OKLAHOMA CITY – Despite its antiquated computer equipment, the Oklahoma Employment Security Commission (OESC) sent out the first federal unemployment benefits under the newly enacted American Rescue Plan (ARP) on March 22, nearly a week ahead of projections.
The agency paid more than $46 million in benefits to more than 63,000 claimants “on the first day payments could be distributed without a delay in payments from the previous benefits package, which is a first for the agency,” said Shelley Zumwalt, executive director of the OESC.
President Biden signed the ARP on March 11.
“This turnaround time is an impressive accomplishment, especially considering the agency’s 40-year-old technology,” Zumwalt said Monday.
“To get these payments out the door so fast, our team came up with innovations,” she said. Testing changes to the system usually takes four weeks “but this time we did it in a week and a half,” she said. “We’ve been learning from the past.” In addition, “Some of our people pulled all-nighters several days last week,” she said.
The new COVID-19 relief bill extends federal unemployment benefits – including Pandemic Unemployment Assistance (PUA), Pandemic
Emergency Unemployment Compensation (PEUC), and the $300 weekly benefit from the Federal Pandemic Unemployment Compensation (FPUC) program – through Sept. 6, 2021.
Approximately 110,000 claimants are receiving unemployment benefits for various types of claims, Zumwalt said.
In a related matter, the $1.9 trillion stimulus package provides that up to $10,200 in unemployment benefits won’t be taxed in the 2020 tax year for individuals whose total income is less than $150,000.
OESC IN PROCESS OF TRANSFORMING TO DIGITAL SYSTEM
Zumwalt inherited an out-of-date claims processing system when she assumed the reins at the OESC on May 27, 2020.
The agency’s IBM mainframe dates from 1978, she said. “It’s a system that you navigate by pushing F9 and F6. That’s the engine that runs the claims process for this agency,” she said. “Everything has to be done manually.”
The OESC has staffers who regularly use COBOL (Common Business-Oriented Language), a computer language developed in the early 1960s. COBOL has been employed in several state unemployment agencies to retrofit antiquated government systems that struggled to process the tsunami of unemployment claims spawned by the coronavirus crisis.
According to FastCompany, many banks, large companies, and government agencies still use COBOL in their legacy systems, but younger coders consider COBOL a relic.
“The technology we’re using in our office in 2021 was new in 1981,” Zumwalt said. “It processes claims and all our payments go through it. We can’t process claims at night because that’s when it’s running batch files.”
OESC is in the midst of an 18-month comprehensive digital transformation project that is not expected to be completed until the end of the first quarter of 2022. The “BT40 project” is “a complete business process transformation that will touch every aspect of the agency, not just software and hardware,” Zumwalt said.
Meanwhile, OESC continues to work on streamlining and modernizing systems for claims and submission processing, benefits renewal, appeals, risk management, employer claims and account management, reporting and re-employment, Zumwalt said.
The digital transformation project will cost an estimated $40 million to $45 million. It will be financed with federal CARES funds and the OESC’s technology fund, agency spokesman Nick Buscemi said. “No state funds or Unemployment Insurance Trust Fund dollars are being used on this project.”
RECORD BENEFITS PAID; UI TAXES RAISED IN ’21
The OESC paid out a record $4.5 billion in benefits between mid-March 2020 and March 19, 2021 – which was one and a half times the amount the agency paid in jobless benefits ($3 billion) during the previous 10 years, Zumwalt reported.
In February 2020, a month when the OESC logged 5,940 initial unemployment claims, the agency paid out approximately $23 million in jobless benefits, she said. In comparison, in one week in June 2020 “we paid out $230 million.”
The OESC has recovered several million dollars from individuals who filed fraudulent claims for unemployment benefits during last year’s crisis, but “some of that will never be recoverable,” Zumwalt said.
The advance, unadjusted number of initial unemployment claims for the week ending March 6 was 5,558, a decrease of 1,635 from the previous week. The four-week “moving average” of continuing claims was a little over 33,000, a decrease of more than 2,500 from the previous week.
Until the coronavirus pandemic coupled with a collapse in the energy industry, the previous one-week record was 9,778 initial unemployment claims filed one week in January 1991, ledgers extending back to 1987 reflect.
The balance Monday in the Unemployment Insurance Trust Fund, from which jobless benefits are paid, was “just shy of $60 million,” Zumwalt said. The trust fund balance on May 24, 2020, was $1.484 billion, the highest it had been in at least 22 years. “It will take years to build it back up” to its previous levels, she said.
Because of the economic downturn, unemployment taxes for Oklahoma employers have gone up and the taxable wage base has increased by almost one-third: from $18,700 in 2020 to $24,000 in 2021.
Conversely, the maximum weekly unemployment benefit payment this year has declined by $78 (141⁄2%): from $539 in 2020 to $461 in 2021. The minimum benefit payment remains at $16 again this year.
Oklahoma’s UI trust fund is underwritten with taxes collected from employers. Approximately 90,000 employers pay into the UI Trust Fund, according to the OESC.
State law requires the OESC to monitor the solvency of the fund and adjust the next year’s employer contribution rates if solvency declines to a specific level. An evaluation last year determined that solvency had decreased.
Consequently, Conditional Factor D, the most severe of the four condition levels, was imposed January 1st to replenish the trust fund. This is the 17th time Conditional Factor D has been imposed, records show; the last time was in 2011-13.
The increase in unemployment insurance rates varies “employer to employer,” Ms. Zumwalt said. The rate schedule last year was .01% to 5.5%. The rates for 2021 range from .03% to a maximum of 7.5%. The rates for nearly three-fourths of Oklahoma employers (72%) have been set at .03%, Zumwalt said.