May 6, 2020
Committee on Labor and Housing Presentation by Labor Commissioner Laura Fortman
Good Afternoon, Senator Bellows, Rep Sylvester and Members of the Joint Standing Committee on Labor and Housing.
My name is Laura Fortman and I am the Commissioner of the Maine Dept. of Labor. I want to thank you for the opportunity to speak with you today.
As we all know, the COVID-19 pandemic is having a profound effect on our state. Tens of thousands of Maine people have lost work and are grappling with how to pay bills, how to feed themselves and their families, how to afford their rents or mortgages, and how to stay healthy and safe.
In the last seven weeks alone, more than 110,000 Maine people have filed for unemployment insurance benefits - this is more than the past three years combined. Never have so many people sought UI in such a short span of time.
Many people people who never before thought they would have to rely upon unemployment insurance have been in touch with the Department as a result of this terrible pandemic.
But behind this extraordinary statistic are real people. They are our neighbors, our friends, our loved ones people who are hurting and need our help.
People such as Janet who wrote to us and said, "My situation was quite complex....Like many Americans, I was furloughed from my position, and therefore fearful that I would not be able to pay my bills or afford food-for the first time in my life. I needed help sorting through the unemployment details and (the person on the phone) was extraordinarily kindhearted. It took a great deal of her time and energy, butshe vowed to help me. That kind of perseverance and exceptionalism is what makes our nation great."
Or the 84-year-old who said, the old days of hard-working people, working together is coming back and it is just a wonderful to see during this hard time.
Or the young EMT quarantined due to COVID-19 exposure, who hadn't been working long enough to initially qualify for state unemployment. He was able to receive benefits after we reassessed his case using wages earned in the first quarter of 2020. These are just a snapshot of the more than 75,000 people who are now receiving benefits. Ill be able to announce a larger number tomorrow when the latest unemployment claims data is released.
In total, more than $240 million has been distributed to these Maine people through the Department of Labor, an unprecedented amount.
However, there are still thousands who are awaiting benefits. And that gap in part is due to understaffing and underfunding of the program, but it is also due to a change in who the workers are today and the fact that they are not covered by the traditional unemployment system.
Unemployment insurance was created in response to the Great Depression. It was designed to respond to job losses in the 1930s when most people worked full-time for a clearly identified employer. For 85 years the unemployment system has fulfilled its role as partial wage replacement for workers who lost their job through no fault of their own and were able and available to work. It is an insurance program paid for by employers to help tide workers over between brief periods of unemployment.
Unfortunately, many of our friends and neighbors who applied in the early weeks of the pandemic were not eligible for traditional unemployment assistance. They could not meet the monetary eligibility requirements of $5,100 in the last 5 calendar quarters and at least $1,700 in the previous 2 calendar quarters. And the requirement to be able to work, available to work and actively seeking work was particularly difficult to understand during a pandemic.
In 1937 a report by the social security board in Washington DC stated Unemployment benefits, guaranteed in advance, certain in amount, paid out of a fund built up by orderly and systematic means, are clearly more business-like than any form of haphazard relief, hastily set up and financed in the midst of crisis.
In spite of the knowledge we had in 1937, the national UI program has not evolved or adapted to the changing economy. Congress was once again forced to hastily set up a program of relief in the midst of this crisis to meet the needs of self-employed, gig workers, and new entrants to the labor force, as well as addressing the unique challenges of covering people impacted by the pandemic.
This was done to help people like Catherine, a self-employed artist and photographer, and Whitney, a cosmetologist struggling to pay her booth fees while unable to work.
This has been frustrating for everyone. Frustrating for those who cant get through to speak with us, frustrating for those who are waiting for their benefits, frustrating for my staff, and frustrating for me personally. I am committed to making sure that every Maine person who is eligible for these programs gets the benefits they deserve.
The scale and the speed of the response to COVID-19 has no comparison. In response, we have expedited thousands of state unemployment claims while concurrently launching new federal programs created by the CARES Act. It has been seven weeks since the passage of Maines emergency legislation, not quite six weeks since the passage of the federal CARES Act, and three days since the last issuance of federal operating instructions.
Determining eligibility and providing benefits has always been a partnership between the states and the federal government. These new programs are no different. While we made some assumptions on how to deliver benefits under these programs, we had to wait for final instructions in order to complete the implementation.
The Federal Pandemic Unemployment Compensation program was the first to be implemented. Beginning April 16, twelve days after the operating instructions were made available by the Federal government, the additional $600 per week was added to the weekly benefit payments.
Two weeks later, on May 1st, we implemented the Pandemic Unemployment Assistance program, or PUA for short. This is the federal program created for people who are not typically eligible for state unemployment benefits.
Maine was one of 13 states that rolled out PUA last week, according to the U.S. Department of Labor. While seventeen other states preceded us in some form, twenty-three other states and territories have yet to implement PUA at all as of this past Monday.
I know many people were awaiting this program. When it launched on May 1, the department processed over 3,000 claims in its first four hours, and then thousands more claims over the weekend. Actual numbers for last week, as I mentioned before, will be released tomorrow morning.
Given the many questions Ive received about how these programs were implemented, Id like to walk you through the events of the last two months.
You will recall that on February 26, we met for a supplemental budget hearing. I presented to you a new administrative funding plan for the unemployment program. For the first time in the programs 85-year history, we were experiencing an administrative funding gap. Like many Department of Labor programs, unemployment insurance is counter-cyclical. When the economy is good which it had been for several years there is very little money for the program. The core federal grant funding has been declining and one-time grant opportunities have dried up.
For the current program year, the department has received enough federal administrative funding to operate the program for 2/3 of the year. We had 13 claims representatives on staff. Id have liked to have more, but except for the winter months, it was adequate when the unemployment rate hovered around 3 percent.
The legislature authorized access to one-time funds that had been distributed to states through the American Reinvestment and Recovery Act of 2009, ARRA for short, and a shift in a portion of employer unemployment taxes into a dedicated administrative fund. The one-time funds were intended to fill the hole for the remainder of the program year, after which we would continue operations using the new administrative fund in 2021.
The balance of the one-time fund was to be held in reserve for an emergency. That emergency is here. I am thankful that the legislature authorized access to the ARRA funds. This funding has sustained the Department and therefore thousands of Maine people during this time.
Just 18 days after we met, COVID-19 hit Maine and a civil emergency was declared. The Legislature and the Governor moved quickly on emergency legislation. This included changes for the unemployment insurance program, including:
- flexibility to the able and available requirement;
- waiving the one-week waiting period;
- covering temporary leaves of absence;
- and, halting charging employer experience ratings for benefits paid.
During that same week, we saw an unprecedented surge in the number of people filing for unemployment: 21,459 people filed a new claim for unemployment that week, up from 634 the prior week.
The Department immediately began moving staff from other areas of the department and state government to address unemployment claims. CareerCenters had shifted solely to online services to help reduce the spread of COVID-19. Those staff were still assisting people with employment services, but demand had begun to decrease. The online chat service shifted to assisting unemployment claimants by walking through the claims process, answering questions about unemployment insurance, and resetting passwords for those who locked themselves out of their account.
Some CareerCenter staff had already received general unemployment training since they provided part-time unemployment services during the busy winter months. Those staff received a short intensive training and were added to the 800 line. We were able to increase the number of people on the 800 line from 13 to 30.
On Friday, March 27, the federal CARES Act was signed into law. It created three new unemployment programs. They are:
- Federal Pandemic Unemployment Compensation, or FPUC, the extra $600
- Pandemic Unemployment Assistance, or PUA, which I described earlier and
- Pandemic Emergency Unemployment Compensation, or PEUC, which provides an additional 13 weeks of coverage.
That same day, recognizing that added assistance was needed, the department began negotiations with a Maine-based contact center to quickly ramp up staffing for the unemployment 800 line. However, that was not as simple as signing a contract and allowing people to begin answering the phone lines. This meant agreeing on service delivery methods, deliverables and costs, working through technology needs, coordinating security checks and, perhaps most importantly, providing training to ensure those answering our phones were able to help people. Our intent was to expand to 100 claims representatives.
The following Monday, March 31, the 800 line received a quarter million calls for the day, and we had over one million hits on our website.
This staggering volume overwhelmed the State communications network, which led to intermittent phone and network outages statewide. The department worked with MaineIT over the next three days to increase system capacity and reroute 800 lines to keep both the 800 line and the state network functioning.
At the same time, we worked with MaineIT and our contractor on alternatives to telecommunications. We agreed to shift the hosting of the 800 line to our contractor while improvements continued to be made to the state network. This was a substantial pivot from our original plan but our management team and subject matter experts worked through the issues. Both MaineIT and our contractor were invested partners and worked 24 hours a day to make this happen.
In response to unprecedented call volumes, we implemented alphabetized call days. Starting April 6, we asked people to call on certain days based on their last name. People whose last name began with the letters A-H were asked to call on Mondays; I-Q on Tuesdays; and R-Z on Wednesdays. Thursdays and Fridays had no restrictions. This reduced call volumes to about 50,000 per day. While I know that many people were still not able to get through to someone, the alphabetizing did allow the state network and the 800 line to remain functional, and I thank Mainers for continuing to adhere to this schedule.
That same week, we planned to implement the shift in hosting of the 800 number and add the contracted staff as our tier one call center. Based on the training schedule, we targeted Friday, April 10 as the go-live date.
However, a massive spring snowstorm resulted in power and network outages across the state. Many of our staff and the contractor staff were set up for telework. Many of them had no power. This continued into the weekend, preventing some from working claims over the weekend.
At this point, three weeks into Maines emergency declaration, USDOL released the first round of operating guidance for the three new programs created under the CARES Act. From USDOL webinars and conference calls for states about these programs, we knew that additional guidance was coming for PUA, which was the most complex of the programs since it covers people who are not normally eligible.
However, we were able to move forward and implement the $600 per week FPUC program on Thursday, April 16, 12 days after receiving initial USDOL guidance.
During all of this, we continued planning for PUA and made the system enhancements that we could without final federal instructions, which arrived on Monday, April 27. On that Friday, May 1st, we began accepting applications for PUA. We created online informational resources and stood up a temporary dedicated toll-free number for questions about the program.
Every state is making decisions unique to their situation in response to COVID-19. With PUA, some states that launched before Maine did so by accepting applications without the ability to pay benefits, or by having partial programs, such as initially just for self-employed or only for those who had exhausted state unemployment.
It is vital that we balance the need to pay benefits with the need for program integrity. An April 21 report from the Office of the Inspector General highlighted concerns based on their prior audits of claims from the Great Recession a decade ago. The CARES Act created these expansive new programs and also provided funding for expanded Inspector General audits. The intent is clear pay quickly but pay appropriately. I believe that we have taken appropriate actions to meet this balanced intent.
My goal for PUA was to launch a system to both accept applications and pay claims, and ensure benefits were distributed in a fast and fair fashion to all the newly eligible people.
Applications for self-employed people began last Friday, and the automatic enrollment of people who had previously been denied is happening now. Initial and retroactive payments to all newly eligible people will start this week.
As you may recall, I first joined one of Dr. Shahs daily briefings two weeks ago. I announced that the department would allow benefits for certain cases that would require a fact-finding interview under normal circumstances. But we certainly arent in normal times. Based on the dates of the filings, I decided to allow for the automating of some decisions.
Automating decisions means system programming and this takes staff time and resources. These are the kinds of decisions each state is making. For example, our consortium partner, Mississippi, opted to focus only on PUA and not address other issues that came up along the way. In addition, Maines law is different than Mississippis. For example, Maine has alternate base periods and dependency allowances, and those differences needed to be included in our programming.
The departments next steps are to implement the last of the three new federal programs, Pandemic Extended Unemployment Compensation, or PEUC, and activate the states Extended Benefits program.
Both programs provide an additional 13 weeks of benefits to people who have exhausted their state or PUA benefits. Initially, people in this group will be enrolled in PUA along with the other groups I mentioned earlier. People who have exhausted state benefits are eligible for PUA so long as PEUC or Extended Benefits are not available.
This is currently the case in Maine, so we will be enrolling them in PUA this week as well. Once PEUC and Extended Benefits are available, we will transfer people to the appropriate program based on the federal operating instructions.
After this week, I expect that well paying benefits to an even larger percentage of applicants. I know that there are still people who will be waiting because of an issue that we cant automate away.
My staff are working through this caseload as quickly and efficiently as possible, resolving issues when we can without holding a fact-finding interview.
One other issue that I would like to address is ongoing communication between the Department and the legislature. In the past, our legislative liaison would field questions from legislators and find answers to questions. This meant contacting an unemployment staff person to get an answer. Due to the extremely high volume and complexity of issues and new programs, we couldnt continue this process in recent weeks. We are committed to working with you and the Governors office to put in place a process to address constituent issues moving forward.
This week is Public Service Recognition Week, and I would like to take this opportunity to publicly recognize the dedication and professionalism of people in the Department of Labor who have been working tirelessly six days a week to help people during this crisis.
Thank you for this opportunity to provide an overview of the work weve been doing, look forward to answering your questions.