Will This State’s Workers be Forced to Pay Back Mistaken Unemployment Aid?

The Missouri House chamber sits empty on Thursday, Jan. 21, 2021, at the state Capitol in Jefferson City, Mo.

The Missouri House chamber sits empty on Thursday, Jan. 21, 2021, at the state Capitol in Jefferson City, Mo. AP Photo/David A. Lieb

 

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Missouri lawmakers failed to pass legislation that would have allowed the Department of Labor to forgive unemployment benefit overpayments. Officials are trying to determine what happens next.

Missouri lawmakers failed to pass legislation this year that would have allowed the state to forgive millions of dollars in unemployment aid that it mistakenly overpaid.

The state legislature adjourned this month with the Senate unable to agree on a bill passed overwhelmingly by the House of Representatives—leaving in flux the fate of out-of-work residents who could each be on the hook to repay hundreds, if not thousands, of dollars in benefits.

The problem was not unique to Missouri—states mistakenly overpaid millions of dollars in unemployment benefits to out-of-work residents at the outset of the coronavirus pandemic as they rushed to implement new federal programs and to provide assistance. But while other states either already allowed forgiveness of non-fraudulent unemployment overpayments or passed legislation this year to allow waivers, it’s unclear what Missouri will now do.

The state’s Department of Labor identified $146 million in unemployment aid that it said was mistakenly doled out to 46,000 residents and issued notices seeking to recover the money. The Department of Labor paused collection of non-fraudulent overpayments in April after the bill was introduced. A spokeswoman said the pause remains in effect while the department works out next steps.

“The department is examining the options available and will provide notice to affected claimants widely should the state begin collections processes,” said Maura Browning, a labor department spokeswoman.

Missouri lawmakers have suggested that the bill could be taken up in special session later this year.

“I would say that issue is not over,” Missouri House Speaker Rob Vescovo told reporters at the end of the legislative session. “It’s unfortunate what happened over in the Senate. But this is not the end of that conversation. We all deeply care about the people we represent and the financial struggles they are going through at home.”

A special legislative session has not been confirmed, said Gov. Mike Parson’s spokeswoman, Kelli Jones, in an email statement this week. She did not respond to other questions about what action the governor intends to take on the matter.

At the outset of the coronavirus pandemic, 10 states, including Missouri, did not allow the waiver of unemployment overpayments.

Unlike Missouri, however, other states were able to approve the necessary changes in state law to allow for waivers. Virginia and Kentucky were among those where the state legislature approved changes so that non-fraudulent overpayments could be forgiven.

Disagreement on Broaders Reforms

Missouri’s bill was derailed over disagreement on broader unemployment reforms that Republican lawmakers sought to include in the overpayment bill.

Sen. Mike Bernskoetter amended the bill to shorten the length of time that unemployed workers would be eligible to receive benefits depending on the state of the economy, according to the Missourian.

Missouri cut the length of time that people can collect unemployment from 26 to 20 weeks after the Great Recession. Bernskoetter’s amendment would have created a sliding model that shortened the time frame that people could receive unemployment benefits to 12 weeks if the state’s unemployment rate is at 5.5% or lower. The currently offered 20 weeks of benefits would be allowed only if the state’s unemployment rate was higher than 9%.

Bernskoetter did not respond to a request for comment.

After the Great Recession, Missouri was one of eight states that cut the maximum duration that people could collect unemployment benefits. Researchers have not found that cuts in the duration of benefits translate to higher employment levels. 

“For states that reduced duration, there was little or no shift in the overall trend in employment of the prime-age working population (age 25 to 54),” researchers from the Economic Policy Institute wrote in a 2014 paper.

Furthermore, the cuts were likely to have exacerbated inequalities.

“In each of the states that cut the duration of benefits, African Americans were overrepresented among the long-term unemployed, accounting for a higher share of such workers than their share of the state labor force,” the EPI researchers wrote.

Andrea Noble is a staff correspondent with Route Fifty.

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