New virus restrictions will impact jobless benefits; state budget closes with a bright spot

many gold coins lying in piles on a white background

FRANKFORT, Ky. (WTVQ) – Just as the state is trying to get the last paperwork done on more tha 60,000 unemployment claims, it’s likely to see another rush of filings with new orders shutting down or limiting restaurants and bars, a big segment of the economy.

And it comes with the state still struggling with an antiquated system that makes it difficult for workers to file and at a time when Congress is letting extra financial assistance expire.

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When asked Monday during his daily briefing about the status of the state’s unemployment insurance and the impact of the likely new claims, Gov. Andy Beshear was honest.

Noting the state can handle the new wave financially, but “our tools for getting them the help are woefully insufficient,” he said.

Of the thousands of old claims, the vast majority just need explanation letter to be sent in as part of the final process to the federal government. But those letters are time-consuming.

Having worked 60,000 cases in a month, the accounting firm Ernst and Young that was brought in to get the state caught up is turning its attention to newer claims so state workers can address those letters. That includes bringing in lawyers from other state agencies to try to get through the backlog as fast as possible.

“We’ve got to get it done,” Beshear said, recognizing even “that is going to take time.”

“This is horrible timing,” he said, distinguishing the potential “long-term harm of the virus running unchecked” is even more devastating than what he hopes are “two weeks of short-term damage.”

“We need another paycheck protection program, we need an extension of the unemployment benefits,” he continued, noting that because of a quirk in state law, the extra $600 a week in federal unemployment funds that officially runs out July 31 actually won’t be in jobless payments approved in the state this week.

Of the $3.3 billion in unemployment benefits the state has paid out so far, $2.5 billion has been the $600 weekly supplement, according to Amy Cubbage, the general counsel for the Labor Cabinet which took over the unemployment process two months ago.

In an update during the briefing, Cubbage said approximately 68,000 initial claims are waiting for resolution, though some significant percentage of those are duplicates. This includes 4,900 claims filed in March, 22,000 filed in April and 20,000 filed in May.

Of the 68,000 initial claims, approximately 63,000 have been investigated and are awaiting a written Notice of Determination.

“When someone loses a job and files an unemployment claim, it could be disputed or undisputed, and a claim could be disputed for multiple reasons. The undisputed claims are obviously the easy ones. We can process those quickly and get payments out. But if a claim is disputed, federal law requires the Office of Unemployment Insurance to issue a formal, written adjudication of the dispute,” said Cubbage. “That is a federal rule. We can’t waive that.”

Meanwhile, the news from the 2019-20 budget year which ended June 30 continues good but the warning clouds continue for the current year.

Beshear announced the General Fund revenues ended up $104.6 million above the budgeted estimate, at a total of nearly $12 billion. The General Fund surplus will be $177.5 million.

“COVID-19 has upended all of our lives, and what it’s going to do to our budget next year, without federal assistance, will be devastating. We believe it could cause the single largest budget cuts in our state’s history, and we hope Congress will act,” said Beshear. “But what I can tell you is that this year’s budget has turned out to be one of the better budgets we’ve had here in a while in Kentucky. We did not end the year with a deficit; we ended up $177.5 million in the black. … I hope the people of Kentucky know how fiscally responsible this administration is committed to being, especially during this crisis.”

Previously, Gov. Beshear said the improved economic footing means:

  • No budget cuts to K-12 education, post-secondary education, and health and public safety, and
  • No cuts to the Judicial or Legislative branch budgets.

The Governor also has said an increase in lottery revenues would result in another $15 million for need-based student financial aid this coming school year.

After holding back $15 million for necessary government expenses, Beshear said the $162.5 million going to the rain day fun, which is called the Budget Reserve Trust Fund, will  bring it up to $465.7 million, which is the largest deposit to the fund from a year-end surplus.

“This extra amount to the rainy day fund is good, because we’re going to need it. As good as this looks, next year looks just as bad,” said Beshear.

He cautioned that the outlook for fiscal year 2021 remains challenging.

He said that although the Road Fund revenue posted a shortfall of $60.3 million, no cuts were being made to the state construction program due to lower spending and help from the federal Coronavirus Aid, Relief and Economic Security (CARES) Act.