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Kauffman Bill Sets Future Course for UC Program
HARRISBURG – The Pennsylvania House of Representatives today approved legislation authored by Rep. Rob Kauffman (R-Franklin), chairman of the House Labor and Industry Committee, to ensure the completion of long-awaited updates to the Unemployment Compensation (UC) program’s computer benefits system and set an end date of state supplemental funding for the program.

“State funding, that was in addition to federal funding, was due to end last year under an original agreement aimed at updating the state’s UC program,” said Kauffman. “However, through committee hearings it has become clear that the system has not been managed well under several administrations; therefore, anticipated computer system upgrades needed to improve service and better manage the program are still not complete. My legislation will ensure proper funding is made available for the upgrades with an end date for the department to manage operations using reoccurring federal funding along with penalty and interest fees collected from claimants and employers.”

When the state’s supplemental funding stream ended last year, the department was unprepared and it created a crisis that led to the furlough of roughly 500 employees, as well as severe service disruptions to customers in the UC system.

After conversations with lawmakers on both sides of the aisle, as well as department officials, Kauffman’s original bill was amended to increase the state’s exit strategy from three years to four years. During that four-year period, the state would provide a total of $115.2 million in funding for the Department of Labor and Industry to implement a modern, efficient UC system and transition to a budget that can be covered by federal funding totaling approximately $130 million per year to operate the UC program.

“Although this bill goes further than I originally wanted, it also doesn’t give as much time or money that the department was first requesting. I think this is a good compromise that will ensure enhancements are completed, greater efficiencies are put in place and customers accessing the UC system are serviced,” said Kauffman. “Funding from the state was always supposed to be temporary, so the UC program should have the ability to fully operate on the funding it receives from the federal government once state funding ceases.”

Kauffman noted that department officials have claimed it is difficult to operate the UC program on continually diminishing federal funds. However, federal funding is primarily granted based on the number of claims being processed. From 2012 to 2016, federal funding has decreased by 24 percent, but initial claims processed by the Pennsylvania UC program actually decreased by 31 percent. With fewer claims to process, fewer employees are needed, especially once an updated computer system is in place.

Furthermore, most other states are putting significantly fewer state dollars into the administration of their UC systems - including all of our neighboring states.  For fiscal year 2016, the most recent data available, state source funding for UC administration was about 15.5 percent of the total spent nationwide.  In Pennsylvania, it was 33.2 percent of the total. 

“This type of information tells me that Pennsylvania needs to up its game because obviously we can do better, as proven by so many other states that are delivering high-quality services using fewer state dollars,” said Kauffman. “A four-year phase-out of these additional state dollars will bring Pennsylvania more in line with state funding levels for most state UC systems – while providing a smooth exit ramp, so that the department can transition to a leaner system, without creating the service disruptions we experienced during the early part of this year.

“Again, I think this bill is a good compromise, and I look forward to getting it to the governor’s desk in a timely fashion so that the department can complete its project,” said Kauffman.

This bill now goes to the Senate for consideration.

Representative Rob Kauffman
89th District
Pennsylvania House of Representatives

Media Contact:  Tricia Lehman
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