Unemployment claim processing slows

INDIANAPOLIS (WISH) — Indiana unemployment claims are taking longer to process, even as the number of claims filed has dropped.

The state's Department of Workforce Development reported Wednesday that decisions are now being made on 75 percent of the claims it receives within three weeks of their filing date.  The agency’s timeliness rate, calculated by decisions and processing time, is up significantly from a low mark of just 50 percent last August.

But, the agency was receiving an average of 12,500 claims per month at that time. That’s more than three times as many claims as it reported receiving in March.

In a presentation to the state’s Unemployment Insurance Board Wednesday, Deputy Commissioner of Unemployment Insurance Operations Josh Richardson estimated that up to three percent of claims currently take seven weeks or more to process.

The agency’s claim timeliness rate dropped from a high of 90 percent achieved in December, when claims dropped to their lowest level in more than a year, at around 1,500 for the month.

DWD also reported that it made decisions on just five percent of all unemployment insurance appeals, or around 5,000 cases, within the federally required 30 day timeframe. The national average on appeals timeliness is currently 62 percent, the agency reported.

Commissioner Scott Sanders said focus has been put on improvement of claim processing and timeliness, and that appeals timeliness has suffered as a result.

“The agency has always struggled with keeping that lower level. Now that we have Josh [Richardson] on board, we've got a team that's focused on that. We'll keep that level on timeliness where it's at and by then appeals will be back to normal. And, it gives us the ability to really manage the whole system. I think that was a problem in the past. You had, in essence, too many cooks in the kitchen,” Sanders said.

Sanders said focus is now on clearing the backlog of appeals.

“It's going to improve by the end of May and we'll be back up to 50 or 60 percent, and we'll be back on our way to hitting those federal timelines,” he said.

INDIANA STILL BORROWING

DWD reported that it continued to borrow money from the federal government to pay unemployment claims this month, as it has since 2009. Indiana now owes nearly $1.8 billion on that loan. That’s the eighth highest amount among all states.

Sanders told the board he anticipated April to be the last month where the state would be forced to borrow to pay its obligations.

“Based on our projections, which are obviously based off the economy as well, we believe we've hit the high water mark now for this year. And, from this point forward, if our collections continue to improve, that trust fund balance will continue to come down,” he said.

Sanders said premium collections from employers are typically lowest and benefit payments are typically highest through the first three months of the calendar year.

“So, based on our projections, we believe that the trust fund by the time we get into the late fall going into the winter, we'll have enough of a balance to push us through the first quarter without having to borrow from the federal government again,” he said.

In Janurary, I-Team 8 reported  that businesses across Indiana are now being impacted by an increase in the Federal Unemployment Tax —or FUTA. That FUTA tax includes a penalty on employers because the loan has been outstanding for more than two years.

A bill introduced in late January by Senator Karen Tallian (D-Portage) would authorize the state to issue bonds in order to reduce that tax burden. Senate Bill 541 would use that money in order to pay the debt off and eliminate the federal government’s tax penalty on businesses.

Six other states—Idaho, Kansas, Texas, Illinois, Michigan and Pennsylvania—have already taken that approach. Arizona announced plans to issue bonds to pay off its debt last week.

Sanders says he doesn’t support that approach.

“It was one of the discussions that was had, on bonding. But, the thing is, the debt doesn't go away. Take the state next to us--Illinois. They bonded out. Those employers still have to pay that back. Right now, our projections are that the fund will actually be paid back a year sooner than what was presented to the House back in 2011. And, it's going to save, based on our run rate, about $300 million from employer pockets,” he said.

Sanders said employers are also better served under the current penalty system.

“We've got a plan that's working. Employers understand it. They're on a fixed schedule for up to 10 years. If that happens, we'll have to change how things are done. Employers at least know now what to expect,” he said.

COMPUTER UPGRADES CONTINUE

DWD continues to work on a project to modernize its computer systems, now stretching into its eighth year without completion.

The agency announced the project in 2005, and work on it was supposed to be completed in April of 2008. Since then, numerous projection completion dates for the project have been missed.

Following the latest delays, the Department of Workforce Development told I-Team 8 the project would finally be finished in November of 2012. But, documents obtained by I-Team 8 show the state signed another $6 million contract extension with California based Haverstick Consulting on the project in December, bringing the total cost of the project to nearly $52 million as it approaches five years past its original completion date.

Sanders said Wednesday that upgrades to the system are still ongoing.

“We're working through other enhancements and features, more on the back end side. We're also going through a technology stack upgrade, which means we're taking the software components and this new system has about 13 pieces, and updating that software,” he said.

Sanders blamed changes in federal laws and requirements and the recent sequestration for causing additional delays. He would not commit to a timeline for final completion.

“I'm not quite sure you're ever done with a project,” he said. “And, I think in an operation where you continue to look to improve, you should be constantly changing and evolving. So, we'll continue to work through it.”

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