New Unemployment Compensation Legislation

11/9/2017

By Rep. Steve Mentzer (R-Lititz)
In last week’s column, I outlined problems with the state’s Unemployment Compensation program (UC) that have arisen due to mismanagement. This week, I want to explain legislation that I support which is being drafted by Rep. Rob Kauffman, the chairman of the Labor and Industry Committee on which I serve.

Kauffman’s legislation that would ensure the completion of long-awaited updates to the Unemployment Compensation (UC) program’s computer benefits system. The legislation would also end the state supplemental funding that was originally designed to end last year.

Several years ago the state agreed to provide temporary additional funding to the UC program on top of the federal funds it receives in order to improve service and make technology upgrades. Unfortunately, due to years of mismanagement, an anticipated computer system is still not in place and UC officials are asking to have the money continue to flow with no results to show for it.

The department needs to get its act together and stop relying on these supplemental dollars. The administration of Pennsylvania’s UC system is broken from years of chronic mismanagement, not underfunding. In order to prevent a future crisis and give the Department of Labor and Industry more time to plan, Rep. Kauffman’s bill would propose a three-year exit strategy to provide the money needed to complete the computer upgrades and then bring an end to the funding.

In total, the legislation would provide about $75 million in additional funding for the Department of Labor and Industry to implement a modern, efficient UC system and transition to a budget that can be covered by federal funding totaling approximately $130 million per year to operate the UC program.

Funding from the state was always supposed to be temporary, so the UC program should have the ability to fully operate on the funding it receives from the federal government. The computer system is an additional cost and Kauffman’s legislation accounts for that and graciously offers the funding needed for the project to reach completion.

We recently closed out the 2017-18 state budget, but only after the General Assembly resolved where to get revenue to pay the state’s bills. So, I think it is only right to expect the UC program to get its house in order and end its substantial reliance on money ultimately coming from Pennsylvania employees to cover its poor management of funds.

Department officials have claimed it is difficult to operate the UC program on continually diminishing federal funds. However, federal funding is primarily granted based on the number of claims being processed. From 2012 to 2016, federal funding has decreased by 24 percent, but initial claims processed by the Pennsylvania UC program actually decreased by 31 percent. With fewer claims to process, fewer employees are needed, especially once an updated computer system is in place.
The House Labor and Industry Committee has held three hearings on this issue and it has become clear that we need to have a plan in place that includes an end date for state funding going to the UC program.