Beshear Administration scraps 16-month effort to find a fix for unemployment system
Sixteen months after Gov Andy Beshear’s administration started searching for a business to overhaul Kentucky’s outdated technology system for handling unemployment insurance claims, the process is starting anew after several complications.
Jill Midkiff, a spokeswoman for the state Finance and Administration Cabinet, acknowledged Tuesday that rebidding is necessary to select a contractor to fix problems with the unemployment insurance system, which repeatedly faltered during the coronavirus pandemic.
“This unfortunately should slow the process once again,” said Tom Underwood, state director of the National Federation of Independent Businesses.
Larry Roberts, who retired at the end of June as state Labor Cabinet secretary and was replaced by Jamie Link, told a legislative task force last month that the state was in the “latter stages” of selecting a contractor to rework and rebuild the claims-processing system and that overhauling the system could take up to three years.
Roberts said replacement of the antiquated computer system used by the unemployment office is expected to cost about $40 million.
News that the Beshear Administration is now rebidding to get a contractor to fix the unemployment insurance system surprised state Senate budget chairman Chris McDaniel, R-Taylor Mill.
“This is the first I have heard about this,” said McDaniel. “My first reaction is that it shows the need for this administration to consult with us in the legislature. I want them to have all the success in the world but they now own this issue. It is theirs.”
Kentucky, like other states, was flooded with unemployment insurance claims caused by business restrictions related to the COVID-19 pandemic. Many Kentuckians waited for months to get their claims processed. Lawmakers still are forwarding complaints about claims to the state.
While many Republicans have criticized Beshear for the unemployment system’s problems, the Democratic governor has blamed budget and staffing cuts that hampered the system before he took office in December 2019.
In the month before COVID-19 hit Kentucky in March 2020, Beshear replaced staff in the state’s 12 local Kentucky Career Centers to help Kentuckians make unemployment insurance claims. The centers had been operating with no dedicated unemployment insurance staff since they were removed in 2017 by former Gov. Matt Bevin’s administration.
Beshear’s administration last year hired an outside company to help with the claims backlog, which cost the state about $14.5 million.
Midkiff said Tuesday that the Finance and Administration Cabinet, on behalf of the Labor Cabinet, issued a request for proposal in March 2020 for the development of a new system to manage unemployment insurance claims. Beshear declared a state of emergency for the coronavirus in March 2020.
“Attempting to create a modern system that addresses failures that have occurred in every state across the country during the pandemic complicated the proposal request,” she said. “The procurement was out for bid when Kentucky and most other states were targeted by one of the most sophisticated cyberattacks on our unemployment insurance system in history, which meant that significant additional elements needed to be added to ensure people’s bank accounts, and other information, could not be accessed.”
Even with those changes, said Midkiff, “we hoped to agree to a contract, but with the changes and the multi-million dollar cost increase they claimed they would need to meet the additional needs, at least one bidder withdrew,” said Midkiff without naming the bidder.
“To ensure fairness and find the most qualified bidder to build a secure, modern system, rebidding is necessary,” she added.
This story was originally published July 14, 2021 at 10:01 AM.
