JFAC rejects initial unemployment operations request but approves accounting corrections and reporting language for Department of Labor

The Joint Finance-Appropriations Committee voted down an initial Department of Labor maintenance motion for FY2026 unemployment insurance operations but later approved fund transfers and corrective language to fix accounting mismatches.

Representative Tim Handy moved a request that would have added $7,330,000 (dedicated funds) for unemployment insurance operations and $161,001 (federal funds) for IT replacement items. After discussion about workload, past COVID-era temporary FTE increases and current operational demands, committee roll calls recorded that the original motion failed in committee (the chair noted both chambers voted against the version presented). Committee members cited a lack of majority support for new ongoing dedicated spending in the packet as the primary reason to reject the request.

The committee then considered technical corrections to departmental fund balances identified during close-out and accounting reviews. Lawmakers approved a corrective transfer motion to “transfer and appropriate $4,868,000 from the Unemployment Security Administration and Reimbursement Fund to the Employment Security Fund” to correct bookkeeping errors; recorded votes showed the motion passed unanimously in committee (18 ayes, 0 nays as announced). The committee also adopted four pieces of language directing the Department of Labor and the State Controller’s Office to coordinate and document FY2024 fund-balance adjustments (these were accepted by unanimous consent). A separate piece of language requires the Department of Labor to report on its positions and provide the committee an accounting of staffing and fund-use; the committee accepted that language by unanimous consent.

Supporters of the initial operations request described continued workload—fraud investigation, case adjudication and consumer responses—and said unemployment operations rely on interest and dedicated receipts that rise and fall with economic conditions. Opponents pushed back on adding ongoing dedicated authority mid-session without a clearer, long-term plan and suggested corrective accounting rather than adding new ongoing authority was the correct immediate path.

Outcome and next steps: The Department’s initial FY2026 augmentation was not approved in committee. Accounting corrections and reporting requirements passed; the department must coordinate with the Office of the State Controller and report back per the adopted language.