On Wednesday I visited with Gov. Laura Kelly by phone for 25 minutes. 
In arranging for the interview, I was told the Governor could give me 15 minutes to concentrate on economic development, transportation and Medicaid expansion — basically the highs and lows of her administration thus far.
What floated to the top was our discussion of the Kansas Department of Labor’s handling of the unemployment claims during the pandemic and the accusations of mismanagement, most recently leveled by Sen. Caryn Tyson, who earlier this week said KDOL employees were inept during the crisis.
Kelly gave a multi-pronged answer.
First, the department’s computer system was installed in 1977 — “The same year Elvis died,” a handy mnemonic device for Kelly — and was overwhelmed by the influx of requests for unemployment benefits spurred by the COVID-19 pandemic.
In the span of one month, unemployment in Kansas went from a historic low of 2.8% to 12.6%.
Prior to the pandemic there were approximately 20 employees handling unemployment claims. On one busy day during the pandemic, the contact center recorded 1.6 million attempted calls.
It was all hands on deck. Employees from the departments of Commerce, Agriculture and other divisions lent their support to help process claims. Perhaps, unwittingly, these are “the flaws on the human side,” Tyson is referring to.
The Department also hired an additional 300 employees with the help of Accenture, a business and technology consulting firm.
In addition to the massive increase in unemployment claims, Kansas, along with every other state in the nation, saw a significant escalation of fraud and identity theft. The U.S. Department of Labor estimates the total impact at $36 billion. California alone paid out more than $11.4 billion in illicit claims; Washington, $600 million; Ohio, $300 million.
Kansas processed $140 million in fraudulent claims for regular unemployment and another $150 million for claims pertaining to federal programs funded by the CARES Act and others offering pandemic relief
Another aspect of the federal relief was Congress’ demand that state IT departments accommodate three entirely new unemployment programs.
It was when the CARES Act and other federal relief programs were hastily enacted during the pandemic that the massive fraud began. According to a press release by Amber Shultz, Kansas Secretary of Labor, “Congress opened the door for this historic level of fraud when they created multiple new pandemic-related unemployment programs, and at the same time prohibited states from asking basic verification questions.”
In December 2020, the Continued Assistance Act was signed into law, allowing states to follow their normal — and aggressive — procedures verifying claimant information.
“It was a perfect storm,” Kelly said of the confluence of the fraudulent claims, skyrocketing unemployment, and the Department of Labor’s vulnerable computer system.
