Leaders predict 2-3 years to update Kentucky unemployment system

Posted at 4:56 PM, Jul 27, 2021
and last updated 2021-07-28 02:27:14-04

Kentucky hopes to stay on course to overhaul its outdated technology for processing jobless claims in two to three years, despite renewing its search for a company to handle the job, the state’s new labor secretary told lawmakers on Tuesday.

Labor Secretary Jamie Link fielded questions regarding the recent decision to go through a rebidding process in search of a vendor to modernize the pandemic-stressed unemployment insurance system. Link said his hope is to still “adhere as closely as possible” to the project’s initial timeframe.

“We intend to stick with that original two- to three-year period,” he told the legislative panel.

Before the rebidding, state officials signaled that replacing the antiquated computer system was projected to cost around $40 million. That amount remains “the target number,” Link said Tuesday.

In June, Link’s predecessor said the state was in the “latter stages” of selecting a contractor to overhaul the claims-processing system. Weeks later, cybersecurity concerns led to the decision to rebid the work, Gov. Andy Beshear’s administration said. In doing so, it said, the state will request enhanced security measures to protect the personal and financial information of jobless claimants.

State officials hope to complete the new request for bids soon, followed by a compressed timeframe for companies to submit offers, Link said Tuesday. The veteran state official took over as labor secretary at the start of July, inheriting the task of improving the embattled unemployment system.

“It’s got to be efficient and easy to use,” Link told lawmakers. “It has to be secure to minimize or eliminate fraud. And it has to meet the claimants’ needs to get them the funding they need, the services they need.”

Lawmakers say they continue to hear complaints from constituents about the unemployment insurance system.

Beshear’s administration previously said at least one bidder to revamp the system withdrew because of the additional costs the company claimed would be needed to meet enhanced security. The withdrawal came “out of the blue” for state officials, Link said Tuesday.

Republican state Rep. Russell Webber questioned why the security concerns surfaced so late in the search for a contractor.

“We’ve been hearing for months about security issues related to the system,” he said. “So I really have a difficult time believing that this was new, that this was something that somebody just discovered one day ... It seems to me that should have been part of the process that started in January 2020.”

In April, Kentucky temporarily shut down its unemployment system for a few days to bolster security protections. State officials said they suspected that individuals or criminal enterprises had attempted to hack into the system’s customer data.

Problems with the antiquated system have become a recurring political headache for Beshear.

Like other states, Kentucky was overwhelmed by record waves of claims for jobless assistance caused by the coronavirus pandemic. Tens of thousands of Kentuckians found themselves in limbo for months as they waited for their jobless claims to be processed.

Republicans have criticized the Democratic governor for the unemployment system’s problems. Beshear points to budget and staffing cuts that hobbled the system well before he took office. Beshear’s administration hired an outside company to help work through the claims backlog.

Even as the state looks for a partner to do the technology upgrades, the administration is tapping into federal pandemic aid to “strengthen and support” the existing system, Link said.