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House OKs $15M for 'wounded' Pa. unemployment centers

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Pennsylvania's House of Representatives gave its blessing Tuesday to a bill that would extend $15 million to the state's beleaguered unemployment compensation system.

The move could mean shorter wait times for Pennsylvania's unemployed, and several months' work for about 200 of the roughly 500 people who lost their jobs when the state closed three of its call centers last fall.

"We would prefer a long-term solution for this funding, but passage of SB 250 would provide critical funding to aid a wounded UC system," the Department of Labor & Industry said in a statement. The department is responsible for running the unemployment compensation centers, as well as collecting unemployment taxes from employers.

The bill, an amended version of one that passed in the Senate, allocates $10.8 million toward bringing back claims-processing personnel, $2.3 million for tax services employees, $1.4 million for appeals personnel and $500,000 toward detecting and preventing overpayment to claimants. The money would support these operations through the end of 2017.

The amended bill passed the House in a 189-4 vote. It will go back to the Senate for approval before potentially landing on the governor's desk as soon as this week.

The $15 million stop-gap measure is meant to relieve some of the long wait times Pennsylvania's unemployed have faced in the months since December, when Pennsylvania shuttered three of its eight unemployment compensation centers and laid off more than 500 employees.

The layoffs and closings were necessary, Labor & Industry said, because Senate Republicans declined to extend a previous funding stream that would have given the department an additional $57.5 million in 2017. 

Some legislators argued the department had not adequately accounted for the $178 million it had already received from the temporary Service and Infrastructure Improvement Fund over the past four years, and that it had known for years that that source of income was coming to an end. 

Labor & Industry countered that it desperately needed an extension to make up for decreased federal funding and upgrade its expensive, 50-year-old computer systems.

The bill passed in the House Tuesday includes a provision requiring Labor & Industry to report to legislators by June 15 on how the department plans to wean itself off of state funds for paying certain recurring expenses.  

Like Labor & Industry, the union representing the unemployment centers' employees applauded the move but cautioned it is little more than a bandage over a much larger problem.

“Even before the furlough of 499 unemployment compensation workers, the program was grossly understaffed so while recalling less than half of the workers is a help, it will still not provide the complete assistance needed to serve the unemployed and underemployed workers of Pennsylvania, but it is a start,” SEIU 668 President Tom Herman said in a statement.

The stop-gap funding is one of several developments in Labor & Industry's story since November's funding standoff.

The Pennsylvania Office of the Auditor General announced earlier this year that it would audit how the department spent the $178 million it received through SIIF. That report is expected to come out later this month.

Labor & Industry is also still locked in a legal battle with technology giant International Business Machines Corp., which the department sued last month seeking compensation for technology upgrades the state says IBM was contracted for but never completed.

The department acknowledged in its statement that it still has a long road ahead, despite the $15 million reprieve.

"While this funding recommendation provides for short-term, gap funding, it still does not offer a long-term solution, and the UC system could be forced into chaos as we saw last year."

This story was updated to include comment from SEIU 668.

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Jennifer Wentz

Jennifer Wentz

Jennifer Wentz covers Lancaster County, York County, financial services, taxation and legal services. Have a tip or question for her? Email her at jwentz@cpbj.com. Follow her on Twitter, @jenni_wentz.

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