The Missouri Department of Labor this month announced a waiver process for those Missourians who received federal unemployment assistance and were then told they had not been eligible for it. Over the past few days it sent notices to Missourians who may be eligible for such a waiver.
House lawmakers in both parties pushed to have the state refuse to seek repayment of federal unemployment benefits. Many had heard from constituents that the Department was demanding back money Missourians received while struggling in the midst of the COVID crisis, and typically months after it was already spent.
HB 1083 passed out of the House 157-3 in early March but did not reach the Governor’s desk.
Lawmakers heard that some Missourians were being told the pay back in excess of $10,000 in federal and state unemployment overpayments. The Department’s action would relieve the federal overpayment liability, which makes up the vast majority of that.
The Missouri House has voted to waive the biggest portion of unemployment overpayments that some 46,000 Missourians were being told to repay. House members also heard that Governor Mike Parson (R) now supports the effort, and his Department of Labor will “pause” efforts to collect the federal portion of those overpayments while the legislation is moving.
Legislators learned that many of the Missourians who applied for and received unemployment assistance last year were then told that the state erred in finding them eligible. They were told they had to pay back the money, often months after it had already been spent on necessities. Some Missourians owed more than $20,000.
The bill that was passed on Thursday would waive the federal portion of those repayments, which amounts to roughly three quarters or more of what most owed. The legislation was the product of a broad, bipartisan effort.
Republic representative Jered Taylor (R) chaired the committee that held hearings with the Department of Labor about this issue. He said waiving this portion is the right thing to do for Missourians who were and are struggling, and were encouraged to apply by the state and federal governments.
Democrats supported the bill, though some say Missouri should also waive repayment of state unemployment overpayments. Republicans say to do that would jeopardize the integrity of the state’s unemployment trust, and lead to higher payments for the small businesses that pay into it – business which are also struggling due to the COVID crisis.
He and other Democrats say the state could use CARES Act money to waive the state’s share of these overpayments and keep small businesses from being impacted. Shell Knob Republican Scott Cupps said he’d be good with that.
The House rejected an emergency clause – language that would make the bill effective immediately upon being signed by the governor. Instead it would take effect August 28. Eggleston said this was part of an effort that’s developed in the last few days to ensure the governor’s support. He said the Department wants time for training and the creation of paperwork that would go into issuing up to 46,000 waivers.
The Special Committee on Government Oversight has heard that of roughly $150-million in overpayments, only a small portion – roughly a quarter or less – came from the state’s unemployment trust. State statute requires the Department to get that paid back.
The larger portion comes from federal covid relief, the repayment of which the federal government has said states can choose to waive. Missouri Governor Mike Parson (R) has told his Department he wants it to be paid back.
The committee held a hearing on six bills – three filed by Republicans and three by Democrats – and a resolution filed by a Democrat, to deal with the issue.
The big question before lawmakers is whether to require that Missourians pay back overpayments out of the state fund. Committee members from both parties say they would like to waive all repayment, but some are questioning whether that can be done. They are unanimous about finding a way to waive the federal repayments, but some think the state portion might have to be recouped.
Shell Knob Republican Scott Cupps said a priority for the Department is to maintain the integrity of the state’s unemployment trust. His bill is one of those that would waive repayment of federal funds, but require Missourians to pay back state overpayments.
Cupps, who sits on the House Budget Committee, is one of those concerned that to waive the repayment of state benefits, the state would have to replenish the fund. This could come from other core budget functions, such as schools or transportation.
St. Louis Democrat Peter Merideth, also a Budget Committee member and sponsor of the resolution, noted that Governor Parson has proposed putting $500-million in federal CARES Act relief funds into the state’s unemployment trust. He suggests that would be a way to waive repayment of state overpayments while maintaining the fund.
House members from both parties are not happy that Missourians are being asked to pay back unemployment assistance they received in error through no fault of their own.
Department of Labor Director Anna Hui told the Special Committee on Government Oversight overpayments are “kind of built into” the unemployment system. The Department is expected to make an eligibility determination and get a payment out to an applicant within 14 days, generally based solely on information provided by the applicant. As additional information comes in, often from the applicant’s current or past employers, it could prove he or she was not eligible.
She said for 2020 that amounted to about $150-million in benefits that the Department paid out and now wants back.
Hui told the committee Governor Mike Parson (R) has made clear that he wants the Department to seek collection of those overpayments, viewing them as taxpayer dollars that went to ineligible individuals.
Several legislators said they have heard from constituents who have been asked to pay back thousands of dollars in state or federal relief, sometimes months after they received it. One constituent was asked to repay about $23,000.
Representatives, including Raychel Proudie (D-Ferguson), said the reasons given to individuals for their ineligibility were not always clear. She read a letter the Department sent to one of her constituents telling them they had to repay for a “miscellaneous reason.” Proudie called that “unacceptable.”
Federal directives have given states the option not to require repayment of assistance from the federal government, which makes up the majority of the $150-million the Department overpaid. Hui explained that Missouri is choosing to seek repayment of federal relief.
The Department is required by state statute to collect overpayments out of the state fund.
Dan Thacker represents a union including about 500 school bus drivers and monitors. He said many of them make salaries that would put them near the poverty level, yet roughly 400 are being asked to pay back thousands of dollars.
St. Joseph Republican Bill Falkner said any legislative action will have to balance the waiving of repayment by Missourians with protecting businesses, as some of these overpayments are charged to them.
Committee members also spoke directly to Missourians during the hearing. Cupps said the repayment situation is adding to already heightened stress for struggling Missourians. He wants them to know he and other legislators are paying attention, and are looking for a solution.
Hui told the committee that Missouri is on pace to need a loan to support the state’s unemployment trust, likely by around June. She did not offer a projection of how great that loan might be. She said this could cause employers to have to pay more, as that loan is repaid.
Witnesses and lawmakers alike suggested that repayment decisions have seemed arbitrary and inconsistent, with some people being ordered to pay back only federal funds, some to pay back only state funds, and some told to pay everything or nothing.
The Missouri House has again voted to reduce the length of time people can claim unemployment benefits.
House Bill 288, sent to the Senate Thursday, would cut that time period from 20 to 13 weeks if the state’s unemployment rate is less than 6-percent. It could increase if the jobless rate increases, reaching a maximum of 20 weeks if that rate exceeds 9-percent.
Republicans said the measure is meant to keep the state’s unemployment fund solvent when the economy takes a downturn. Missouri has had to borrow money from the federal government to cover benefits in past economic slowdowns, and business owners have had to pay millions of dollars in interest on those loans.