Biggest cut of crisis relief money for unemployment trust
RICHMOND, Va. (AP) — Like many state agencies across the country that administer jobless benefits, the Virginia Employment Commission was overwhelmed by an onslaught of applications for benefits amid the coronavirus pandemic.
The unprecedented demand exposed cracks in a system that Gov. Ralph Northam’s administration has said was long underfunded and set up to benefit business over workers.
Yet only 2% of Virginia’s funding from the latest federal coronavirus relief bill will be going toward paying for improvements at the state agency, under a budget plan the Democratic governor signed into law this week.
That compares with about 20% that will help replenish the fund that pays unemployment benefits, staving off hefty tax increases for employers.
While business groups welcomed the funding, workers’ advocates said the imbalance shows Virginia Democrats’ priorities are out of order.
“There are values that are embedded in the choices that Virginia makes about how to spend this crisis-relief money. And to see families suffering month after month without answers and without benefits from the unemployment system and say, ‘We’re going to put that money toward making employer taxes less,’ is just completely wrongheaded,” said Pat Levy-Lavelle, an attorney with the Legal Aid Justice Center.
The budget legislation directs an $862 million infusion to the unemployment insurance trust fund, the largest single chunk of spending allocated from the $4.3 billion infusion of American Rescue Plan money. Northam’s administration also says the budget will cap employers’ unemployment insurance tax rates for 2022 so they’re essentially held harmless from pandemic-related claims.
The trust fund, which had $1.3 billion in it in February 2020, is funded solely by employer taxes. It covers regular unemployment insurance, while federal money covers the new programs and expanded benefits created by federal coronavirus relief legislation.
The General Assembly previously allocated $210 million toward backfilling the fund during a special session last summer. Proponents of using this year’s relief money to pour more money back in say doing so will allow employers to focus on hiring and paying workers instead of figuring out how to pay a huge tax bill.
Nicole Riley, Virginia’s state director of the National Federation of Independent Business, said the funding would be a substantial boost to small businesses that suffered over the past year from government-mandated measures intended to slow COVID-19′s spread.
Advocates of the funding also say it will help ensure the fund is solvent and available to workers who later need it.
“It would be fiscally irresponsible to keep the fund at its currently depleted levels, and would be devastating in the event of an economic downturn,” Alena Yarmosky, the governor’s spokeswoman, wrote in an email.
Before the special session, a coalition of workers’ advocates put forward a proposal that would have offered $1,000 monthly grants to certain applicants who were waiting on their claim to be processed, Levy-Lavelle said.
Their pitch didn’t make it into the budget, which was largely hashed out privately between Northam’s administration and Democratic leaders before the special session that began Aug. 2.
Republicans, meanwhile, said the Democrats’ plan didn’t go far enough.
House GOP Leader Todd Gilbert attempted to introduce a floor substitute to the budget that, among many other changes, would have fully restored the fund to $1.3 billion. Democrats didn’t allow debate on the measure and passed it by.
Brett Vassey, president and CEO of the Virginia Manufacturers Association, said his organization, while grateful that some action was taken in this budget, hopes lawmakers will act soon to refill the fund.
“When the government creates the unemployment situation, the government has the obligation to make that whole,” he said.
The budget directs $73.6 million to fund initiatives at the employment commission, which in addition to widespread criticism has faced a class-action lawsuit over delays in processing benefits.
The money will include $37.4 million to boost call center capacity, $29.8 million to upgrade technology, nearly $4.6 million to hire additional adjudication officers and $1.8 million for extra security at career centers.
Complaints of poor customer service from the commission’s call centers have persisted since the pandemic began, despite the tens of millions of dollars the state already has spent to expand them.
In July, an official with the state’s legislative watchdog agency, which is currently reviewing the commission, told lawmakers only a “small portion” of calls related to benefits were being answered.
In an interview, Secretary of Labor Megan Healy said VEC had only 86 full-time call center workers at the start of the pandemic. The state expanded that number through third-party contracts, but that hasn’t helped many callers because those contractors don’t have access to “high-level” information about individual’s cases, such as why their application has been flagged for adjudication.
This round of money will pay for a contract with Deloitte, which is setting up a call center with “navigators” who can handle more intensive advising of complex cases, Healy said. The first wave of new agents began taking calls this month.
The $1.8 million in the budget for security was necessary because VEC employees continue to encounter confrontations, including death threats, with “irate individuals” who aren’t eligible for benefits,” Healy said.
“Some have been really scary. We take everything seriously,” she said.
Asked if the VEC was getting enough funding to fix the problems the pandemic brought to light, Healy said the budget was “a really good start.”