By Dick Hall-Sizemore

There has been considerable discussion on this blog as to which agency has been the biggest failure in the face of the pandemic. Many have placed the heaviest blame on the Department of Health. I would award the prize for the being the biggest failure to the Virginia Employment Commission (VEC).

The Department of Health certainly has had its problems and failures, but it has had to face a complex environment. For examples, it was dealing with a disease about which little was known at first, including its major method of transmission; the most vulnerable citizens were those in nursing homes, which are controlled by private owners; and it is dependent on other actors, such as hospitals and local health departments, for its data.

On the other hand, VEC has one primary mission—get out checks promptly to people who have lost their jobs. It largely failed at that job.

One year after the pandemic began, there are still people who are waiting for their benefits. One claimant got two letters from VEC on the same day. One letter said that he was ineligible for the benefits he had received and was liable to repay $19,650. The other letter notified him that he had been found eligible for benefits.

There are two main reasons for these failures. First, the agency has been neglected in the past and there have been administrative failures. Second, the pandemic was unprecedented and presented unprecedented problems for the agency, as it did for most agencies.

The agency is an easy one for administrations and legislatures to neglect. It is funded entirely by nongeneral funds: federal funds and revenue from employer taxes. Such agencies generally operate in their own little world, unbothered by the administration or the legislature.  They do not ask for general fund appropriations. As long as they do their job, no one pays much attention to them. And, in the past, VEC has generally executed its functions with little complaint from the public.

That is not to say there have not been administrative failures. At the beginning of the problems brought on by the pandemic, VEC officials used the excuse that the agency’s computer system was obsolete, operating on 1980’s technology. However, as I pointed out in a post last year, the legislature long ago provided the authorization and appropriation to upgrade VEC’s system. Prior directors and  administrations dragged their feet in carrying out the upgrades, with the result that, after 15 years, its completion was finally projected for December 2020. After all, in the past, there really was no urgency to make this work a priority. The current VEC administration bore the brunt of the criticism resulting from the failure of prior administrators.

COVID-19 brought unprecedented problems. First and foremost, there was the deluge of claims. According to VEC, since March 2020, it has received more than 1.5 million claims. That is more than three times the average received during recent economic recessions. Another point of comparison would be 2019, the most recent year prior to the pandemic, when the agency received a total of 134,957 claims. The agency simply was not staffed to process the volume that descended upon it. For example, there were not enough operators to handle the volume of calls, frustrating many desperate people.

Another problem was created by the supplementary payments provided by the federal government. While welcomed by the unemployed, it took considerable time to program that obsolete VEC information system to handle this different category of funding and to handle the categories newly created by the federal COVID legislation, primarily self-employed individuals.

In December, the Northam administration made the decision to begin making payments to people whose applications had been on hold, some for months, pending staff review. Many of those applications were of people who had been originally approved and then had payments stopped because something in their file had been flagged. The most common issue for stoppage of payments related to the way the claimant left his job. In short, the administration decided to let the paperwork catch up with the payments. If someone was subsequently found to be ineligible, he would be required to pay the money back.

The Governor recently signed legislation (HB 2040) that would codify this authorization until the end of FY 2022. Furthermore, the legislation requires VEC to waive the obligation to repay any overpayment “if (i) the overpayment was made without fault on the part of the individual and (ii) requiring repayment would be contrary to equity and good conscience.” (In order that any loss from this provision not be reflected in the tax paid by employers, the legislature provided almost $19 million in general fund appropriation to cover it.)

My Soapbox

Through no fault of its own, the current VEC administration was woefully unprepared for the flood of claims resulting from the closing of businesses due to COVID-19. However, despite the very public problems and public outcry, the Northam administration was slow to react. It was not until December that it made the decision to continue payments for claimants whose files had been flagged and were being reviewed by senior staff.

I realize that it takes time to train new employees to provide information to potential claimants and to review claims. However, it seems that some steps could have been taken to improve service. For example, the administration could have contracted with private companies to provide more people to answer telephones. Those operators may have been in New Mexico and not have been able to provide more than basic information, but at least desperate unemployed persons could have been able to talk to someone rather than being but on indefinite hold. Another possibility would have been the establishment of large registration sites in armories, school gymnasiums, etc., where claimants could have gone to get help submitting their claims via computer. These sites could have been staffed by retired VEC personnel.

Finally, it is apparent that these delays in getting payments to claimants constitute some justification for the moratorium on evictions and shutoffs related to back rent and utility payments.