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Feb 18, 2021 Labor Cmte Testimony, SB 662

Good afternoon Senator Osten, Representative Walker, Representative France, Senator Miner and members of the Appropriations Committee. My name is Kurt Westby and I am the Commissioner of the Department of Labor.  It is my pleasure to be here with you today to discuss Governor Ned Lamont’s proposed FY 2022-2023 Biennial Budget.

To understand where the CT Department of Labor (CTDOL) stands today as we discuss this budget eleven months into the COVID-19 pandemic, it is important that I first explain from where we came.  
The CTDOL is primarily a federally funded agency implementing federally funded programs. After the Great Recession, the US Department of Labor’s (USDOL’s) funding to states declined based on workload.  At the same time, CT experienced budget challenges and rising state fringe rates, which effectively decreased the agency’s share of federal funding.  
As a result, DOL began the process of streamlining and modernizing the agencies processes to be more efficient and cost effective. For example, in 2016 the agency modified its UI call center to be both less costly and more customer service oriented.  In place of a phone-only system, we transitioned to a cloudbased internet process for accepting UI applications and in-person customer service in 18 American Job Center (AJC) locations statewide for personalized claim assistance.  
This combination of online and in-person UI service delivery was well received by both our customers and colleagues; and was considered a model practice because it brought unemployed individuals together with our workforce development and training system.  Unfortunately, no one predicted the current global pandemic, which required the CTDOL and the Regional Workforce Development Boards (WDBs) to close the AJCs in March of 2020 and severely limit one-on-one access to our claimants.
The impact the pandemic has had on the agency’s ability to connect with our UI claimants at a time when UI became a necessary safety net for so many, has required the agency to navigate unprecedented claims volume and balance consumer needs in a semi-remote environment.  For context, March 13, 2020 we have received almost 1.3 million UI applications – that’s 10 years’ worth of applications in less than 1 year.  
In addition to balancing this historical influx, the agency is within one year of completing Unemployment Insurance Modernization (UIM) – a project in the works since 2016 – to retire our four-decades-old COBOL mainframe and other integrated automated platforms, and replace them with an entirely cloud-based modern system which will allow for processing of claims with more automation and less manual Intervention. Completion of the UIM project has been delayed and is anticipated mid-2022.  The agency has prioritized focusing our UIM experts and all non-UI units on processing the record-breaking influx of state UI claims, while simultaneously designing, developing, and implementing the numerous standalone new UI programs created by the federal government since March of 2020.
These programs include:  State Unemployment Insurance, Federal Pandemic Unemployment Compensation, Pandemic Unemployment Assistance, Pandemic Emergency Unemployment Compensation, Lost Wage Assistance, Extended Benefits, High Extended Benefits, Shared Work and Mixed Earner Unemployment Compensation.  A description of these programs and a breakout of the $6.88 billion in benefits paid out under these programs is provided at the end of my testimony. 
State UI and a portion of EB is paid out of the Trust Fund, which is funded through payments from 108,496 contributory employers (those who are required to pay state UI Quarterly Taxes) and 1,862 reimbursing employers (those who reimburse the UI Trust Fund for charges against their account). 
We entered the pandemic with a Trust Fund balance of $615 million as of March 16, 2020.  To pay the $2.168 billion benefits that were not federally funded, CTDOL began borrowing money from the federal government in August and have borrowed $577.2 million thus far.  It should be noted that the Governor issued another Executive Order that relieved contributory employers of UI charges that are attributable to COVID.
CARES Act I & CARES Act II provides a UI Trust Fund interest waiver until March 14, 2021. This reduces the financial liability for Connecticut companies that will have to pay a special assessment to repay interest on UI Trust Fund borrowing. 
In response to the claim volume, the agency put in place additional phone lines that were staffed by non-UI agency staff to answer general questions; until such time as the agency was able to set up the Consumer Contact Center in July; a necessary step since the pandemic limited our ability to operate inperson services safely at our AJCs.  Investment in the Center has been provided by Governor Lamont from over $38 million in CRF. 
The remote Center, which can be accessed by phone or on-line through the page, has fielded over 700,000 interactions to date.  It is now operated with just under 100 intermittent staff, and 15 Permanent CTDOL staff which have been temporarily reassigned from their previous units.  We expect to increase intermittent staff levels to 135 within a month and hope to sustain this number while demand is high. 
The Center is “configured” into an UI and extension programs “section” and a PUA “section”.  Since December, callers looking for assistance with non-PUA programs can utilize our Virtual Hold Technology (VHT) callback system to schedule a date and time for an appointment with an agent. At current staffing levels agents can handle approximately 4500 callers per day, which we expect to rise to 6000 per day within the next month with continued experience, training, and vendor support.  In addition to calls, agents are handling another 1500 email cases per day and our chatbot is making about 2700 interactions per day thereby lessening the number of calls needing to be made by claimants. The agency monitors the volume on an ongoing basis. 

Despite this increasing ability to service customers virtually and over the phone through our contact center, on February 16, 2021 we began a limited reopening of the employment services provided by CTDOL within the 5 Comprehensive AJCs located in Hartford, Waterbury, Hamden, Bridgeport, and Montville.  Customers who have no means of receiving virtual services or require services that are not sufficiently accessed by phone, may receive in-person assistance.  All visits to the AJCs must be scheduled in advance through the CTDOL’s homepage and link to the American Job Centers’ page or by calling the main phone number of the AJC in the individual’s region.  Services offered by WDB-contracted providers vary by region, and access to the Career Centers within the AJCs is expected to resume shortly.
With regards to claims backlog and processing time, I am pleased to report that as we meet today, there is no backlog of claims and the time for an application to move into processing is at pre-pandemic levels, 3 days from submission. However, releasing payments is dependent upon many factors, including but not limited to employer verification.  Even an uncontested verification can add 8 days to processing.  If the income provider disputes a claim or aspects of the claim information require a closer look, our Adjudications Unit must perform a fact-finding hearing which is currently being scheduled approximately 28 days out, down from a peak of 70 days.  If an appeal is then filed against the Adjudications’ decision, the average wait for an Appeals Lower Authority Referee Hearing is 130 days. The next and last level of appeal before Superior Court is with the Higher Authority Board of Review, for which the wait is 45 days. The agency is in the process of leveraging its federal UI funds to augment staff in this critical area.  
As you can see, the life of a claim can be long as it moves through the system allowing for due process of both the employee and employer.  Similarly, the work within CTDOL can rise and fall from unit to unit as the surge of applications begins in our automated Internet Initial Claim (IIC) system, travels to our Integrity Review and  Initial Claims Processors, to possibly Adjudications and Appeals or Benefit Payment Control unit for overpayments or fraud prevention, then on to Tax and Fund Accounting to keep the books in balance, and potentially back around to IIC when a claim needs to be reopened during the one year period or the claimant needs to apply for a second benefit year.   I have obviously simplified the process here, but my point is to illustrate that CTDOL will be managing the impact of the pandemic into the foreseeable future. 
In addition to the work we have done on the UI side, the agency has transitioned our comprehensive portfolio of services to phone and virtual models.  A summary of a few programs operating by CTDOL, and those operated in collaboration with providers hired by the five Regional Workforce Development Boards (WDBs) is provided at the end of my testimony.
In closing, despite unprecedented number of UI claims being managed by the agency since March 2020 and the passage of multiple, complex new federal programs, the dedicated and hard-working employees of CT DOL have not faltered. They worked tirelessly to achieve all that we have accomplished.  While there is still much to do to comeback from this pandemic, I am proud to lead such a fine group of individuals.  I look forward to working with the Legislature to achieve success for both the Agency and its customers.  My team and I stand prepared to answer any questions you may have, and I thank you for your time and consideration.
State and Federal UI Programs: 
State Unemployment Insurance (UI) Our “regular UI” program provides up to 26 weeks of cash benefits to eligible workers who are unemployed or underemployed through no fault of their own. These benefits are paid out of the UI Trust Fund, which is maintained through quarterly employer contributions, not by employees. Some types of employers, such as the self-employed and certain religious institutions, do not traditionally pay into the unemployment system and have therefore not typically been eligible for unemployment benefits. Since March 13, 2020 CTDOL has provided $2.159 billion in benefits to CT workers.
Federal Pandemic Unemployment Compensation (FPUC) This was included in CARES Act I and is a federally funded emergency increase in unemployment benefits which had provided an additional $600 per week to individuals who receive a weekly benefit of at least $1 in unemployment benefits. CARES Act II created a second round of FPUC at $300 per week regardless of which unemployment program the claimant was receiving. The program is currently scheduled to end March 13, 2021.  
Pandemic Unemployment Assistance (PUA) This unique federal program was created as part of CARES Act I.  PUA has provided unemployment insurance to qualified individuals who are not eligible for regular unemployment compensation or have exhausted all rights to such benefits. Covered individuals also include self-employed workers, 1099 employees, "gig" workers, workers in jobs not covered by regular unemployment benefits, and individuals disqualified from receiving regular, PEUC, or extended benefits. CARES Act I began providing up to 39 weeks of PUA benefits and was extended with CARES Act II by 11 weeks for a total of 50 weeks. The program is currently scheduled to end March 13th, with a phase-out period through April 10, 2021 for certain claimants based on federal eligibility requirements.
Pandemic Emergency Unemployment Compensation (PEUC) This federal extension program originating with CARES Act I provided qualifying claimants 13 additional weeks of unemployment compensation and CARES ACT II extended benefits by 11 weeks for a total of 24 weeks.  The program is currently scheduled to end March 13th, with a phase-out period through April 10, 2021 for certain claimants based on federal eligibility requirements.
Lost Wages Assistance (LWA)
This federal program differed from all others because the funding source was Federal Emergency Management Agency (FEMA) not USDOL, so numerous differences in protocol made it extremely challenging to administer.  It provided $300 per week for 6 weeks to claimants who had a weekly benefit equal to or greater than $100. Governor Lamont’s executive order in December 2020 retroactively and temporarily increased weekly unemployment benefits to $100 for residents not originally eligible for LWA, allowing them to qualify for the program. This Executive Order relieved employers who make payments in lieu of contributions from the cost of the increase in the Weekly Benefit Amount.
Extended Benefits (EB) This program allows for an additional 13 weeks of unemployment compensation benefits when a state’s official unemployment reaches 6.5% for three consecutive months.  CTDOL “triggered on” to EB at the end of April and is still subject to administering this program.  

High Extended Benefits (HEB) Connecticut’s continued pandemic-related high unemployment rate “triggered” the start of High Extended Benefits (HEB) at the beginning of August 2020. HEB occurs when the state’s unemployment rate averages 8% or higher for three consecutive months. It offered claimants an additional seven weeks of EB for a total of 20 weeks and extended the Pandemic Unemployment Assistance (PUA) program for another seven weeks for a total of 46 weeks. CT “triggered off” HEB mid-December.

Shared Work The CT Shared Work program began in the early 1990s.  It helps employers avoid layoffs by allowing them to use unemployment benefits to partially cover a 10% to 60% reduction in hours. It also helps employees stay attached to jobs and retain full benefits, even with reduced hours. As an added advantage, CARES Act I and CARES Act II extends 100% federal funding for this program.  The Shared Work program, for which Governor Lamont invested Corona Recovery Funds (CRF) to enhance CTDOL’s ability and capacity to administer, has grown from receiving approximately 230 applications per year to 1417 in the past eleven months. There are currently about 32,114 employees participating this extraordinary program.  
Mixed Earner Unemployment Compensation (MEUC) CARES ACT II created another new federal program for residents who have both self-employment earnings as well as W2 earnings. Currently, Connecticut is one of only a handful of states that have announced they are opting into this program which offers an additional $100 for eligible filers using many state and federal unemployment programs.  Although MEUC is slated to expire March 13, 2021, CTDOL is currently creating an online application process and partnering with Department of Revenue Services (DRS) for tax review and verification.  If eligible, claimants will be provided retroactive payments beginning in March.
Thus far, CT’s UI claimants have received a grand total of $6.88 Billion in benefits from these programs.  
As of February 10, 2021, we have paid: 
       • State UI: $2.159 B 
       • PUA:  $440 M • PEUC:  $467 M 
       • EB – State: $8.5 M 
       • EB – Federal:  $102 M 
       • FPUC:  $3.347 B 
       • LWA:  $365 M 
       • Grand Total: $6.888 B 
Summary of Certain CT DOL Programs 

• UI Reemployment Services and Eligibility Assessment (RESEA) is a CTDOL program funded by the USDOL to help unemployment insurance claimants return to work faster. Claimants are randomly selected to participate. This is a labor-intensive program whereby our staff help RESEA participants develop a plan to address their specific reemployment needs. Pre-pandemic the participant needed to meet with staff in person to authenticate their plan and complete paperwork, but we have recently moved to utilizing online management tools and are now serving 240 claimants per week, and are working toward growing the participant pool to 300 per week over the next few months.

Trade Adjustment Assistance (TAA) is also a CTDOL program funded by a USDOL grant.  This program seeks to provide adversely affected workers whose jobs were impacted by foreign trade with opportunities to obtain the skills, credentials, resources, and support necessary to return to suitable employment. Any member of a worker group certified by the USDOL may be eligible to receive training, employment and case management services, job search allowances, relocation allowances, and income support in the form of Trade Readjustment Allowances (TRA).  At the recommendation of the USDOL and through federal funding we recently added three TAA Navigators to broaden the base of personalized support to participants.  In addition, we also added a federally funded TAA Petition Coordinator, with the goal of increasing the number of petitions filed and partakers in the program. 
• Workforce Innovation and Opportunity Act (WIOA), is a federally funded program administered by the state.  WIOA Title 1 funds which are utilized for employment, training and educational programming to Adults, Dislocated Workers and Youth. Programming and services are designed to lead to meaningful career opportunities.  The activities are provided to eligible individuals ages 18 and older in the categories of Adults, Dislocated Workers, and to Youth ages 14 to 24. The CTDOL partners with the WDBs to administer this program through contracted providers and the network of AJCs. Recently, through this partnership and given our pandemic-related high unemployment rate, we requested and received a waiver from USDOL to increase on-the-job training (OJT) employer reimbursement from 75% up to 90% percent for businesses with 50 or fewer employees through June 30, 2021.  This additional 15% OJT funds will go directly to participants’ training and wages; and not added to administrative allowances. 
• Jobs First Employment Services (JFES) is another a federally funded program administered by the CTDOL.  The source is the Temporary Family Assistance (TFA) grant, and like WIOA Title 1, programing is contracted to providers by the WDBs and service is traditionally delivered in the AJCs.  But, recently we teamed with DSS and each of the WDBs and have formed a consortium with some New England states (Maine, New Hampshire, Rhode Island, Vermont) to share best practices for providing virtual services to TFA clients.  As a result, we are developing plans for transitioning the 1,700 TFA clients that have applied since March into the JFES program and creating an orientation video to be utilized via zoom.  This is one of many new service delivery models JFES is developing.


Connecticut Department of Labor 
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