Kentucky Unemployment Insurance Transition Update and Budget Review 2020

KY Office of Unemployment Insurance Transition Update Kentucky Career Center Update Budget Review Subcommittee on Education | September 16, 2020

Presenters Commonwealth of Kentucky Labor Cabinet Secretary Larry Roberts Deputy Sec. Amy Cubbage Education and Workforce Development Cabinet Beth Roark, Executive Director of the Office of Administrative Services

OUI /CDO Transition from EWDC to Labor The Office of Unemployment Insurance and Career Development Office officially re-organized to the Labor Cabinet on August 16, 2020 by Executive Order. The Labor Cabinet has continued to utilize limited detailed staff from other state agencies and detailed staff from Career Development Office to assist constituents with UI claims to ensure timely processing and payment On August 3, 2020, Secretary Roberts appointed Buddy Hoskinson as Interim Executive Director of OUI: Mr. Hoskinson, former Executive Director of the Kentucky Office of Education and Training (the former combined entity housing OUI and CDO), has an invaluable knowledge or state government and the unemployment insurance system Secretary Roberts appointed Jonathan Pendergrass as Interim Executive Director of CDO: Mr. Pendergrass began working for Career Development 18 years ago and most recently served as a Regional Program Manager of the West Kentucky and Green River Areas. His vast knowledge and experience in the Career Development Office will be invaluable moving forward

OUI Transition from EWDC to Labor OUI conducted in-person UI assistance beginning in June in Frankfort and other locations throughout the state ending in Louisville in August. In-person UI assistance available in Frankfort Monday Friday each week since July. UI and CDO staff combined into teams to address unresolved claims with emphasis on March and April Claims.

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Kentucky Career Centers Bowling Green Covington Elizabethtown Hazard Hopkinsville Lexington Louisville Morehead Owensboro Paducah Prestonsburg Somerset

Kentucky OUI in 2020, Pre-COVID: Technology Staffing There were zero staff dedicated to in-person unemployment services at Career Centers Only 23 staff in the Adjudications Branch who could adjudicate UI claims. 12 staff located at call centers to assist UI Claimants Overdue technology upgrades A UI system that was still coded in 1970 s COBOL RFP for a new system was released in 2020, just before COVID-19 The unemployment office budget went from $41 million in 2010 to $25 million in 2018

Kentucky OUI Today Approximately 50 employees assigned to Benefits Branch (15 UI employees, 15 Adecco employees and 28 detailed from CDO) Approximately 40 employees assigned to Adjudication Branch (23 UI employees and 17 detailed from CDO) 12 employees answering phones at Call Centers Approximately 50 employees making calls to UI claimants

Kentucky OUI & CDO Budget Office of Unemployment Insurance Personnel 18A FFTL $21,582,100 133 employees 30 employees Career Development Office Personnel 18A FFTL $11,855,500 60 employees 33 employees

Budget and staffing cuts caused a delay in claims, even before COVID 90 Days Before COVID-19 December 8, 2019 March 7, 2020 44,841 Number of new claims filed 77% Percent of eligible claims paid

COVID-19 caused a rapid increase in claims, overwhelming an already fragile system

Where Are We Today? March 8, 2020 September 11, 2020 Approximate number of new claims filed 1,175,000 Approximate percentage of eligible claims paid 80% Over $3.8 Billion Total amount of UI funds distributed

Ernst & Young Contract Extension New contract will extend through the end of 2020 $4.9 million contract fee paid for with federal funding No general fund dollars will be used EY will provide a dedicated workforce to address the 70,000 claims which are awaiting, or in the process of, adjudication These claims require determination letters telling claimants whether their claim was approved or denied Determination letters which were previously required to be written by state employees The U.S. Department of Labor waived this requirement, allowing EY employees to draft determination letters, making Kentucky only the second state behind Indiana with this waiver For first four weeks, 100 private vendor workers will focus on writing determination letters For the rest of the contract, 25 Ernst and Young employees will work on claims each week.

Ernst & Young Processing-Initial Contract Total Issues or Claims Processed Pre- 2020 Month Unknown Jan Feb Mar Apr May Jun Jul Aug Total 141,233 225 427 2263 45,769 28,487 25,191 17,329 15,998 728 4850 Total Issues/Claims Processed through August 30, 2020

Kentucky Career Centers: COVID and Beyond Kentucky Career Centers help connect employers and job seekers, but they also help provide resources for those seeking to secure more education, training or skills to improve their job prospects With many out of employment due to COVID, KCCs are helping connect Kentuckians to resources which can provide greater economic security in post-COVID life: Free GED testing Career coaching Job search and connection to area jobs But, the past closure of many KCCs has impacted the accessibility of these services for Kentuckians including in-person UI services

KCC Legislative Obstacles Budget cuts have made it difficult to staff Career Centers, and this problem is compounded by statutory FFTL requirements OUI and CDO receive no general fund dollars for administrative costs; administrative costs, including personnel, are wholly funded by federal grant dollars OUI and CDO cannot hire additional staff and re-open additional career centers without either expanded federal dollars or state general fund money FFTL requirements make it difficult to attract and keep qualified leadership

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