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Plan for state unemployment agency focus of workers’ rally

November 12, 2017

Employees and union representatives at the state Department of Labor and Industry have planned a rally for Tuesday at the Capitol in an effort to urge lawmakers to come up with a better solution to a proposed three-year phase out of state funding to help underwrite the cost of operating Pennsylvania’s unemployment compensation system.

Already, lawmakers have initiated two temporary funding solutions, but they’re soon to expire, which would put the program for jobless workers in peril.

“Unfortunately, federal funds have been steadily declining since the mid-90s and we’ve already had a glimpse of what it would be like to administer the unemployment program solely on federal dollars this past winter when claimants faced rampant busy signals and delayed services,” said state Rep. Maria Donatucci (D-185), chair of the Philadelphia delegation and a member of the House Labor and Industry Committee.

“Also, it is important to note that this is not an issue that is unique to Pennsylvania,” she said. “There are actually several states that are currently providing supplemental funding for the administration of their unemployment programs due to declining federal funds.”

Funding for the state’s unemployment compensation call center has been at the heart of a dispute between conservative Republican legislators who feel that previous funding for call centers and technology upgrades has been mismanaged.

Rep. Rob Kauffman (R-89), the majority chairman for the House Labor and Industry Committee that oversees the department, introduced legislation that could result in the state getting out of funding the UC system. The measure would provide an initial boost of $75 million in state funding to help modernize the UC system to where it can be fully funded by a federal appropriation of $130 million a year.

Kauffman’s proposal includes a three-year phase out of state funding that would assist in underwriting the cost of operating the UC system until the Labor and Industry Department could determine how to operate it on the $130 million appropriation.

“My bill would provide the funding the department needs to complete its project and allow enough time for officials to take a hard look at the budget and make the necessary changes to create a more efficient operation that will continue to provide great service to those accessing the UC program,” Kauffman said in a statement.

“Funding from the state was always supposed to be temporary, so the UC program should have the ability to fully operate on the funding it receives from the federal government,” he said. “The computer system is an additional cost and my legislation accounts for that and graciously offers the funding needed for the project to reach completion.”

Rep. Morgan Cephas (D-192), a member of the House Labor and Industry Committee, said Kauffman’s proposal marked a good start, but a deeper look was needed to ensure that a funding plan did not miss the mark.

“The already overburdened system needs state support to increase efficiency, and to be able to provide workers the ability to rightfully access a system they already paid into. With the closing of unemployment service and call centers and the laying off of over 500 employees, there were and continue to be increased delays in service to our constituents which border on crisis,” Cephas said.

“This all goes back to the goal of unemployment insurance programs, which is to provide benefits to those who are unemployed through no fault of their own, are ready and willing to work, and financially eligible for benefits,” she said.

With that goal in mind, lawmakers should strive to ensure that there are no additional barriers to those who are struggling to get back on their feet, Cephas added.

“To do this, the legislature must work together toward a funding plan that would provide Pennsylvanians with the service they deserve,” she said.

A spokesperson for Gov. Tom Wolf didn’t immediately respond to a request for comment.

Department of Labor and Industry spokeswoman Theresa Elliott said, while operating solely on federal money, 4.3 million people who called UC centers during a one-week period had encountered busy signals while others spent an average of more than five hours on hold waiting to speak to an agent.

“If we were to maintain our current operations and staffing levels, we project a budget deficit of $28.5 million in 2018. The budget deficit would continue to increase each year to $38.5 million in 2020,” Kaufmann told reporters.

“If we operate solely on federal dollars, we would need to make staff reductions of a little more than 300 positions in 2018, with additional staffing reductions of approximately 45 in 2019 and 2020. The potential impact on services would be dire,” she said.

In 2013, the state started directing a portion of the revenue from an unemployment compensation tax that Pennsylvania workers and employers pay into a temporary special fund to support the UC system.

At the time, lawmakers gave it an expiration date of December 2016. During the ensuing years, $178 million reportedly went into that fund, which many lawmakers believed was being spent mostly on improving the system’s technology.

However, the state spent another $170 million on a contract with IBM for a later-terminated computer project that ultimately ran $60 million over budget and was 45 months behind schedule.

Earlier this year, Wolf filed a lawsuit against IBM over that project.

Last year, the department laid off 521 employees and closed three service centers after a Service and Infrastructure Improvement Fund expired.

Rep. John Galloway (D-140), the ranking Democrat on the House Labor and Industry Committee, said Kauffman’s proposal should at least get everyone talking.

“Democrats are reviewing his proposal along with talking to interested stakeholders, including representatives of UC employees, and what Labor & Industry believes is necessary to ensure uninterrupted prompt service to UC claimants in future years,” Galloway said.