Kentucky’s unemployment system is building back up after being drained throughout the COVID-19 pandemic. Looking forward, cabinet officials and the business community are focusing on changes that must be made to ensure stability.
At a meeting of the Unemployment Insurance Reform Task Force on Thursday, Kentucky Chamber Senior Vice President of Public Affairs Kate Shanks said Kentucky’s Unemployment Insurance (UI) Trust Fund is back to about half of its pre-pandemic level. Over the course of the pandemic, the benefits paid out exceeded the more than $600 million reserve and required the state to take out a loan of $500 million to meet obligations. While the General Assembly allocated federal funds to pay back the loan, the trust fund balance is not back to the pre-pandemic level.
Important steps were taken during the 2021 legislative session to address the crisis unfolding in the UI system, but Shanks emphasized there are still many improvements that need to be made.
The Kentucky Chamber’s recommendations on this front include:
- Provide additional funds to the UI Trust Fund to ensure the balance returns to pre-pandemic level. This will reduce the time it takes to achieve Trust Fund Adequacy according to the U.S. Department of Labor, a status Kentucky has not seen since the 1970s.
- Improve UI tax framework as Kentucky is currently ranked 49th in this area
- Move from one “job contact” per week for work search requirements to five “work search activities” per week which is broadly defined to include applications, interviews, job fairs, etc to bring Kentucky more in line with other states
- Revise the definition of suitable work which could be more broadly applied the longer someone is receiving benefits
- Consider job referral programs used in states like South Carolina where claimants are being paired with jobs in their region that match their skills and the state is sending out emails to claimants each week with those jobs
- Update portal where employers can notify the cabinet when someone fails to complete a job search activity or accept a position
- Strengthen and increase audits of requirements
A strong unemployment system is critical as employers across the state are struggling to find workers they need to fill their positions and Kentucky trails the nation by at least 4 percentage points in workforce participation, Shanks stated pointing to research in the Kentucky Chamber Foundation’s new report about the workforce crisis.
To begin to address this, she highlighted Kentucky Talent Hub, a dynamic platform recently launched by the Kentucky Chamber Foundation that is searchable and employers and job seekers can create profiles and find opportunities in many sectors.
Shanks said the Chamber continues to support many of the same pieces of legislation to improve the system that has been introduced in the legislative process in years before and will work directly with the General Assembly on these new recommendations.
Representatives from Kentucky’s Labor Cabinet also testified in front of the group about the new technology system they are seeking to put in place.
Kentucky Office of Unemployment Executive Director Buddy Hoskinson said the request for proposal for the replacement computer system for the UI system has recently closed and those are currently being evaluated. Once a vendor is selected, the cabinet said development and implementation of the new IT system will take around 18 to 24 months and in the meantime, they stated there is work being undertaken to ensure fraud prevention and more within the current system.
As for why the state needs this upgraded technology, Morgan Eaves, Director of Legislative Affairs at the Kentucky Labor Cabinet, said the technology being used now is so outdated that the coding system is not even being taught anymore so when something goes wrong, they have to try and find retired IT staffers to address issues.
As for other improvements suggested by the cabinet, Hoskinson said they are looking at a Short Time Compensation program to help businesses keep their skilled workforce once they recover from an issue by allowing reduced hours rather than layoffs which would require a statutory change by the legislature.
The work of the Unemployment Insurance Reform Task Force wraps up in November.