No PUC for you: DWD denies a federal $600 payment when there is a “BAR”

CBS 58 has a report about how Wisconsinites with a BAR are not receiving any of the $600 PUC payment despite guidance that they should receive at least $300 PUC payment each week. The key paragraph from the story:

“We have received verification [from the US Dep’t of Labor] that if somebody has a BAR fine, which is a benefit amount reduction, they are not eligible to receive Federal Pandemic Unemployment Compensation, which is the acronym FPUC or the additional $600 a week, and basically it’s because this person was found to have committed fraud against the system and therefore they would not be able to get those additional benefits due to that bar penalty as a result of committing fraud,” said Emily Savard with the Department of Workforce Development.

Here is the May 8th e-mail message in which the Department announced this policy to its staffers:

From _, Melissa – DWD
Sent: Friday, May 08, 2020 10:46 AM
To: _
Subject: FPUC and BAR

If a claimant does NOT receive UI, PEUC or PUA payment for a week because the entire amount is applied to the Benefit Amount Reduction (BAR) the claimant will not receive Federal Pandemic Unemployment Compensation (FPUC) (extra $600).

Melissa _
IQ Supervisor (Integrity and Quality)

The Department’s own original April 20th guidance on PUC benefits did NOT have this exclusion (emphasis supplied).

Eligible to receive a payment under UI, UCFE, UCX, PEUC, PUA, EB, STC, TRA or DUA. FPUC is added after all debts are offset, forfeited, or applied to a benefit amount reduction from the individual’s UI. Individuals whose UI payments are intercepted to pay debts (child support or pverpayments) are eligible for the $600 FPUC payment, even if 100% of their weekly benefit amount is intercepted.

What changed?

According to the CBS 58 report, the Department asked for additional guidance from the US Dep’t of Labor on this issue. But, why would additional guidance be needed?

A BAR used to be called a forfeiture of future unemployment benefits. Here is how an initial determination in 2016 regarding a “BAR” read:

Effect

The claimant shall forfeit $12705.00 of unemployment compensation benefits that become payable during the six year period that ends 02/05/22.

Additionally, the Department may at a later date seek criminal prosecution under Wis. Stats. 108.24.

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Forfeiture (the withholding of future payable benefits) is an administrative penalty for intentionally concealing information affecting your unemployment eligibility and is in addition to any overpayment caused by such concealment of information.

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And, here is the relevant language for a “BAR” in an initial determination in 2018:

Effect

The claimant’s benefit amount shall have a reduction of $1480.00. This reduction remains in effect for benefits and weeks that become payable during the six-year period that ends 02/15/25.

---

This benefit reduction of future payable benefits is an administrative penalty for intentionally concealing information affecting your unemployment eligibility and is in addition to any overpayment caused by such concealment of information.

---

There has been NO change in this law, Wis. Stat § 108.04(11), during this time. The only change has been in how the Department characterizes this forfeiture of future unemployment benefits.

But, this change in terminology by the Department is important. Federal guidance for the payment of the $600 PUC payment has the following information about when there is an over-payment of benefits because of a forfeiture and whether the $600 PUC is still paid:

Question: Must FPUC payments be used to offset intrastate state or federal UC overpayments?

Answer: Yes. FPUC payments must be reduced to recover state and federal UC overpayments if the state has a cross-program offset agreement in place with the Secretary under Section 303(g)(2), SSA (42 U.S.C. § 503(g)(2)). However, a state may not offset more than 50 percent from the FPUC payment to recover overpayments for these unemployment benefit programs.

UIPL 15-20 PUC benefits, Change 1 (9 May 2020) at I-2 (emphasis supplied).

Essentially, the Department is claiming that this change in wording in how it calls this forfeiture of future unemployment benefits — from a forfeiture to a benefit amount reduction or BAR — means that the federal guidance about still paying $300 of the federal PUC payment (and earmarking the other $300 towards the remaining benefit amount reduction) does not apply.

Again, as with eligibility for PUA benefits for the disabled (see the discussion of SSDI in this post), the Department is going out of its way to stymie the whole purpose of the CARES Act: to stimulate the economy by giving folks needed cash to pay for rent and groceries.

As the federal guidance for PUC payments explains:

Question: When is an FPUC payment considered to be overpaid?

Answer: An FPUC payment is an overpayment any time an individual receives an FPUC payment for which the individual was not eligible. For example, if an individual is paid FPUC and the underlying UC benefit payment is subsequently denied and determined to be overpaid, then the FPUC payment is also overpaid. However, if an individual is eligible receive at least one dollar ($1) of underlying benefits for the claimed week, the individual is eligible to receive the FPUC payment for that week.

UIPL 15-20 PUC benefits, Change 1 (9 May 2020) at I-2 (emphasis supplied).

All the claimants currently under the BAR penalty are seeing in their benefit statements that they are being credited/reduced each week for these BAR/forfeiture penalties. Just like any forfeiture, these funds simply are not being paid out to them. So, why is the Department at least not paying out the $300 PUC as per federal guidance on this issue?

Another reason why Wisconsin UI is faring so poorly: terrible job growth in 2019

Jake has the 2019 gold standard numbers, and they are just terrible.

Wisconsin’s rate of job growth started to decline in mid-2016, and has pretty much gone down since then, with the except of a Bubbly 6 months after the GOP Tax Scam was signed into law. But last year was a new depth, with barely more than 5,000 jobs added from December 2018 to December 2019, and we even slipped below 0 in November before a small rebound in the last month of 2019.

Jake compares the jobs picture in Wisconsin with Minnesota, and the comparison does not go well for Wisconsin.

Total jobs added, QCEW 2010-2019
Minnesota    330,103
Wisconsin    227,993
Difference   102,110

Jake further points out that the 2019 data for Wisconsin reveals that Dane County by itself is providing the job growth for the entire state.

Jobs added, Wisconsin 2019
Dane County    +7,446
REST OF WIS    -2,367

As Jake concludes:

This data sure seems to indicate that we could learn something by being more like Minnesota and Dane County, because that’s what was working before the COVID-19 recession hammered everyone starting in March. And today’s report is yet another blaring piece of evidence of just how much we have been held back during the Age of Fitzwalkerstan. It needs to be ended ASAP, and it goes well beyond changing who is in the Governor’s office.

Because job growth has been so anemic in Wisconsin, unemployment is that much more important as a wage replacement. But, as indicated previously, Wisconsin’s policies over the last decade have made unemployment much, much more difficult to get. Now with the pandemic and absolutely no jobs available at all, folks who have been suffering under meager job growth the past decade have absolutely nothing to fall back on other than unemployment. And, that system is designed to be difficult and cumbersome.

The Evers administration could start fixing this system by actually following the law rather than subverting it, as it is currently doing by denying PUA benefits to the disabled (see the discussion of SSDI in this post). And, the Evers administration could take a look at what our neighbor in Michigan is doing to make an equally difficult unemployment system at least less burdensome on claimants and the workers who have to administer that system. The results of these efforts in Michigan speak for themselves:

Chart courtesy of NELP

In comparison to Michigan, Wisconsin will only begin to start paying out PUA benefits next week.

Wisconsin remains . . .

Policy choices with unemployment

Right now, there are many, many unemployment claims being filed in Wisconsin. But, the problems folks in Wisconsin are having with their claims arise to a great degree from policy choices being made about how those claims should be processed and how the Department decides to enforce federal and state legal requirements.

Last week, the NY Times Upshot examined claims data for all 5o states and concluded that, in general, states have made it harder to get jobless benefits.

The story included three charts indicating in various ways how unemployment eligibility and payments have changed for each state. Here are those charts with Wisconsin marked by a green dot. As evident in these charts, Wisconsin has made it much harder to get unemployment benefits.

Here, we see that in 2007 roughly 50% of Wisconsin’s unemployed received benefits in 2007. Now, in 2019, that percentage has dropped to around 30%. This drop is actually greater than the drop in Florida noted in the article. Indeed, it seems that only North Carolina, the other state noted in the article, had a greater drop.

Here, we see that in the weeks from mid-March to mid-April 2020 in Wisconsin around 13% of the employees have applied for unemployment benefits. But, less than 10% of those applicants ended up receiving unemployment benefits. The change here is not that stark. But, Wisconsin does not fare all that well on this issue when compared to its neighbors Michigan and Minnesota.

Here, we see where Wisconsin has instituted another dramatic change. In 2007, less than 2% of weekly claims were being denied for failing to meet continuing eligibility requirements. In 2018, however, the percentage of claims being denied for this reason was nearly 8%, a four-fold increase.

Indeed, Wisconsin’s efforts on this front exceed that of Florida, a state notorious for creating these obstacles. And, while other states like Mississippi, South Carolina, and others were even more effective than Wisconsin in getting claims denied for these reasons, the shift in Wisconsin is even more extreme when considered in light of Wisconsin’s role in creating the unemployment in the first place.

Note: see this post for how states have used these obstacles to unemployment benefits to suppress growth in wages.

Essentially, Wisconsin and other states have completely turned away from the goal of providing economic security for the unemployed. It does not need to be this way. As evident in these charts, not all states are like Wisconsin, Mississippi, or Florida.

In 2007, unemployment in Wisconsin was once quite similar to Massachusetts. Today, the weekly benefit rate in Massachusetts is around $600 a week, and more than 50% of the unemployed still receive unemployment benefits in that state. Wisconsin took a much different path. The question is what path Wisconsin will take next.

Will Wisconsin continue to be like Mississippi and Florida and North Carolina? Or, will Wisconsin return to the kind of unemployment system the state originally created.

Backlogs with claims

Unemployment claim-filing is up, way up.

Initial Claim-filing data

          2020      2019    ratio
w/e 03/14   5,698   5,587   1.0
w/e 03/21  69,342   5,216   13.3
w/e 03/28 115,679   5,640   20.5
w/e 04/04 103,226   5,173   20.0
w/e 04/11  65,654   4,619   14.2
w/e 04/18  56,038   4,624   12.1
w/e 04/25  48,630   4,570   10.6
w/e 05/02  39,278   4,146   9.5
w/e 05/09  35,134   4,026   8.7

Source: https://dwd.wisconsin.gov/covid19/public/ui-stats.htm

For the week ending May 16th, initial claims filed on Sunday alone (4,135) were more than all the claims filed the equivalent, entire week in 2019 (3,460). So, even as the trend in new claims is slowing, the numbers are still overwhelming.

Furthermore, this data only includes claims for regular unemployment benefits. Claims for PUA benefits are not included here. As of May 9th, the Department reports 72,695 of these PUA claims having been filed (none of these PUA claims have yet been approved, apparently).

My sources within the Department indicate that the Department is weeks behind on processing the documents claimants and employers are submitting by fax or by mail. And, by processing, I mean simply scanning the documents into the Department’s computer system and associating those scanned documents with the correct claimant and employer.

Note: as of mid-April: UCB-23 forms (weekly wage confirmation notices) were being scanned from 4/6/20 with ~16,000 in the queue; UCB-16 forms (separation notices) were being scanned form 3/30/20 with ~54,000 in the queue; ~40 mail bins dating from 4/10/20 had yet to have their contents even opened.

Even at hearing offices, it takes five to ten days from when a letter is faxed or received before the received documents are scanned and entered into the Department’s claim-filing systems.

Note: Accordingly, if you need to update your availability or a phone number for contact purposes, it is best to call the hearing office rather than sending a letter or even providing the requested form.

And, it appears that the Department is ignoring this backlog when deciding cases and scheduling hearings. I had a hearing on Monday, May 11th, in which there was only seven days notice. As a result, the documents I submitted in a letter dated May 5th were NOT available to the administrative law judge. Luckily, those documents were made available through other mechanisms during the hearing. But, if those other mechanisms had failed, the hearing would have had to be postponed until another several weeks had passed.

Claimants have also contacted me about their claims being denied for failing to provide requested documents. They did provide the requested documents on time, but the deadline passed without those documents being uploaded into the Department’s system. So, rather than account for this backlog, the adjudicator/investigator denied the claim because the requested documents were not yet available in the system and dinged the claimants for failing to respond on time.

In these ways, the Department is essentially penalizing claimants for its own backlog.

Given how the numbers of new claims continue to dwarf the claims filed in 2019, these problems will continue. Until the Department acknowledges this backlog, claimants will simply have to jump over these additional hurdles being placed in their path by the Department.

The claim-filing process should NOT be a contest, however.

The check should be in the mail