JFAC approves accounting corrections for unemployment insurance, debates staffing and operations funding

The Joint Finance-Appropriations Committee discussed the Department of Labor’s unemployment-insurance operations and staffing, including whether prior temporary staff additions made during the pandemic should be retained. Committee members and staff debated whether rate increases and interest earnings in the unemployment-security account were being used for operations and whether personnel levels remain appropriate now that claims volume has declined.

The committee ultimately approved an accounting correction and fund transfer to reconcile FY2024 fund balances: $4,868,000 was transferred from the Unemployment Security Administration and Reimbursement Fund to the Employment Security Fund to correct entries. The committee also adopted language to correct other fund balances for FY2024 (statutory requirement for corrections over $500,000) and accepted a reporting requirement for the Department of Labor to report on position counts and fund usage.

Why it matters: The accounting correction does not appropriate new dollars but fixes where funds are carried on the state’s books and restores correct fund balances so operations can continue. The debate highlighted the tension between resourcing to handle fraud and backlog (a legacy of the pandemic years) and the need to align staffing and spending with current claims volumes.

Key points and actions: - The committee discussed an initial motion to add $7,330,000 (dedicated funds) and $161,001 (federal funds) for unemployment-insurance operations and hardware. That motion drew contested votes and confusion in the transcript before committee members pursued accounting corrections. - The approved fund transfer: $4,868,000 from the Unemployment Security Administration & Reimbursement Fund to the Employment Security Fund to correct FY2024 accounting errors. Committee tally reported 18 ayes, 0 nays. - The committee approved language to correct FY2024 fund balances (four pieces of language to be executed by the Department of Labor and the Office of the State Controller) and adopted a reporting requirement describing positions and fund usage; both items passed by unanimous consent.

Discussion highlights: Representatives said unemployment remains low but that the Department of Labor still faces heavy workloads, including customer complaints and fraud investigations. Several members said they were comfortable with the department using interest or dedicated accounts in low-unemployment periods to maintain operations; others worried about preserving appropriate oversight.

Next steps: Department of Labor to work with the Office of the State Controller to finalize fund-balance corrections and deliver the required report to JFAC. The department will also proceed with ITS-recommended IT replacement items if and when appropriations and accounting corrections are finalized.

Sources: Committee transcript and votes recorded during the Department of Labor agenda item.