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Oregon Unemployment Still Crawling Out of Pandemic Pile-Up

While new leadership and a quick economic rebound have allowed the state’s Employment Department to better address new claims and phone calls, the agency still has outstanding issues to be resolved.

The Oregon Pioneer, aka Gold Man
The Oregon Pioneer, aka Gold Man, atop the state capitol building in Salem on Saturday, Jan. 29, 2022.
Sean Meagher/TNS
(TNS) — Fraser Holmes, along with 600,000 other Oregonians, began collecting unemployment in the spring of 2020 after losing his job to a layoff triggered by the pandemic.

Unlike most other Oregonians, though, he didn’t get to keep the money. His former employer challenged his eligibility for benefits after Holmes tried to start his own business, and he had to pay it back.

The Oregon Employment Department billed him $1,800 in January — then a month later billed him another $1,800. Then another letter came from the department saying that second bill was an error and instructing him to wait to make further payments. In March, though, the department started garnishing his paycheck for the remaining balance of both – which at that point was $3,400.

“They took double what they said I owed,” said Holmes, 42, a Salem resident now working in metal fabrication. He said he called the employment at least seven times and sent five emails but couldn’t get any clarity on what he really owed or why the department was taking his wages.

“I’m not the guy who doesn’t pay my bills,” Holmes said. “That’s embarrassing for me.”

The employment department ultimately acknowledged its error in May, one day after The Oregonian/OregonLive inquired about Holmes’ case, and promised to pay him back the share of the money he didn’t really owe. But he said he’s still awaiting the last of the repayments the department’s agent promised him.

“He said he would call me every week from when he called me to make sure I got the rest of my $285.50,” Holmes said. “And my phone hasn’t rang once.”

Two years after a calamitous start to the pandemic, the Oregon Employment Department is still digging out from the confusion and chaos of those early days when it couldn’t answer its phones or process many basic payments.

The department’s dysfunctional management and obsolete technology left thousands of people waiting weeks or months for aid during the steepest, deepest economic downturn in state history.

New leadership — and a rapid economic rebound — enabled Oregon to get a handle on new claims, eventually. The department said it now processes new claims promptly and answers the phone when people call with questions. It says an upgrade to its computer systems is on track to be complete in 2025.

The agency acknowledges, though, that it still has a lot of work to do to resolve the issues that arose during those early months.

“That’s still a significant body of work and typically that persists to some degree for several years during the recovery from a recession,” said David Gerstenfeld, who is beginning his third year as the employment department’s acting director.

Chief among the issues is determining how to handle people like Holmes, who received what the employment department classifies as “overpayments.” Many are eligible to keep the money through waiver programs, either because it wasn’t their fault Oregon paid them too much or because state lawmakers decreed last year it would be a hardship for them to do so.

And in that complexity are echoes of the confusion that reigned during the spring of 2020.

While the employment department wouldn’t speak about Holmes’ case specifically, his overpayment related to a federal program called Lost Wages Assistance that paid extra benefits during the pandemic.

The employment department had to administer that program manually because the funding came from the Federal Emergency Management Agency rather than the U.S. Department of Labor. It sounds like a trivial distinction, but it was more than Oregon’s ancient mainframes could handle.

The result was that Oregon ran that program manually, which “created more opportunity for human error,” according to the employment department.

It was human error, the agency says, that caused the agency to mail about 6,000 erroneous billing statements for overpayments last winter that showed larger balances than claimants actually owed.

It took a week or two to catch that mistake, after which the department sent out additional mailings trying to correct the issue. The department said it hasn’t made a similar error again, though Holmes’ experience illustrates that the fallout from a mistake can linger for months.

Overpayments can result from an error at the employment department, a change in a federal or state program that reversed claimants’ eligibility, or a mistake by those seeking benefits.

The Oregon Law Center sued the employment department last week on behalf of three clients, who it says received overpayment notices months after receiving their benefits. The attorneys say their situation is representative of larger issues, with the department sending out “incomprehensible” demands for repayment.

The litigation alleges at least 27,000 people received overpayment notices, and it’s not clear how many of them really owe money, or for what. The complaint seeks to restore benefits for the three plaintiffs and enforce a more transparent process for everyone who receives an overpayment notice.

“We have a really hard time in any individual case seeing what actually happened, what went wrong, how much someone owes,” said Kelsey McCowan Heilman, staff attorney for the Oregon Law Center.

“We’re disappointed that the Oregon Law Center decided to go this route,” Gerstenfeld said in response this week. “We share the common goal of providing our customers the best possible services.”

Payment eligibility was especially complicated during the pandemic, he said, because there were many new benefit programs, many new employees, and many people filing claims who had never been unemployed before.

“We understand the system can be confusing, especially since the onset of the pandemic,” Gerstenfeld said.

Last year, Oregon lawmakers expanded the number of people eligible to have overpayments waived to include some people who got paid too much because they made a mistake themselves in filling out their benefits application. To qualify, applicants must demonstrate that repaying the money would create economic hardship.

Through May, though, Oregon had waived just $400,000 in such cases. That compares to more than $17.7 million in waivers in cases where claimants weren’t at fault – because of program changes, employment department errors or other complications.

The disparity is partly because most overpayments weren’t the fault of the benefit recipient, according to Gerstenfeld. But he said the relatively small number of hardship waivers also reflects the difficulty of starting yet another new program, notifying people of their potential eligibility and processing their applications.

“Because this was a change, there were a number of things we needed to do to start waiving the overpayments,” Gerstenfeld said. “And we started doing that as quickly as we could.”

The agency’s long-term future is in flux while Oregon awaits a fresh audit of the employment department. Secretary of State Shemia Fagen ordered the audit in February 2021, shortly after taking office, but it’s been delayed twice and isn’t due until sometime this summer.

Gov. Kate Brown said last year she will wait for the audit’s release before choosing a permanent director for the employment department. That’s left Gerstenfeld serving in a caretaker role since May 2020, when the governor fired his predecessor and appointed him acting director.

Rep. David Gomberg, D-Otis, co-chairs the legislative committee that oversees the employment department’s budget. Like other lawmakers, he said he was overwhelmed by phone calls from constituents who couldn’t get their jobless benefits in the pandemic’s early month.

“We have a record number of claimants. We have a record number of new rules. And we have a record number of new employees at the agencies, dealing with these cases,” Gomberg said. “Even in the best agencies that’s a recipe for a record number of mistakes. And that’s precisely what we saw.”

He credits Gerstenfeld with being credible and forthright, and said he walked into a tough spot when he took over an agency in crisis during the pandemic’s early days. He said the department’s performance has improved substantially.

Still, Gomberg said he wonders if the state is doing a clear job communicating waiver information and addressing the overpayments.

“Are we handling it properly? The answer, I think, is we’re in the early stages of handling it,” he said. “And as a legislator, I’m going to have questions going forward.”

©2022 Advance Local Media LLC. Distributed by Tribune Content Agency, LLC.
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