Unpaid unemployment claims top 728,000 as state Senate holds hearings on backlog

MADISON - State senators asked tough questions Wednesday about Wisconsin’s historic increase in unemployment as the number of unpaid claims passed 700,000. 

As of Monday, the state had yet to pay more than 728,000 of 2.4 million weekly claims that had been filed since March 15, when the coronavirus pandemic began to batter the state's economy. Others have encountered problems that have prevented them from filing claims.

Officials with the state Department of Workforce Development say they haven't been able to keep up because they lack enough staff to deal with an unprecedented spike in claims. They are hiring more workers to deal with the claims but have offered no predictions on how long it will take to clear the backlog. 

The delays have sparked the state's latest partisan fight. Republicans say Democratic Gov. Tony Evers' administration should have a better grip on the problem. Democrats contend Republicans set the stage for problems by passing a series of restrictions on when people can receive unemployment benefits. 

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Sen. Steve Nass said any changes to the system wouldn’t be beneficial if the individuals couldn't access the money.

"With the governor, there doesn’t seem to be any urgency," said Nass, a Whitewater Republican and the chairman of the Senate Committee on Labor and Regulatory Reform.

"We’re waiting for the cavalry and it’s slow in coming."

Between March 15 and May 10, there was a 670% increase in claims compared to 2019, testified Workforce Development Secretary Caleb Frostman. This represents a typical eight months of work and Department of Workforce Development employees have worked themselves to “a state of exhaustion” to keep up, he said.  

“The nuance and complexities of this program make it clear why we are receiving the numbers of calls we do and why so many people feel the system is rigged against them,” Frostman said.

Frostman asked the committee to upgrade the unemployment insurance system's computer infrastructure, increase benefit rates and permanently repeal a one-week waiting period before people can claim benefits. (The waiting period has been temporarily suspended because of the coronavirus pandemic.)

University of Wisconsin-Madison economist Noah Williams said the economic downturn would likely be sustained. He said lawmakers should consider ways to bring people back to work, such as by offering cash bonuses to those who quickly find jobs and are taken off the unemployment rolls. 

April's 14% unemployment rate is likely an underestimate, Williams said. It could be closer to 18%.

"We’re seeing very high levels of unemployment," he said. "It doesn’t seem out of line with national averages, although other states have certainly done better.

"The hope was that on the onset a lot of this unemployment would be temporary. Now closer to 50 or 60 percent are expected to be permanent.”

Scott Manley, an executive vice president with business lobbying group Wisconsin Manufacturers & Commerce, said the state needs to put its focus on returning people to their jobs.

“The escalating unemployment rate is the new curve we need to flatten in the state,” said Manley, who sits on a council that advises the state on unemployment issues. “The only way to do that is to get back to business and get employees back to work.”

New type of assistance now offered

The state last week began issuing payments under a new unemployment program that allows contractors, the self-employed and others who don’t qualify for the regular unemployment program to get benefits. Known as Pandemic Unemployment Assistance or PUA, the program provides benefits for up to 39 weeks. 

Frostman said Wisconsin took longer than other states to get that program rolling because of its "antiquated, inflexible" computer system. After claimants enter their information into an online portal, state workers must manually re-enter it into a separate system and review their 2019 income to determine whether they qualify for the new program, he said. Only then can payments be made.

Additional testing of the computer system also delayed the implementation of the program, Frostman said.

No timeline for fixing backlog

Ben Jedd, a spokesman for the Department of Workforce Development, said it was difficult to say how long it would take to get on top of the backlog, in part because it's difficult to know what will happen with the economy.

To help address the problem, the Department of Workforce Development is hiring 74 adjudicators to review unemployment claims. That would increase its team of 171 adjudicators by 43%. 

In addition, it is hiring a vendor that will likely have a staff of 100 or more performing that work. The staff for the vendor will begin training next week, which is expected to take two to four weeks. 

Jedd said the situation was made worse by the 1970s-era computer system the state uses for unemployment claims. Programmers cannot make multiple changes to it simultaneously, causing delays, he said.

Along with the hiring effort, the state extended the hours at its call center. It's now open from 7 a.m. to 5 p.m., rather than 7:35 a.m. to 3:30 p.m.

Sen. Chris Kapenga, R-Delafield, called for staffing the call centers 24 hours a day, seven days a week to help catch up on the claims. 

However, taking calls is only part of the equation when accounting for the backlog, according to Frostman. Even if claims could be submitted with increased call hours, they still need to be processed, which is complicated by the outdated computer system.

Some claims, the ones with no issues, are autoprocessed and almost immediately distributed to banks. Others that require review pile up and take more time to process, he said.

The computer problems contributed to Wisconsin becoming the last state to begin to issue $600-per-week supplemental benefits provided by the federal government under a recent law approved in response to the coronavirus pandemic. 

The $600 payments are being covered by the federal government. Other unemployment benefits provided through the state are paid by a tax on employers.  

If the state runs out of money in its unemployment account, it can borrow funds from the federal government to cover claims. That typically leads to an increase in the tax on employers to help the state pay back its loan and replenish its unemployment fund. 

Contact Patrick Marley at patrick.marley@jrn.com. Follow him on Twitter at @patrickdmarley.