The moral case for funding higher education
July 29, 2024
The moral case for funding unemployment compensation
Posted on 08/29/24 by Michael Shields (he/him) in Basic Needs + Unemployment Insurance
Everyone who works deserves the security of knowing that, if they lose their job through no fault of their own, they will have income to prevent a financial crisis while they get back on their feet. A well-functioning unemployment compensation (UC) system provides that security for individuals and their families. Its benefits also extend far beyond those who personally experience unemployment, especially during major downturns. By ensuring that those experiencing job loss can continue spending on basic needs like groceries and housing, unemployment benefits help prevent the economy from falling into an even deeper and more prolonged recession. To work as intended, the system needs the administrative resources to quickly distribute benefits and respond to any problems before they become costly disruptions to income.
In the last budget cycle, the Ohio Department of Job and Family Services (ODJFS) sought $60 million in annual funding for UC administration. Gov. DeWine proposed that amount in his executive budget. The legislature stripped it from the final budget. The result has been weeks-long delays for Ohioans newly experiencing joblessness. Thousands of Ohioans who already received benefits, especially during the COVID recession, have had their claims retroactively denied, in some cases over paperwork that could have been tracked down with better staffing. Many have been unable to reach a staff person in time to file an appeal. This summer, ODJFS issued a request for proposals to contract for 300 call center representatives.
Federal law requires that 87% of unemployment claims be processed — and first payments received — within 21 days of filing. Ohio routinely exceeded that standard prior to COVID-19. For example, in 2019, an average of 94.9% of claimants received their first payments on time. However, since April 2020, the state has hit the 87% target in just one month. By June of this year, the share of claimants whose benefits were paid on time was the highest it had been in 18 months: 83.1%, still below the target.
When unemployment claims surged early in the pandemic, ODJFS was understandably overwhelmed: In April 2020, Ohioans filed 384,000 claims — an amount unprecedented since data were kept, beginning in 1997. But claims volume has fallen dramatically since then, to a monthly average of 9,000 in the past year. Still, the department has taken 42 days to get first payments out to 87% of claimants on average.[1]This has become a chronic problem even as the state remains near record low unemployment; one that threatens to become a crisis if not resolved by the time Ohio faces another recession. It already threatens enormous harm to affected Ohioans; 42 days is long enough that at least one rent or mortgage payment has come due, and possibly a second.
Ohio locks many Ohioans out of unemployment benefits altogether. Stringent rules on who can qualify leave out some 840,000 Ohioans — about 15% of the employed workforce —due primarily to low pay. This problem was temporarily resolved during the COVID recession by expanded federal benefits, but thousands of Ohioans who received those benefits are facing a new financial calamity at least partly because the legislature has failed to adequately fund ODJFS.
Pandemic Unemployment Assistance (PUA) covered Ohioans left out of traditional UC between March 2020 and September 2021. Ohioans filed some 2.6 million initial claims for PUA. Many received tens of thousands of dollars. During the most severe public health crisis in a century, those benefits protected Ohio families against financial ruin, and, by enabling nonessential workers who would have been in high-interaction roles to temporarily leave the workforce, they undoubtedly saved lives.
During the COVID recession, so many Ohioans lost jobs that the state rightly prioritized rapid payments over fraud prevention. Claims flagged as potentially fraudulent were reviewed, but benefits were paid out in the meantime, while the review took place.[2] ODJFS has now determined that many Ohioans received “overpayments” of PUA benefits. The department has retroactively denied their claims, and referred many for collections, requiring Ohioans to pay the money back, with penalties.
This includes Ohioans who filed claims in good faith: They lived in Ohio, lost their jobs, and applied for benefits appropriately. Many likely would have the debt waived, if they had appealed ODJFS’s finding within 21 days. But notices were sent by email and posted to unemployment portals long-forgotten by Ohioans who have been back to work for months or years. Some did not learn they were affected until they were sent to collections.
This issue seems to have been caused by an overly aggressive, poorly targeted attempt to reclaim funds paid out on fraudulent claims, which incorrectly flagged many Ohioans who legitimately filed. The fact that it has gone so far to harm those Ohioans comes back to understaffing. In several cases, Ohioans only had to verify their identity to have their claims reinstated — suggesting that missing paperwork may be at the root of many of these denials.[3] An appropriately staffed ODJFS would simply reach out to claimants with requests for additional information. Instead, as reported by News 5 Cleveland, ODJFS sent some 568,000 claims to collections before cancelling them when the department learned that they were legitimate.
Understaffing has also created a roadblock for Ohioans seeking to appeal a determination denying their claim. After ODJFS adjudicated a backlog of some 180,000 claims this January, the department was inundated with calls from Ohioans trying to file an appeal. The department urged Ohioans to queue in line when the call center opened at 8:00AM and cautioned that those not waiting by around 10:00 would not receive a call back the same day.
Columbus’s ABC 6 Problem Solvers has found that closed phone lines have been an impediment to those seeking to file new claims too. This spring, the volume of claims forced the department to freeze collections of PUA benefits until the matter could be fully reviewed, while the House Minority Caucus conducted a fact-finding investigation.
Ohio’s unemployment benefits system needs tweaks to cover more Ohioans and to deliver on the intent of UC: to provide job seekers the support they need to find a job well-matched to their skillset that pays a livable wage. Yet even with shortcomings, Ohio’s system still provides a lifeline to Ohioans for whom a job loss could otherwise result in the loss of a home or other serious financial crisis. To deliver on this, the system needs the administrative capacity to get the benefits to those who need them, and to spot and resolve any problems before they become crises. Gov. DeWine in the last budget cycle allotted ODJFS $60 million per year to run the state’s unemployment system effectively. Lawmakers zeroed those funds out, and while the agency has made up some of the difference in part by moving funds from elsewhere, the consequences have been plain. During this budget cycle, the legislature must restore the funds ODJFS needs to run an effective UC system that reaches Ohioans when they need it.
[1] Data are kept on seven-day intervals: At day 35, 83.5% of claimants had received their first payment.
[2] Because PUA covered Ohioans left out of the normal system, it was more vulnerable to fraud; the state lacked normal verification protocols, such as referencing the claim against records from a former employer.
[3] ODJFS has not disclosed its parameters for flagging a claim as potentially fraudulent.