TOPEKA, Kan. (AP) — Kansas paid $290 million worth of fraudulent claims for unemployment benefits last year, prompting a key Republican lawmaker on Wednesday to call the state Department of Labor’s fraud problems “a disgrace.”
Figures released Tuesday by the department were its first estimates of the cost of bogus unemployment claims and were issued a day before the scheduled release of a legislative audit on fraud issues. Democratic Gov. Laura Kelly has said her administration is doing “everything in our power” to combat fraud and resolve problems with distributing benefits during the coronavirus pandemic, but Republicans in the GOP-controlled Legislature contend the efforts are inadequate.
Senate Commerce Committee Chair Rob Olson, an Olathe Republican, renewed his call to strip the governor of control over the department and create an independent board to oversee its day-to-day operations, similar to the board that oversees the state pension system for teachers and government workers. Olson said Wednesday that he’s holding off on a committee vote on a bill aimed at overhauling the unemployment system so that he can develop a proposal.
Republican legislators have expressed concerns that employers, who pay taxes to finance benefits, could be on the hook for covering the costs of bogus claims.
“The governor’s office has failed to do their job managing this,” Olson said. “It’s just a disgrace.”
Kelly and the department have blamed the problems on decades-old computer technology. They’ve said that system wasn’t equipped to handle the surge of 4 million claims that came after restrictions imposed to check the spread of COVID-19, including a statewide stay-at-home order imposed by Kelly last spring. Kelly has included $37.5 million in her proposed budget to upgrade the department’s technology.
The governor also sees much of the criticism as Republicans “just laying the groundwork” to try to prevent her reelection in 2022.
Acting Labor Secretary Amber Schultz on Tuesday also blamed Congress for some of the problems when it created several new programs to provide additional benefits to jobless workers. She said congressional measures handcuffed states efforts to limit fraud until the most recent COVID-19 relief package in December.
The Department of Labor shut down the Kansas unemployment system from Jan. 30 to Feb. 2 to install new security protocols. It said it has blocked about 5 million fraudulent log-in attempts by scammers or internet bots, or roughly three every second. The department said it has referred more than 50,000 cases to federal law enforcement officials.
“All 50 states have been overrun with coordinated, sophisticated criminal fraud attempts,” Kelly said in a statement Tuesday.
Attorney General Derek Schmidt, a Republican, said his office has been working with law enforcement officials for months to attack fraud “to the extent that bad actors can be found.”
“The challenge appears to be that most of these bad actors, particularly the organized ones, are almost certainly off-shore and outside the jurisdictional reach of local authorities or state authorities,” Schmidt said in an interview Tuesday.
But Republican lawmakers said the federal government warned states about potential fraud early in the pandemic last year and contend the state Department of Labor wasn’t aggressive enough in combatting it. They’re also frustrated, they say, because they’re still receiving dozens of calls a day each from people who deserve benefits but are having trouble getting them.
The problems prompted the Legislature to commission a two-part review by its auditing arm. The first report, to be released Wednesday, was to focus on fraud, while a broader audit is expected in June.
Republican legislators circulated estimates for fraudulent claims as high as $700 million, based on calculations from human resources managers outside government, which the Department of Labor has disputed.
House Speaker Ron Ryckman Jr., an Olathe Republican, said that even accepting the department’s estimate, “That’s $290 million that should have gone to Kansans who are out of work and waiting for benefits.”