 2021 amid the COVID-19 pandemic.
Rep. Shawn Tarwater, the Stilwell Republican and chairman of the House Commerce, Labor and Economic Development Committee, said he was irritated with Department of Labor’s process of soliciting bidders for the agency’s IT modernization program. The Republican-led Legislature set up a special council to provide oversight of the agency’s work on the contract. Bidders were Accenture of Chicago, FAST Enterprises of Colorado, Sagitec of Minnesota, and Tata Consultancy Services of New Jersey.
Tarwater said legislators advised the labor department to avoid “several companies” and sought to extend the window for bidders to respond for the request for proposals. Negotiations are underway at the labor department with the preferred bidder, but no announcement has been made.
“The RFP was written rather narrowly and looked like it was written for a specific company,” Tarwater said. “My inkling is that company will get this deal.”
