The Department of Employment, Training and Rehabilitation told lawmakers Tuesday that despite a benefit system overwhelmed by the economic shutdown and mandates to implement a half dozen new federal programs, they have made major inroads to eliminate backlogs and get checks to more than 1 million Nevadans.
DETR Director Elisa Cafferata told the budget committee made up of Senate Finance and Assembly Ways and Means members that, when the pandemic forced Nevada’s economic shutdown, the roughly 20,000 benefit claims a week jumped to more than 20 times that number, 369,000 claims at their peak.
She described the impact as, “like a bird flying into a window,” but proudly pointed out that, unlike some states, Nevada’s regular benefits system stayed online through the pandemic because of Herculean efforts by her IT staff.
On top of that, federal legislation created the Pandemic Unemployment Assistance, Pandemic Emergency Unemployment Compensation program, State Extended Benefit program, Federal Pandemic Unemployment Compensation program and the Lost Wages Assistance program in the first stimulus package, ordering states to implement all of them.
Cafferata said the system is still battling massive fraud attacks against it and the Pandemic Unemployment System that provides benefits to the self-employed and gig workers.
She pointed out between those two programs, a total of 1,591,967 initial applications for benefits have been filed with employment security. The problem with that, she said is that Nevada only has a labor force of 1,555,270, nearly 40,000 more claims than workers.
Despite that, she said the department is doing better than many expected in clawing back some of the false claims that have been paid, recouping more than $120 million so far. She and her senior staff said they are working with all levels of law enforcement, banks and other institutions to find, get the money back and prosecute offenders. But she said a lot of that money can’t be reclaimed since it went out of the country to Russia and Africa, among other places.
Lawmakers were told there really isn’t much they can do about getting those funds back.
In one piece of good news, she said the problem of people being sent letters demanding repayment of overpayments particularly in the PUA system has been fixed by the new stimulus legislation. The original rules for claiming PUA benefits were unclear and many people filed based on their gross wages. They should have filed based on net wages. Some of the letters to claimants demanded repayment of up to $14,000.
But the rules prohibited the state from waiving the penalty demanding repayment.
Cafferata said the new stimulus legislation allows states to waive those repayments if the errors were made without criminal intent and not the claimant’s fault.
DETR’s proposed budget for the coming biennium is $419.5 million. Over half of that, 56 percent, is federal funds.
Cafferata said before the pandemic hit, DETR had built up a trust fund of $2 billion. Since the economic shutdown, she said the department has paid out $8.3 billion in benefits and, so far, has had to borrow $133.5 million from the federal government. She said total borrowing is projected at about $200 million by the time things stabilize.
Going forward, she said DETR needs to “change the way we work.” She said they have to get past the Band-Aid measures they’ve had to use to keep going and “putting out the fires.” Instead, she said they need to look for long term solutions including modernizing the employment security division’s IT systems, particularly around security.
But she said they are making significant progress in reducing the backlog of claims that still need to be paid.
Modernizing IT, she said, will take $20-$30 million over the next two or three years. That request isn’t in this budget plan, she said. They also need up to $12.5 million more for staff that isn’t in the proposed budget.
Lawmakers were told that, this cycle, they are seeking funding to hire additional appeals referees to help with the backlog. But they were told many of those appeals are being resolved before they have to go to a hearing and they will continue to do that.
Lawmakers thanked the Employment Security staff for their extraordinary efforts to keep the system running and make payments to those in need to pay for food, rent and other expenses.