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State Unemployment Chiefs Finding Themselves Jobless in Pandemic

Sept. 3, 2020, 9:30 AM

It’s been a tough year to manage a state unemployment agency, and unemployment officials in at least eight states now have resigned or been fired during the pandemic.

The latest is Ken Lawson, who resigned as director of Florida’s Department of Economic Opportunity on Monday. The department has responsibility for paying unemployment benefits in Florida, although Gov. Ron DeSantis (R) assigned a different state agency head to oversee those benefits in April amid criticism of lengthy delays in getting the payments to laid-off workers.

Lawson joins counterparts from as far away as Hawaii and Nevada, where Scott Murakami and Heather Korbulic stepped down from their unemployment agencies, after facing the pressures of record-high jobless claims brought on by Covid-19. In Nevada’s case, Korbulic, an acting director, asked the governor in June to transfer her out of the unemployment agency after receiving personal threats, only two months after taking over the agency when the previous director, Tiffany Tyler-Garner, resigned.

Lawson offered no reason for his decision in his resignation letter, except to say it was “in the spirit of turning the page and moving forward.”

DeSantis on Wednesday announced a new department director, state Rep. Dane Eagle (R). A spokesman for the governor, Cody McCloud, said Eagle would gradually reclaim the oversight of unemployment benefits that had been stripped from Lawson in April.

Unemployment agencies were hit with a flood of claims beginning in March, as states shut down businesses to slow the spread of Covid-19—more claims in a matter of weeks than states fielded during the whole Great Recession.

On top of the high volume of claims, Congress tasked states with administering new benefit programs for self-employed and independent workers who had never qualified for unemployment, a job that required major reprogramming of computer systems and application processes.

“It just ballooned to an unbelievable amount of claims, and as a consequence there’s a whole lot of political pressure,” said Dale Ziegler, a former unemployment official in the U.S. Labor Department who now works for a software vendor focused on unemployment fraud detection and prevention.

Most of the state unemployment officials who have resigned or been fired this year held positions appointed by their governors, he said.

“Like anybody else, the buck stops there,” despite staff shortages, enormous claims volume, and outdated technology, Ziegler said. “The governor appointed them.”

Michelle Marshel, a spokeswoman for the National Association of State Workforce Agencies, said the demands on unemployment agencies during the pandemic have been unlike any prior recession.

“Job loss during the last great recession occurred over a period of time, not in six months and certainly not to the depth and breadth we are currently experiencing,” she said.

Payment Delays and Scapegoats

Payments to laid-off workers came slowly in many states, and fairly or not, much of the criticism and blame has fallen on the officials and staff at state unemployment agencies. Even as the $600 weekly federal benefit ended in late July, roughly $100 billion in benefits were waiting to be paid, according to Bloomberg estimates.

“It was an incredibly difficult task. The burden was put on unemployment,” said Muncie McNamara, who was fired in May from his job as director of Kentucky’s unemployment program. The $600 federal benefit was “a stimulus shoehorned into unemployment” and contributed to the huge increase in volume of claims. It isn’t hard to see why some state officials would get burned out and quit, he said.

In Oklahoma and Oregon, state unemployment officials Robin Roberson and Kay Erickson resigned in May under pressure from higher-ups—in Oregon’s case from Gov. Kate Brown (D) and U.S. Sen. Ron Wyden (D).

In North Carolina, Lockhart Taylor was reassigned within the state’s commerce department to make room for Pryor Gibson to take over unemployment administration. In Illinois, Tom Chan resigned from the Department of Employment Security in mid-August after previously serving as acting director.

On top of the nationwide challenges, Florida’s unemployment processing was plagued by a computer system that DeSantis himself called a clunker. Deloitte, which built the system under the previous administration of Gov. Rick Scott, faces a class action over the delays in unemployment benefits to Floridians, although the company has said it isn’t responsible because the state didn’t hire it to maintain the system.

Problems with Florida’s unemployment payments have persisted long after DeSantis assigned a different state agency head to oversee the program, according to state Sen. Audrey Gibson (D), the Senate minority leader.

“It didn’t improve anything,” she said. “Ken Lawson was just a scapegoat for a dysfunctional system.”

The governor’s office and the Florida DEO disagree, with the DEO reporting more than 92% of eligible unemployment claims have been paid.

“Governor DeSantis is pleased with the improvements that have been made to Florida’s unemployment system, with nearly 2 million claimants having received more than $14 billion in reemployment assistance,” McCloud said by email Wednesday.

Rush to Pay Quickly

McNamara said he was a scapegoat as well, in his case because Kentucky Gov. Andy Beshear (D) was pushing to pay benefits as quickly as possible and ran afoul of federal guidance meant to prevent overpayments and fraud.

A worker laid off on a Wednesday, for example, couldn’t be paid a full week of benefits. But McNamara said his agency was doing it anyway, plus not requiring self-employed workers to certify their earnings as frequently as the feds required. The U.S. Department of Labor scrutinized the state’s handling of benefits for these and other reasons, and McNamara said a terse email that he sent in response to a federal official was one of the reasons he was fired.

A spokesman for Kentucky’s Education and Workforce Cabinet, which oversaw the unemployment program at the time of McNamara’s firing, said McNamara “exhibited unprofessional behavior toward cabinet leadership and teammates and lacked the leadership skills necessary” to address unemployment issues.

“The case is currently before the Kentucky Personnel Board, and we are confident that his claims will be found baseless,” said the spokesman, J.T. Henderson.

In some states, the pressure on agency officials and staff was compounded by public criticism from governors, as McNamara said was the case in Kentucky.

Agency employees “would come to me and say ‘could you please talk to the governor and tell him to stop crapping on us,’” McNamara said of Beshear’s public criticism of the unemployment agency. “These were good people doing good work.”

To contact the reporter on this story: Chris Marr in Atlanta at cmarr@bloomberglaw.com

To contact the editors responsible for this story: Karl Hardy at khardy@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com

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