Kentucky is still processing about 50,000 unemployment claims made during March, April and May, though state officials said on Wednesday that contractors have started working through the backlog this week.
Democratic Gov. Andy Beshear’s administration announced last week that the state will pay professional services firm Ernst & Young $7.4 million to help process the backlog with 300 workers.
During a meeting of the legislature’s Joint Interim Committee on Appropriations and Revenue on Wednesday, Republican Sen. Mike Nemes said he had “quite a few problems” with the contract, arguing that the state could have saved money by hiring more state employees.
“For $7.4 million you could hire 100 people with benefits for a year,” said Nemes, who previously worked as deputy secretary of the Kentucky Labor Cabinet in Gov. Matt Bevin’s administration.
More than 900,000 new unemployment claims have been made in Kentucky since the beginning of the coronavirus pandemic in March.
Amy Cubbage, general counsel for the cabinet, said that the state entered into the contract because workers came pre-trained and the state won’t have to pay their benefits.
“We don’t have to pay any of those kinds of things,” Cubbage said. “We can quickly put in 300 processors to work through this backlog in a cost-efficient manner that is paid for with federal funds.”
Beshear said last week that part of the reason the state contracted with Ernst & Young is their work helping Colorado handle its unemployment backlog. Cubbage said that officials hope to clear, or at least get close to clearing, the backlog by the end of the month.
Officials also announced more sign-ups for people to get in-person help with their unemployment claims. The new appointments will take place in Covington and Prestonsburg next week (appointments can be made here). Signups at the Labor Cabinet’s main office in Frankfort are booked until September.
Lawmakers also questioned the Beshear administration’s decision to take out an $865 million loan from the federal government shore up its unemployment insurance trust fund, the main pot of money for unemployment claims.
Rep. Jason Nemes, a Republican from Louisville (and son of Mike Nemes), said that the decision to take out the loan should have gone through the legislature.
“It is my belief that it’s not for a governor, or the administration to make those determinations, not to talk amongst themselves,” Nemes said. “I think it is a grave usurpation of our rights as a body.”
Josh Benton, deputy secretary of the Education and Workforce Development Cabinet, said that without the loan, Kentucky’s unemployment insurance trust fund would have “zeroed out” in mid-June.
Kentucky took out a nearly $1 billion loan to keep its unemployment system from collapsing in 2009. The loan was paid off in 2015.