Auditor: We Don’t Know How Much Kentucky Owes In Unemployment Benefits Tuesday, Dec 22 2020 

The Office of Unemployment Insurance is unable to determine how much money the state owes in unresolved unemployment claims, according to a report from Kentucky Auditor of Public Accounts Mike Harmon released Tuesday.

Since the start of the coronavirus pandemic in March, many thousands of unemployment claims have gone unresolved for months. The resulting backlog has frustrated the Office of Unemployment Insurance and kept much needed financial support out of the pockets of unemployed Kentuckians.

Now, that backlog has also prevented Kentucky from conducting a full and accurate audit of the unemployment insurance trust fund. Harmon said it is “imperative” that the unemployment office address the lack of reliable data, especially as the General Assembly starts work on a new budget in January.

Harmon said the gap is worrisome for unemployed Kentuckians, state government, and businesses who pay taxes to replenish the unemployment trust fund.

“You’ve got multiple people that are being impacted by this: The people who are expecting unemployment who, to this date, several thousands of people that have not received the unemployment that they are due,” Harmon said in an interview. “You’ve got that, you’ve got the business aspect (the prospect of higher taxes on employers) and then certainly you’ve got the General Assembly trying to craft next year’s budget.”

The Office of Unemployment Insurance did not immediately respond to requests for comment and for the most recent number of unresolved claims.

The findings are part of the auditor’s annual financial report for the fiscal year ending on June 30. The annual report is based on financial statements provided by the Finance and Administration Cabinet, which are then audited by the auditor’s office. Auditors were able to report an “unmodified” or clean audit of every state account except the unemployment compensation trust fund, which received a “qualified” report, meaning auditors were unable to provide documentation to back up certain financial claims.

“In this particular case, the biggest concern is that they really did not know how much was still owed to claimants. We received multiple different numbers, it was kind of all over the board,” Harmon said. “The numbers ran everywhere from hundreds of millions to a couple billion (dollars).”

Harmon said the sheer volume of claims and new unemployment programs overwhelmed the unemployment office.

The office also “eliminated key internal controls” to expedite benefit payments but had a significant backlog of unprocessed claims at the end of the fiscal year, Harmon said in an opinion letter to the Finance and Administration Cabinet.

“Management was unable to provide a reasonable or reliable estimate of the financial statement impact of this backlog of claims,” the letter said. “Because of this, we were unable to obtain sufficient appropriate audit evidence to conclude that the accounts payable balance in the unemployment compensation fund was free of material misstatement.”

The Kentucky Center for Investigative Reporting has documented the unemployment office’s hurried steps to make payments quickly as the pandemic shut down businesses in the spring. The unemployment office broke federal unemployment rules in the chaos, and made improper payments. Many people are saddled with debt to the unemployment office for benefits they already spent during the pandemic, and Gov. Andy Beshear since told unemployed people to save their money, in case they need to pay benefits back. Beshear has said inconsistent guidance from the federal government led to much of the confusion.

The auditors annual report says the unemployment compensation fund has a net position deficit of $18 million and the total fund balance decreased by $797.8 million for the 2020 fiscal year.

The report says that, as of June 30, the unemployment office owed at least $511.5 million based on claims filed before the end of the fiscal year, and paid through November 17. The amount owed in unpaid claims filed before June 30 that remained unpaid “could not be reasonably estimated due to system limitations and not being able to determine payment amounts of unprocessed claims,” according to the annual report.

States have to continue paying unemployment claims even if those funds are depleted, and Kentucky has been approved for a loan from the federal government amounting to $350 million per month through February 2021. 

The report also presents a picture of Kentucky’s overall fiscal health. The coronavirus pandemic has severely dented revenues for state and local governments, leading the Commonwealth to decrease its revenue forecasts for the fiscal year. Actual revenues, however, overshot those estimates by $578 million.

Contact Jared Bennett at

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Despite Millions In Public Money, Eastern Ky. Industrial Parks Still Largely Vacant Wednesday, Dec 9 2020 

Benny Becker

A mostly vacant industrial park in Martin County, Ky.

In a crowded conference room at the community center in downtown Inez, then-Kentucky Gov. Matt Bevin and Congressman Hal Rogers announced the latest infusion of public money into Martin County’s industrial park.

The two grants from the Abandoned Mine Land Pilot program totaled $3.37 million, and would be used to upgrade a largely vacant building at the Eastern Kentucky Business Park and prepare a site for a new one.

With flags flanking the podium and attendees’ tables replete with blooming flowers, Bevin proclaimed at the event last year that the funds would “transform eastern Kentucky’s economy.”

The funds also would create “one of the most highly marketable industrial parks in the coalfields,” according to a press release issued by Rogers’s office.

But just five years earlier, a consultant had analyzed the Martin County industrial park and concluded the opposite: it was not marketable, and should not be a priority for investment.

A highway sign for the Martin County park (formerly known as Honey Branch) and a federal prison.

In a 2014 report presented to Rogers and then-Governor Steve Beshear, the economic-development consultant found several “fatal flaws”: The site would need to triple its excess water capacity. The industrial park authority had insufficient control over mineral rights. And looming just outside the park was a high-security federal prison that limited the site’s desirability.

Over more than half a century, eastern Kentucky’s industrial parks have received tens of millions of dollars designed to attract businesses that would help create steady, well-paying jobs and build a middle class to supplant the region’s rampant poverty.

Prior to the two recent AML Pilot grants, more than $7.5 million in public money had already been spent on the Martin County industrial park since its creation in 1997. Six businesses have located there. Only three remain.

The AML Pilot program, a federal/state collaboration, has pledged nearly $26 million to four eastern Kentucky industrial parks, including Martin County’s, since 2016.

But today, nearly empty industrial parks sit in counties spanning eastern Kentucky. They’re the multi-million-dollar consequences of hollow promises to revive the region’s foundering economy, and they’re left to fight against failing infrastructure and remote locations to cobble out some success. 

The Appalachian Regional Commission, a federal-state partnership created in 1965, has invested $5.5 million in eastern Kentucky industrial parks during the past 20 years. But the ARC also has acknowledged in one of its own reports that Kentucky’s Appalachian counties still trail behind the rest of the nation.

Eastern Kentucky remains home to some of the nation’s most impoverished counties, which also are bedeviled by low life expectancy and high rates of drug abuse. Median household income is 27% lower than for the state as a whole, and the region’s population has dropped by 10% since 2010. 

The Kentucky Center for Investigative Reporting asked the state Cabinet for Economic Development on November 18 about the role that industrial parks play in its current job-creation strategy, and why state officials believe that continued investment in industrial parks makes financial sense. 

A cabinet spokesperson said a substantive response was being drafted, and three weeks later hadn’t provided one.

But industrial parks still hold allure for the state’s politicians.

Just last month, at the beginning of one of his regular coronavirus briefings, Gov. Andy Beshear, Steve Beshear’s son, lauded an industrial park investment in Pike County and the promise of 40 immediate new jobs there.

That project is one of “the good things that are going on out there,” Andy Beshear said, adding that he’s “committed to the values of promoting economic development in communities that haven’t received their share of attention and, really, results that they deserve.”

Newly announced industrial park projects like these have revived hope that this time will be different. But if history is any guide, there is reason for skepticism.

Many Industrial Parks Largely Empty

Approximately two-thirds of Kentucky’s 54 Appalachian counties have at least one industrial park, including some of regional scope, according to the Cabinet for Economic Development. 

One in eastern Kentucky that has achieved some success, the Coal Fields Regional Industrial Park in Perry County, did so with the help of more than $25 million in government funds. That figure includes a $6.5 million AML Pilot program grant in 2018 that helped lure Dajcor, a Canadian aluminum manufacturer, with an equipment purchase by the county. The park has more than a half-dozen paying tenants, some of which have been there for a decade or more.

“Good local leadership and partnering with the appropriate economic-development agency has been our key to success,” said Angelia Hall, an associate director with the Kentucky River Area Development District, that includes Perry County.

But many neighboring parks have had only a few, if any, revenue-generating businesses. 

Stacy Kranitz, special to ProPublica

This sign is all that remains of a proposed industrial park. Nearly two decades later, the Appalachian Wildlife Center would choose to build on the same site.

An industrial park in Bell County sat idle for about two decades without ever attracting a single occupant, despite an investment of more than $10 million in public funds to buy the land and build a bridge and a three-lane, paved road to the site.

The property, in southeastern Kentucky, on the Tennessee border, ultimately was sold to a nonprofit organization that hopes to create a major tourist attraction there. That project is years behind schedule.

In Clay County, the 525-acre Elk Mountain Regional Business Park has a single tenant. 

“It’s just us,” said Amy Roberts, office administrator of Speyside Cooperage KY. The company makes staves for bourbon barrels and employs about 50 people. “No other buildings, nothing. Just us.” 

Despite receiving at least $2.8 million in public money, the park has had only two tenants in its 25-year history.

About 35 miles north, in Owsley County, the Lone Oak Industrial Park houses the county’s cooperative extension office, and one for-profit company.

Benny Becker

An unused concrete truck in Owsley County

Owsley is one of the nation’s poorest counties, and its industrial park authority has done what it could to lure and keep jobs. One such attempt is still on display in a parking lot across the road from the park, where a little-used concrete mixing truck sits idle next to a pile of rusting railroad tracks.

The Owsley County Industrial Authority bought the truck and related equipment in 2016 with a $246,600 Appalachian Regional Commission grant for Wolf Creek Metal, a nonprofit company the authority was operating in the park. 

A new company, South Fork Metal, bought Wolf Creek Metal and opened in the Lone Oak Industrial Park late last year. South Fork Metal employs about a half-dozen people, manufacturing roof and siding panels. But it didn’t buy the truck, and the industrial authority is stuck with it.

A 26,000-square-foot “spec” building in the park, constructed in the mid-1990s in hopes that a buyer could be found, has never been occupied.

In other eastern Kentucky industrial parks, large buildings constructed years ago in hopes of attracting a business also remain vacant. 

A 40,500-square-foot spec structure in Breathitt County’s Panbowl Lake Industrial Park was built more than two decades ago with $323,000 in public funds. Since then, it has served only as storage space for city and county governments.

“It’s very sad, because it involved a lot of taxpayer dollars,” Jackson Mayor Laura Thomas said in an interview.

But Thomas remains confident. She said a private, nonprofit health care clinic that opened in the park last January has been a “wonderful addition,” and she expressed hope that businesses will move into the park’s two empty buildings. 

“I am a realistic optimist,” she said.

The problem of empty or minimally productive industrial parks isn’t confined to eastern Kentucky. The West Kentucky Megasite in Graves County, created in the late 1990s with about $12 million in taxpayer money to buy some 2,200 acres of land, has never drawn any industry.

“It’s a stranded asset,” said Mark Manning, chair of the Purchase Area Regional Industrial Authority board. 

The industrial park, in the far southwestern tip of the state, has suffered from many of the same issues that often plague Appalachian counties: its relative remoteness; a lack of direct interstate access; challenges with utilities; and its distance from a full-service airport.

“It has intrinsic value, but not as an industrial park,” Manning said. “It’s highest and best use is farmland.”

Questionable Investments

Rogers, the Republican congressman from Pulaski County who was reelected to his 21st term in Congress last month, says continuing to invest in industrial parks is necessary — even if not sufficient. 

“[N]one of our local officials believes that one project in an industrial park or an exciting new tourism project will lift their county out of poverty,”  Rogers said in a statement provided by his office to KyCIR. “Our region faces exceptional challenges, but I believe our best days are ahead of us.”

But experts say that industrial parks have not proven to be a successful strategy to lift struggling areas out of rampant unemployment — particularly in Appalachia. 

Continuing to funnel public funds into industrial parks is “a failed strategy,” said Ronald D. Eller, former director of the Appalachian Center at the University of Kentucky and a retired UK history professor. 

“It’s a comfortable thing to do. It’s what we know how to do. It’s the easiest thing to do,” he said.

Eller said the War on Poverty began with the assumption that economic development strategies that worked in urban places would work in rural areas too — and politicians love to cut ribbons for new, big projects. 

But businesses tend to gravitate to more affluent areas with better-educated, more highly skilled workforces, according to Robert Lynch, a professor of economics at Washington College in Maryland, who has studied the effectiveness of state tax incentives for industrial development. 

Companies attracted to poorer locales by promises of tax breaks, free rent or ready-made buildings may stay for only a few years — until the incentives run out, Lynch said.

“If you’re an elected official looking at reelection in two or four years, does it make political sense to invest in something that may not bear fruit for 15 or 20 years?” Lynch said.

Bob Turner, an associate professor of political science and environmental studies at Skidmore College in New York, agreed that there’s far more excitement about launching projects than in evaluating their long-term impact and effectiveness.

“Part of that is the political cycle doesn’t match up well with the economic-development cycle,” Turner said. “The political cycle, the payoff for is the ribbon-cutting ceremony, the sort of symbolic equivalent of, ‘Look, I am doing something, I am attentive to the needs of the region.’

“But really, for us to know if it’s going to work, we need to look three to five years down the road —  at which point it’s a forgotten event in the political world.”

One East Kentucky

Former Kentucky governor Paul Patton

Even Paul Patton, who oversaw and championed the construction of about a dozen eastern Kentucky industrial parks during his tenure as governor from 1995 to 2003, gives the results of those investments a cautious appraisal.

“If you’re looking for industry and you don’t have an industrial park, you’re not in the game,” Patton said in a recent interview. “If you do have a park, it doesn’t mean you’ll get the industry you’re looking for. But if you don’t, you won’t.”

Asked whether the money devoted to industrial parks has been well spent, Patton replied: “A lot of it has been wasted, but not all of it has been wasted.”

Eller, the former University of Kentucky professor, says the public dollars have made a difference, that housing, health care and educational opportunities are better than they otherwise would have been.

“But if we assume that money alone is going to address the underlying issues, we will fail,” he said.

‘Transformative’ Project Hasn’t Materialized In Martin County

Martin County remains desperately poor more than a half-century after President Lyndon Johnson trumpeted the War on Poverty from the front porch of county resident Tommy Fletcher in 1964. 

Nearly 40 percent of Martin Countians live in poverty. Fewer than one in 10 has a college degree. The county’s population has declined more than 13 percent during the past decade. And impure, often undrinkable, water has afflicted the county for years.

So it is understandable that local officials would eagerly grasp any opportunity for public funding, even if it was destined for the Eastern Kentucky Business Park.

Politicians’ enthusiasm for funneling still more tax dollars into the park was fueled in part by promises of two major job-creating projects nearby.

An Enerblu battery manufacturing plant in adjoining Pike County would harness a highly skilled workforce in eastern Kentucky, then-Governor Bevin said in 2017. And he predicted that creation of the Braidy Industries aluminum rolling mill, about 45 miles away in Boyd County, would be “the most singularly transformative economic development decision that has ever been made in the Commonwealth of Kentucky.”

Some officials thought the Enerblu and Braidy projects might have a ripple effect, bringing spillover business to Martin County’s industrial park. But early last year, Enerblu suspended its plans to build in Pike County, and has since filed for bankruptcy. 

And Braidy Industries has struggled to raise the necessary capital to build its rolling mill, even after receiving $15 million in state funds.  

That project was riddled with controversy after the state refused to name all of the company’s shareholders, and a Kentucky court ruling ultimately forced disclosure. The former CEO later was ousted, and sued the company, which has since been renamed Unity Aluminum. Gov. Beshear has said he will take steps to reclaim the state’s financial contribution if the plant is not built.

So far, no ripple effect has been detected at the Eastern Kentucky Business Park.

The more than $7.5 million in tax dollars already spent there funded engineering studies, property purchases, a wastewater treatment plant, an access road, a sign at the park’s entrance and a 44,000-square-foot, $1.2 million “speculative building” that has sat empty since its construction seven years ago.

The Logan Corporation, one of the six companies that have occupied the park since its creation, moved there in 2011 but departed five years later for a nearby county. It sold back its property to the regional industrial authority for $854,000 — less than half what the company had paid for it.

David Brown Kentucky, a company that manufactured gear boxes for underground mining and conveyor systems, signed a 15-year lease in March 2012. The county had spent about $3 million to build a customized structure, and the company had hired a few people with a promise to triple its workforce within five years. The state gave preliminary approval for up to $2 million in tax incentives. 

At the ribbon-cutting ceremony, then-Governor Steve Beshear cited David Brown Kentucky’s “proven record of success.” State Rep. Hubert Collins predicted “a major boost to our economy for years to come.”

But the company essentially had no track record in Kentucky. It generated little if any job growth. And there was no “major boost” to the local economy. 

Instead, in July 2014, barely two years after it arrived, David Brown Kentucky packed up and left the park. Its $19,000 monthly rent payment to the county vanished. The tax incentives were withdrawn. Later, the company filed for bankruptcy. 

Two months after David Brown Kentucky went out of business, Steve Beshear, Rogers, and SOAR, the Appalachian economic-development group Rogers had helped create a year earlier, received the 377-page document on eastern Kentucky’s future and priorities.

The 2014 report brimmed with possibilities and cautious optimism. But it also included an outside consultant’s critical assessments of several industrial parks. One of them was Martin County’s. 

“This currently is not a viable, marketable park that could compete on a national level for global projects,” InSite Consulting, a South Carolina-based firm, concluded. “This would not be a priority for the region to develop as an industrial park.”

Some state and local officials disagree.

Charles Sexton, president and CEO of One East Kentucky, the economic development recruiting and marketing organization for a nine-county area including Martin, defended continued investments in Appalachian Kentucky’s industrial parks, including the Eastern Kentucky Business Park.

“Unlike other regions, east Kentucky communities do not always have the resources readily available to make these strategic moves and investments, and by the time they can, the opportunities pass by,” Sexton said in an email to KyCIR. “Our organization along with many others is fighting to push this region forward at a faster pace to take advantage where we can.”

InSite Consulting’s assessment offered some suggestions to make the Martin County industrial park marketable, including creating a “global, recognizable identity,” developing a master plan, having at least one “pad-ready” site and offering a comprehensive incentive package. All of those recommendations have been fulfilled or are in the works, Sexton said. 

And he provided another study that offered a more optimistic appraisal of Martin County’s industrial park. Boyette Strategic Advisors, an Arkansas consulting firm, concluded in October 2018 that new construction in the park was a “strong” concept, “and should be pursued.”

That $44,250 study was paid for by One East Kentucky.

Sexton also shared a June 2019 letter from a Canadian manufacturing company expressing interest in opening its first U.S. business operation in the park once construction there was completed.

“While it is taking longer than anyone would like, we are making strides in east Kentucky,” Sexton said in the email. 

The taxpayer dollars continue to flow in.

So it was that last year, when Rogers and Bevin announced 20 new Abandoned Mine Land Pilot program grants, two of them totaling $3.37 million went to Martin County’s industrial park.

One would retrofit an existing building and provide free or reduced rent for new businesses. The other would pay for a 200,000 square-foot “build-ready site” and renovations for the park’s existing spec building.

The federal government has not distributed the funds from the two AML Pilot grants, and construction is yet to begin.

Benny Becker

Nina McCoy and husband Mickey McCoy

For Nina McCoy, a retired high-school biology teacher from Inez, it all has a too-familiar ring. A longtime community activist, McCoy is skeptical that continuing to pour public money into the long-beleaguered industrial park will alleviate the county’s chronic economic woes.

McCoy calls it “corporate welfare.”

“Officials talk about, this is going to bring us jobs. They seem to think it’s a great idea,” she said.

Last year, McCoy authored an opinion piece in the Lexington Herald-Leader that took political leaders to task for industrial park funding. 

An age-old saying warns that ‘the definition of insanity is doing the same thing over and over again, but expecting different results,’” McCoy wrote.

And problems continue to plague the industrial park, where the newest occupant, Boxvana, opened for business early this year. The tiny-home manufacturer was attracted to the park in part by tax incentives and temporary free rent in one of its two buildings, if it met certain employment goals.

But the company was late with its September rent payment of $4,297 for the other building. Then, amid the coronavirus pandemic, it terminated about a third of its roughly three dozen employees due to a lack of business. And in October, the Martin County Economic Development Authority sued Boxvana and Harrison Langley, one of the company’s owners, for allegedly removing and selling equipment that belonged to the county. 

Langley told KyCIR that he was unaware of the late rent payment, and he declined to discuss the court case. 

He said he didn’t know whether the company would be able to meet the hiring requirements of the lease for the building it’s renting, but that the company plans “to be there for a while.”

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How Kentucky Missed Out On A $90 Million Unemployment Upgrade Monday, Nov 30 2020 

After the 2008 recession revealed the weaknesses of the nation’s unemployment insurance systems, most states got to work upgrading their technology.

The need for such an overhaul was obvious, and the reason the federal government set aside $7 billion in 2009 to modernize the nation’s unemployment systems.

Forty states took the free money. But Kentucky left it on the table. 

The commonwealth missed out on a cool $90 million back then. But experts say the failure to bring Kentucky’s unemployment insurance system into the 21st century is costing Kentucky to this day.

A task force appointed by then-Gov. Steve Beshear prioritized stabilizing the struggling unemployment insurance trust fund over improving the old infrastructure. It scheduled incremental tax increases on businesses, cut benefits and delayed major system upgrades until the state’s fiscal situation improved.

In January, Gov. Andy Beshear — Steve Beshear’s son — began taking steps to replace the technology. But the state was still using a program that predates the personal computer when the coronavirus ushered in a new employment crisis.

Delays were likely inevitable regardless of the technology as Kentucky dealt with unprecedented numbers of new claims, but those seeking help to get through the pandemic dealt with crashing websites, frustrating tech issues and outdated information in the application that the state conceded was difficult to bring up to date. Delayed claims mean a worker without income to support their family. It also means fewer federal unemployment dollars circulating in Kentucky’s economy.

“Especially what we’ve seen now during this pandemic is that states with terrible systems that couldn’t get people through, they lost out on a lot of federal money,” said Michele Evermore, a policy expert at the National Employment Law Project and a member of President-elect Joe Biden’s transition team. “All for the sake of pinching pennies between recessions.”

Already, signs point towards another cost-cutting approach. Kentucky’s largely Republican legislature wants to insulate businesses from tax increases, and Beshear has already committed spending upwards of $300 million of federal CARES Act funding to pay down the $865 million federal loan Kentucky required in June.

Kevin Kinnaird, a spokesperson for the Kentucky Labor Cabinet, said the Office of Unemployment Insurance’s legislative priorities include investing in the current “archaic” system “to be more efficient and responsive to unemployed Kentuckians” as well as increasing the number of staff.

“The problem is we keep prioritizing keeping business taxes low at the expense of dislocated workers and our economy when we hit hard times,” said Jason Bailey, executive director of the Kentucky Center for Economic Policy. 

Policymakers often keep unemployment insurance systems out of sight, out of mind during good times, when fewer people are exposed to its flaws, he said. Recessions put unemployment insurance in the spotlight and provide the best opportunity for policymakers to invest in improvements. 

“My fear,” Bailey said, “is that they are going to go the other direction.”

The Recession

The Great Recession put so many Kentuckians out of work by 2009 that the state needed a $972 million loan from the federal government to keep paying unemployment claims.

Nearly every state required such a loan. They had until 2012 to pay it off, or the federal government would automatically increase business wage taxes.

In Kentucky, this meant taxes would increase on businesses by .3% every year after 2012.

At the same time, states were running unemployment systems on technology that predated the personal computer. Old policies left many workers without unemployment benefits, should they lose their job.

So the American Recovery and Reinvestment Act provided states with $90 million each if they adopted reforms to cover more part-time, seasonal workers and anyone leaving a job for a compelling personal reason, such as domestic violence or a family move.

The incentives could be used to pay benefits or to cover administrative costs — such as modernizing the technology powering the unemployment program.

Then-governor Steve Beshear put the decision to a task force chaired by Helen Mountjoy, who was Secretary of the Kentucky Secretary of Education and Workforce Development, the cabinet that housed the unemployment office until this year. Other members included Sen. David Givens, (R-Greensburg); David Meyer, a vice president of UPS; representatives from the Kentucky Chamber of Commerce and labor unions; and Larry Roberts, who was director of the Kentucky State Building and Construction Trades Council.

Roberts would become Kentucky’s Labor Cabinet Secretary in 2013 under the elder Beshear. Andy Beshear named him to the post again this year — and the Labor Cabinet took reins of the unemployment office during the pandemic.

Roberts declined to be interviewed through a spokesperson, who said the secretary was “dedicated to ensuring Kentucky’s Office of Unemployment Insurance is being responsive to Kentuckians in need during this pandemic.”

The task force met 11 times before its final opinion was turned into legislation, passed by the general assembly and signed by Steve Beshear.

The task force made 17 recommendations, including reducing benefits from 68% of lost wages to 62% and establishing a week-long delay between approval and the first payment. The waiting week is supposed to save money by avoiding paying benefits too soon, allowing time for documents to be mailed and staff to manually calculate benefits.

As for the federal incentives, the task force concluded even though the money would more than cover the technology upgrade, the long-term costs of policies expanding coverage outweighed the immediate $90 million reward.

Sen. Givens said focusing on steps the task force didn’t make, such as the modernization efforts, was “inappropriate.” The goal, he said, was bringing the unemployment insurance trust fund to solvency through a plan that businesses, conservative politicians and labor activists could agree to.

“It was a very very lengthy, educational process, followed by a very thorough and rigorous negotiation between competing interests,” Givens said.

What’s Happening Now

This year’s pandemic in 2020 found Kentucky’s unemployment insurance system still lagging behind other states in both technology and unemployment funding.

Kentucky’s Office of Unemployment Insurance reports over 75,000 claims are outstanding. More than 600 claims are from people who have been trying to collect unemployment insurance benefits since March.

And the state covered far fewer unemployed people than the national average: Only 19% of unemployed people in Kentucky were covered by unemployment insurance because the rest had exhausted their benefits, left the workforce or worked a part time or contract job that didn’t qualify.

Coverage increased when the pandemic hit, as Kentucky adopted many of the changes recommended by the federal government.

Gov. Andy Beshear waived the waiting week nearly immediately to get money to claimants as quickly as possible. And some of the same changes first proposed in 2009 were included in emergency legislation Kentucky passed in March in order to unlock federal unemployment funding in the CARES Act.

The unemployment office has not followed through on all those upgrades, however.

For example, the 2009 task force passed on incentives that required adopting the “alternative base period,” which uses earnings from a worker’s most recent economic quarter to determine eligibility. Currently, a worker’s most recent earnings often aren’t counted.

Lawmakers gave the unemployment office the option to use this alternative base period when it passed Senate Bill 150, but Kinnaird, the Labor Cabinet spokesperson, said the unemployment office has not implemented the policy.

The emergency legislation also gave the unemployment office permission to establish a program to cover reduced hours with unemployment benefits, another recession-era reform that would allow employees to keep more people on the payroll. The CARES Act committed the federal government to fund up to half the costs of creating this program.

The office drew up regulations under the Education and Workforce Development Cabinet, but the plans were scrapped once the Labor Cabinet took over.

Kinnaird said “the statutory scheme is not in place to provide the framework or authorization for this program” because the federal government required a permanent program rather than a temporary one set up by emergency legislation.

Givens, who is now in Republican leadership, said he would not support making major changes to the unemployment program right now, though he agreed the system is “obviously antiquated.”

The legislature recognized this in 2018 when it created a separate fund to divert a portion of unemployment taxes into and save up for an eventual technology upgrade. The fund has five years to raise $60 million, according to the statute. By the end of 2019, the state had saved $16 million.

Givens said one of his priorities is to protect people who were approved for unemployment insurance only to be deemed retroactively ineligible and sent an overpayment bill. As the Kentucky Center for Investigative Reporting found, many in Kentucky applied for unemployment benefits after Beshear said those who “self-quarantined” for fear of the coronavirus would be eligible. The state later backtracked, sticking those who had self-quarantined with overpayment debt, and blamed shifting guidance from the federal government for the mistaken payments.

The state has already requested a waiver from the federal government to forgive this debt, and Kinnaird from the Labor Cabinet said they have not received a response to the request. Givens said he is waiting to see if the waiver is approved before pursuing a legislative fix.

“We have a lot of needs right now and one of those most important needs is to keep people employed,” Givens said.

Dan Borsch, who owns the Old Louisville Tavern and Burger Boy Diner, said he’s concerned about future tax increases when uncertainty is at an all-time high.

“I want to say it’s not make or break but who knows exactly how much business is going to come back and how fixed costs are going to be six months from now,” Borscht said. “It all adds up.”

Borsch said the unemployment system is clearly outdated and needlessly adversarial, pitting employers against their employees. And since Kentucky made contract and gig-economy workers eligible for unemployment benefits, Borsch said businesses like his with traditional employees foot the bill for companies like Uber that don’t pay unemployment taxes.

“I’m concerned that it is going to be a large expense going forward,” Borsch said, “and it’s just frustrating that we don’t have a better system.”

Bailey of the Kentucky Center for Economy Policy says the unemployment taxes paid by Kentucky businesses are already historically low, but he worries the current recession will usher in another round of benefit cuts without addressing the holes in the unemployment system.

“What we should be doing in this next legislative session is learning the lessons from this and putting in the improvements that are needed for next time,” Bailey said. “This is not our last pandemic, and it’s not our last recession. One way or the other, more problems are coming.”

The post How Kentucky Missed Out On A $90 Million Unemployment Upgrade appeared first on Kentucky Center for Investigative Reporting.

Substitute Teachers Given Unemployment Now Face Overpayment Debt Thursday, Nov 12 2020 

Leonard Sanderson was scheduled to start a long-term substitute teaching assignment on March 16, the day Jefferson County Public Schools closed to deal with the first wave of the coronavirus.

Sanderson, 67, has taught part-time since January 2017 to supplement the income he receives on social security and another part-time gig enrolling people in health insurance plans. Both jobs dried up as the coronavirus hit.

Courtesy of Leonard Sanderson

Leonard Sanderson has been a substitute teacher at JCPS since 2017.

Between the sudden loss of steady income and the deadly virus outside his door, Sanderson spent much of March feeling anxious and confined, and each day he watched Gov. Andy Beshear’s briefings. On March 25, he learned some good news: Beshear was extending unemployment insurance to substitute teachers like him.

The Kentucky Office of Unemployment Insurance deemed him eligible a few days later, and he was paid from the end of April until June 23 — when the checks stopped without warning.

A few weeks later, Sanderson learned he owed $952 to the state of Kentucky for unemployment benefits he had apparently been ineligible to receive.

 “If I wasn’t qualified, why did I get it?” Sanderson said. “Who manages that? Should I have cut it off?”

Sanderson was caught in a trap many other substitute teachers found themselves entangled in during the pandemic. Education professionals can’t claim unemployment during the summer break that started in Louisville on May 31, a caveat the state doesn’t appear to have made clear when it extended benefits to substitute teachers. Subs who continued to file for unemployment after summer break began are now expected to repay anything the state paid in error.

When asked about the error in August, Beshear told WHAS he thought the message was sent to substitute teachers but couldn’t say when and he didn’t specify by whom. A spokesperson from the Kentucky Labor Cabinet provided KyCIR with a link to guidance posted on the state website, which says seasonal workers like substitute teachers are ineligible for unemployment benefits during a scheduled break if they have “reasonable assurance” that work will continue. It is unclear when this guidance was issued and whether it was shared with those filing unemployment claims.

Substitute teachers are just one group of workers caught unawares by unemployment overpayment debt. Those who self-quarantined and filed for unemployment after Beshear said they’d be eligible were later assessed overpayment debt. Beshear said at his daily briefing on October 29 after a KyCIR investigation that people who “self-quarantined” to avoid catching the virus at work were eligible when they filed claims in March. But guidance from the federal government became more stringent as the pandemic stretched on, he said, and Kentucky is bound by federal law to pursue the overpayments even as his administration is seeking the Department of Labor’s permission to forgive the debts.

The federal Department of Labor says its guidance never changed and, in fact, Kentucky had violated several unemployment insurance policies in its rush to pay benefits.  A spokesperson for the Department of Labor said in an email that, in response to questions from states, the Department of Labor provided guidance on existing provisions related to substitute teachers eligibility on May 15.

The plight of Jefferson County Public School substitute teachers provide the clearest example yet of how errors, mixed messages and overlapping authority in the unemployment system has left workers on the hook to repay hundreds or thousands of needed dollars.

Meanwhile, the unemployment office in August threatened Sanderson with civil action  in August unless he ponies up $160 a month to repay money he’s long since spent.

‘There’s a crack’

Sanderson sounds pretty unflappable over the phone, even as he uses words like “anguish” and “ballistic” to describe the ordeals of the past few months. He’s slow to assign blame and says he has a “cool mind” that handles stress well.

Still, he doesn’t think it’s fair that he has to pay back money the state mistakenly paid him. Sanderson already spent a few lean months relying on savings and social security until he landed some insurance work in September.

“I don’t want to sit and say that it’s somebody’s fault,” Sanderson said. “But obviously there’s a mishap here. There’s a crack, and it’s a big crack.”

Just how many substitute teachers have fallen through that same crack is unclear. KyCIR spoke with at least 18 JCPS substitute teachers whose claims have been investigated by the unemployment office.

When an unemployment claim is filed with the state, the unemployment office reaches out to the employer to check that the claimant is in fact unemployed through no fault of their own. JCPS says it has answered 2,215 unemployment claims since February 2020.

In response to questions about unemployment, JCPS spokesperson Mark Hebert sent the JCPS’s pre-pandemic substitute teacher’s handbook, which states that employees are “not eligible to receive unemployment compensation during an established and customary vacation period or holiday recess.”

Hebert said the district doesn’t know how many substitute teachers filed for unemployment over the summer.

Now that school is back in session, even substitute teachers that aren’t currently working in classrooms aren’t technically unemployed, according to the state’s logic, because there is work available. But in practice, schools are now in non-traditional instruction and JCPS needs fewer subs than normal. Hebert said there are other opportunities for subs to work, including custodial or distribution jobs. They can also sign up to help students with non-traditional instruction (NTI) at designated “learning hubs,” he said.

Like Sanderson, many JCPS substitute teachers are semi-retired, at an age where they are particularly vulnerable to COVID-19. Teaching is just one of several tenuous streams of income that, together, keep their household budgets afloat. Springtime is normally a busy time for substitute teachers but JCPS was closed this year, denying many an important last chance to save for summer.

Most of Christine Granberry-Higdon’s expenses are covered by what she receives from social security and her husband’s 401k, but not all of them. She worked as an aide in Jefferson County Public Schools for 16 years before retiring. She takes on long-term sub roles now to make it easier to care for her husband, a stroke survivor with type 2 diabetes. When schools shut down in March, she filed for unemployment.

She received one payment in April, only to have her benefits mysteriously stop until June 17. By that time substitute teachers were supposed to be ineligible, but she got paid for about six weeks. That income mostly went towards her husband’s medical supplies. When that money wasn’t coming in, Granberry-Higdon’s husband had to ration insulin and insulin pumps.

In August, the unemployment office said she was overpaid about $3,600. Granberry-Higdon didn’t get a chance to appeal before the 15-day window closed.

She paid off all but $210 of that original bill, but when she logs onto the unemployment system website, her account inexplicably says she owes $7,413, far more than what she was allegedly overpaid.

An Uphill Battle

The unemployment office hears appeals from those billed for overpayments. Both the employer and the former employee give testimony and both sides are entitled to a lawyer, but most unemployed people don’t bring one.

Substitutes from JCPS come up against the law firm Wyatt, Tarrant & Combs, which the district keeps on retainer to handle legal matters including unemployment hearings at a cost to taxpayers of $175 per hour.

Most unemployed people won’t have a lawyer during this process. JCPS teachers who have been through the first level of appeals try to stem the knowledge gap with shared advice on social media.

Consistently, some teachers say, JCPS lawyers argue that substitute teachers were not unemployed because school was on a break, and that work will pick up in the fall. Four that spoke to KyCIR felt like the appeals officer favored JCPS.

Sanderson still decided to fight back, and found a lawyer.

For him, the issue is simple. Somebody made a mistake. But it wasn’t him, or the other substitute teachers in his shoes.

“I’m generally a principled-type guy, but I’m also pretty much about common sense and I don’t think this thing is fair,” Sanderson said.

Devon Skeens, Sanderson’s attorney, argued at his appeal hearing that since substitute teachers weren’t ever eligible before Beshear’s executive order, that order should be the ruling document — not the existing rules for permanent teachers that bar benefits when school isn’t in session. 

But the appeals officer maintained that Sanderson was ineligible for benefits received after May 31. Sanderson has filed another appeal before the unemployment commission and is waiting on that decision.

Regardless of who is at fault, Skeens says it is ultimately vulnerable Kentucky workers who will pay the price. “This is where the rubber meets the road between the citizenry and their government,” Skeens said.

Beshear said last month that people who are overpaid in unemployment benefits to “save that money, because we may need to ask for it back.” Saving was not an option for Sanderson. Most of the money he received through unemployment went towards fixing a broken-down car in June.

“Believe me, I wasn’t out squandering the money, buying this and buying that,” Sanderson said.

Contact Jared Bennett at

The post Substitute Teachers Given Unemployment Now Face Overpayment Debt appeared first on Kentucky Center for Investigative Reporting.

Should Record-High COVID-19 Cases Bring Restrictions? It’s Complicated Friday, Oct 30 2020 

On March 16, Governor Andy Beshear announced the new coronavirus had contributed to the death of a man in Bourbon County. He was the first person in Kentucky to die from the virus.

There were 21 total cases of the coronavirus in Kentucky that day, and the governor announced steps he knew were drastic.

“What we are doing and the significant steps we are taking — the major disruptions that we are going to cause to our lives and the economy — are to protect the most vulnerable among us and we all have to do that,” Beshear said.

A lot has changed since then. Kentucky saw more than 9,300 new infections in the week before Monday, October 26, when Beshear gave new recommendations he hoped would stem the virus.

But he stopped short of imposing new closures or hard-and-fast mandates. 

Kentucky is one of 29 states considered “reopened,” according to the New York Times. 

Illinois, Idaho and five other states are reversing course on reopening with new restrictions on bars and restaurants. But Beshear is clear that more aggressive mandates or closures aren’t imminent here.

“If you move one lever too much, you see it inversely impact the other. In other words, if you push too hard on the rules and restrictions, you get less effectiveness and people are unwilling to follow them,” Beshear said on Monday while announcing new, unenforceable recommendations.

Many Kentuckians are anxiously waiting as case numbers rise and wondering why the governor isn’t taking more aggressive steps to contain the virus when the situation looks exponentially worse than it was in the spring. But the shrinking economic safety net and federal aid, along with the politics of the moment, complicate the otherwise straightforward public health decision to implement new restrictions many observers see as inevitable and necessary.

The current seven-day average of new positive cases is 72 times higher than the case count was in March. Beshear has announced many more deaths since then. As of Thursday, the virus has contributed to the death of 1,461 Kentuckians, and hospitalizations continue to rise. 

During his Thursday briefing, Beshear pointed to mandates already in place —  the statewide mask mandate, restricting restaurants to 50% capacity and limiting gatherings to 10 people or fewer — in saying some restrictions never went away. The problem, Beshear said, is that people aren’t complying with those existing orders.

Beshear said all the mandates and recommendations he’s put in place are based on guidance from public health experts. “I have promised to be following that advice from the beginning,” Beshear said. “And I have not had either from the federal government’s health experts or from the state’s, any recommendation to add a new mandate.”

Economic Concerns

The shock of the immediate, drastic measures taken to flatten the curve back in March was partially absorbed by a patchwork of federal aid and safety net programs that kept some of the worst suffering at bay.

As the pandemic drags on into winter, that patchwork is wearing thin.

The most robust aid came in the form of unemployment insurance. But Kentucky still has over 70,000 unresolved unemployment claims — and the state is attempting to claw back unemployment benefits paid to people who were approved in the early rush to implement new programs, but later deemed retroactively ineligible.

Even when things go smoothly, many people are close to or have already exhausted their unemployment insurance. Kentuckians are eligible for up to 39 weeks, depending on available federal aid. The expanded benefits created by the CARES Act put $600 a week into the pockets of the unemployed, but that program has expired and the $400 FEMA-funded payments that came next only cover six weeks in August and September.

The CARES Act, signed in late March, also provided a one-time $1,200 stimulus check directly to individuals and provided $1.6 billion in aid for the state to distribute. As of September 2, the state had spent just over half of that money. The governor has used it to buy personal protective equipment for health care workers and to establish an eviction relief fund.

On Thursday, the governor said the state plans to spend more on additional testing and personal protective equipment, and what’s left will go toward repaying the federal loan Kentucky took on to keep the unemployment insurance trust fund solvent. 

“We believe there’s going to be at least a couple hundred million dollars going towards that loan,” Beshear said.

Jason Bailey, the executive director at the Kentucky Center for Economic Policy, thinks that money would be better spent directly helping struggling Kentuckians. Evictions are now allowed in some circumstances after being banned outright for months, and utility companies can start shutting off water and electricity next week.

“We need to be helping people who don’t have enough to eat and are going to lose their home or have their water shut off,” Bailey said. “And also we need to fund the front line protection of people from the spread of the disease.”

Many in the business community are concerned that businesses will pay higher taxes next year to pay off the federal unemployment loan. Bailey said that potential tax increase is not an immediate crisis.

This time, there is no federal aid legislation moving through Congress to fall back on. To Bailey, the situation looks dire.

“People are going to run out of unemployment benefits, people are going to have their unemployment benefits decline dramatically, state and local governments are going to be cutting back a lot more than they have and that means more people laid off. That means the economy gets dragged down weaker,” Bailey said.

The promise of financial assistance allows people to make safer decisions, Bailey said. Expanded sick leave, for example, will expire on December 31 when the Families First Coronavirus Response Act expires. About 40% of Kentuckians wouldn’t have sick leave without it.

Ultimately only Congress can allocate the kind of funds needed to stave off addressing the magnitude of the economic problem, even without further restrictions. The absence of new funding falls at the feet of one man: Kentucky’s Mitch McConnell, who as Senate Majority Leader controls what comes up for a vote on the Senate floor and who adjourned the Senate until November 9 without reaching a deal.

On Thursday, Beshear said if Congress doesn’t extend the CARES Act or pass a new stimulus package, “we fall off a cliff.” He told Congress to “do (its) job. Certainly do it during the pandemic. Don’t leave all of us high and dry.”

Beshear’s office didn’t respond to an emailed question Thursday after the briefing about whether the lack of federal safety nets is affecting his decision on restrictions.

Political Pressure

The political picture has also changed tremendously for Beshear since March, when he was a brand-new governor enjoying widespread support as he dealt with Kentucky’s portion of a global pandemic.

Beshear regularly said he was “done with politics” when it came to dealing with the coronavirus, and Kentucky was praised at the time for Beshear’s quick action to flatten the curve. But politics kicked in soon after he enacted “healthy at home” restrictions through executive orders, and Republicans throughout the state claimed Beshear had gone too far.

Al Cross, a veteran political journalist and commentator who is now the director of the University of Kentucky’s Institute for Rural Journalism and Community Issues, speculates that Beshear is likely preparing to take more hands-on measures after the election.

“He’s only got so much political capital he can spend and he’s already spent a lot of it on the mask mandate,” Cross said.

Going any further would likely give Republicans ammunition that could damage Democrats in tough races across the state. That’s true, Cross says, even though Ipsos polling suggests that a majority of Kentuckians support Beshear and the mask mandate.

Despite that public support, people in positions of power have challenged Beshear’s more forceful actions to slow the virus’ spread.

Legal Challenges

The Kentucky Supreme Court is considering a challenge to Beshear’s executive orders filed by Attorney General Daniel Cameron and several Northern Kentucky businesses. The challenge claims Beshear overstepped his power as governor by requiring people to wear masks in public and placing limits on businesses and public gatherings.

A spokesperson for the Attorney General’s office said only that the Kentucky Supreme Court is considering the issue in response to a request for comment.

Republicans in the General Assembly are discussing legislation that would limit the governor’s ability to use emergency powers. State Treasurer Allison Ball has published findings from an investigation questioning the constitutionality of some of the governor’s orders.

Ball said through a spokesperson that a recommendation from Beshear isn’t likely to be unconstitutional the same way an executive order would.

“One of the purposes of my report to the Interim Joint Committee on Judiciary was to prevent any future unconstitutional executive orders or activities,” Ball said.

Beshear has said challenges like these have not factored into his decision whether or not to implement new mandates. Likewise, Cross says the Attorney General’s lawsuit and the Treasurer’s investigation are unlikely to change the minds of many voters.

“I think that Beshear probably figures that Kentuckians figure that politicians are going to be politicians,” Cross said.

Still, a vocal minority shows up at protests and makes other dramatic expressions of their displeasure with the governor. Members of the Three Percenters hung the governor in effigy in May during a rally opposing the restrictions.

Beshear did acknowledge the balancing act of issuing new orders that will protect as many people as possible without alienating those who are already resistant to the measures.

“The way the equation works is: the best rules, recommendations, restrictions, whatever we want to call them, the best steps in place, times the number of people that are willing to follow them, equals our best result,” Beshear said. “If we end up losing whole communities based on the next steps that we take, I believe our situation could get even worse.” 

The post Should Record-High COVID-19 Cases Bring Restrictions? It’s Complicated appeared first on Kentucky Center for Investigative Reporting.

Legislators To File Bill Preventing Unemployment ‘Overpayment Debt’ Tuesday, Oct 27 2020 


Senate leadership

Kentucky Senate Republicans intend to file a bill that would prevent the unemployment office from “clawing back” money mistakenly paid to people who self-quarantined.

Republican leadership announced the plan at a press conference last week, where they discussed concerns with Gov. Andy Beshear’s response to the coronavirus pandemic.

Among those concerns were missteps in the unemployment insurance program that led the state to pay, then seek to recoup, benefits for people who felt they had a reasonable fear of catching the virus at work. Beshear said during a March briefing that they would be eligible, and the unemployment office has since backtracked on that offer, blaming the confusion on shifting guidance from the federal government. 

Sen. Mike Nemes, a Republican from Shepherdsville, said that billing people for unemployment benefits they had already received based on the word of the governor is unfair.

“These people don’t have that money. They paid for groceries, they used the money,” Nemes said. “That’s what unemployment is for. When you are unemployed you get your unemployment insurance and you pay your bills so you can get back to work.”

(Related: Gov. Beshear: Save Unemployment Money In Case Of Overpayment Senate)

President Pro Temore David Givens, a Republican from Greensburg, said he is working with staff to write legislation to protect individuals in this situation.

Givens and the Senate Republican spokesperson did not respond to questions about the proposed legislation.

At the press conference, Givens said the governor “got over his skis” by telling people they would be eligible for unemployment benefits based on criteria that was rolled back retroactively.

The legislators also expressed concern for what turmoil in the unemployment office will mean for Kentucky’s business community. The unemployment insurance trust fund required an $865 million loan from the federal government in June as Kentucky was paying out a record number of unemployment claims.

Businesses in Kentucky may face a higher tax rate to refill the trust fund and an extra fee to pay back that federal loan. 

Givens called on the governor to use CARES Act funds to keep the trust fund solvent without pushing the burden onto the business community.

The governor’s office did not respond to a request for comment.

The post Legislators To File Bill Preventing Unemployment ‘Overpayment Debt’ appeared first on Kentucky Center for Investigative Reporting.

The Elk, The Tourists And The Missing Coal Country Jobs Thursday, Oct 22 2020 

Stacy Kranitz, special to ProPublica

Recently strip mined land at the Appalachian Wildlife Center.

Standing at the site of a long-abandoned, multimillion dollar industrial park in November 2016, U.S. Rep. Hal Rogers urged residents in southeastern Kentucky’s Bell County to envision the tourism potential for miles of open land.

Joined by Matt Bevin, then Kentucky’s governor, and local politicians, Rogers pointed to the expanse of forestlands and mountaintops in the distance as he unveiled a $12.5 million federal grant for the Appalachian Wildlife Center. Rogers, a Republican who represents the state’s Appalachian region, had helped secure the money through the Abandoned Mine Land Pilot Program, a federal initiative designed to foster economic development around former coal mine sites in Kentucky and other states. 

The proposed state-of-the-art facility would include a museum and local artisan market where visitors could learn about nature. The center’s biggest attraction: the elk that roam the area.

“Let me assure you this is a worthy project that we are investing in,” Rogers said during the gathering. “The Appalachian Wildlife Center has the potential to transform tourism in our region. There is no place in the country with a better story than eastern Kentucky.”

Nearly four years after the announcement, and three years after the wildlife center was first supposed to be completed, the land is still largely untouched except for a few pens to hold elk and some water utility construction. The projected infusion of hundreds of thousands of tourists has not materialized. And Bell County residents, a third of whom live in poverty and fewer than 1 in 10 of whom have a college degree, are still waiting for an influx of jobs from yet another effort promising to help the area recover from the decline of the coal industry.

The AML Pilot Program, created in 2015, is among the latest efforts that pledged to change the fate of eastern Kentucky. State and federal leaders have directed hundreds of millions of dollars to the region over the past 50 years as part of multiple economic revitalization efforts.

Those investments have resulted in some improvements, including new hospitals and other health care facilities, job-training programs, and some businesses that have come and stayed. But many projects haven’t lived up to expectations, leaving residents waiting for an economic lifeboat that never seems to arrive. 

Stacy Kranitz, special to ProPublica

Downtown Pineville, Kentucky, a small town in Bell County near the future site of the Appalachian Wildlife Center.

Since its inception, the AML Pilot Program has awarded $105 million to 43 projects in the state with little vetting. Some projects like the wildlife center have taken far longer to complete than promised, with no consequences. And lofty projections for job creation, visitation and tourism revenue made by the wildlife center and other projects went largely unchallenged by the state, the Kentucky Center for Investigative Reporting and ProPublica found. 

An industrial park in Martin County was awarded $3.37 million in September 2019 even after a consultant warned that the project had “fatal flaws,” including its location near a federal prison. Two other industrial parks that received funding have already lost, or are at risk of losing, major businesses after pledging large numbers of jobs and related economic growth.

And a $2.5 million grant to Harlan Wood Products LLC in 2016 was tabled after the company was unable to obtain additional private funding. The Harlan County business, which is now dissolved according to the Kentucky secretary of state’s office, had planned to produce wood pellets for biomass fuel, employ up to 35 people and create about 60 indirect jobs.

For the wildlife center, pledges of economic turnaround soared even as the projected opening date was repeatedly delayed. The center is now expected to open in June 2022, according to the Appalachian Wildlife Foundation, the nonprofit organization that is responsible for its construction.

“We’re actually building it. Nobody’s ever done anything for tourism like we’re doing,” said David Ledford, president and CEO of the nonprofit foundation. He said project delays have been primarily due to construction challenges on the reclaimed mine site and a request by federal authorities for an additional environmental assessment. The coronavirus pandemic also has pushed back construction, according to recent reports submitted to the state by the foundation.

The federal Office of Surface Mining Reclamation and Enforcement, which oversees the distribution of AML Pilot Program funding to states, did not respond to a request for details about its application review process. But three officials familiar with the process, who aren’t authorized to speak publicly, told KyCIR and ProPublica that the agency does no independent scrutiny of grant applicants’ claims. 

State officials also could not provide KyCIR and ProPublica with records showing that they verified the tourism and job projections. In fact, a committee appointed by the state Energy and Environment Cabinet secretary has helped to dole out millions in taxpayer dollars without maintaining any records of discussions or votes, as required for public bodies, KyCIR and ProPublica found.

The committee, which helps determine how the program’s federal tax dollars are spent, is not required to comply with state transparency laws, according to state officials who argue that it is not a public agency because it serves in an advisory capacity to the cabinet secretary. 

State and local programs across the country that offer incentives for economic development repeatedly come under scrutiny for failing to achieve job creation and revenue benchmarks. 

The AML Pilot Program falls within a gray area that sometimes escapes deeper examination. 

The federal government has gradually given states more decision-making authority over grant distribution and oversight, said Brett Theodos, a senior fellow and director of the community economic development hub at the Urban Institute in Washington, D.C. 

But the AML Pilot Program stands out because the federal agency responsible for distributing the funds does not appear to have provided clear parameters and measurements for success, he said. 

“The lack of expert decision-making, public meetings or outcome tracking makes (the AML Pilot Program) open for abuse,” Theodos said.

Disney-like Experience

The announcement on building the wildlife center came nearly two decades after the failure of an industrial park project on the same site.

The state spent more than $10 million to buy the land, build a bridge over the Cumberland River and run a three-lane, paved road up to the mountaintop, where the industrial park would be located.

But no industry came. The park sat empty for more than a decade. 

Stacy Kranitz, special to ProPublica

This sign is all that remains of a proposed industrial park. Nearly two decades later, the Appalachian Wildlife Center would choose to build on the same site.

Then, in 2014, Ledford announced plans to construct the Appalachian Wildlife Center. At the time, Ledford said he was considering five counties as potential locations for the center, which would be funded solely through private donations.  

The following year, Ledford chose Bell County.

Ledford said in 2015 that the project, which would encompass 12,000 adjoining acres, would draw 580,000 visitors and generate more than $113 million for the region in its fifth year in operation. “We will not seek any government funding for the project. It will be funded thru private donations,” Ledford said in a news release that projected a 2017 completion date. 

After three years of operating at a net loss, the Appalachian Wildlife Foundation sought to bolster funds for the center by seeking an AML Pilot Program grant.

In an application filed in 2016 by the county, the foundation offered more ambitious tourism numbers than it had a year earlier. Not only would the center draw 638,000 visitors in its fifth year in operation, it would spur the creation of more than 2,000 jobs in the region.

By the time Rogers announced the AML Pilot Program funding later that year, the foundation was projecting that the center would be complete in 2019.

Ledford did not respond to a request to explain why he sought government funding after vowing not to do so. He has said that the state and federal governments vetted the economic projections. 

But hundreds of pages of federal and state documents related to the Appalachian Wildlife Center project show no indication of any independent assessment or critical vetting by the state or the federal government of the tourism and job creation projections. At least three federal documents, including a 2019 report, repeat almost verbatim the project application’s claims for visitation, job creation and revenue generation. 

In 2019, foundation leaders estimated that the center would open in June 2021. By its third year, it would make $8.5 million after operating expenses, they said. The projection was based on new estimates of 850,000 visitors annually, starting in its third year, and average per visitor spending of $44 on admission fees, food and gift shop items.

“We’re going to build a first-class tourism destination and we’re going to deliver a Disney-like experience,” Frank Allen, a foundation board member, said during a presentation last year. “I know it sounds ambitious and it is but, bear with me, at one point so was Disney World. Ultimately, all you need is a great plan and a lot of money. We’ve got the plan and most of the money.”

Stacy Kranitz for ProPublica

A screenshot of Kentucky Gov. Matt Bevin’s Facebook post in 2016 announcing the Abandoned Mine Land Pilot Program grant for the Appalachian Wildlife Center and showing the proposed rendering

Stacy Kranitz, special to ProPublica

Four years later, the future site of the visitor center still lies empty.

The Appalachian Wildlife Foundation’s tourism projections exceeded by nearly 300,000 the number of visitors last year to western Kentucky’s Mammoth Cave National Park, one of the region’s leading tourist attractions and home to the longest-known cave system in the world. 

Ledford said the projections stem in part from his belief that the wildlife center will generate more visitors and revenue than the Keystone Elk Country Alliance in northwest Pennsylvania, which was created in 2009. The facility attracts more than 481,000 people annually, according to its website.

The wildlife center hopes to capitalize on tourists traveling to other destinations, including resorts such as Pigeon Forge, a mountain town two hours away in eastern Tennessee that is home to Dollywood, and Hilton Head Island in South Carolina, which is a seven-hour drive from Bell County. About 94% of the center’s visitors would be from outside the state, according to the foundation’s estimates.

“Our visitors are not going to spend three or four days here,” Ledford said in an interview. “It’s not the end destination. It’s a stop on the way to someplace.”

Stacy Kranitz, special to ProPublica

An elk pen at the future site of the Appalachian Wildlife Center in Bell County, Kentucky.

Jeffrey Larkin, an Indiana University of Pennsylvania professor who teaches ecology and conservation, is skeptical that the wildlife center will be able to live up to its projections.

“I would say that the challenges that lie before the Kentucky facility would be, ‘If you build it, would they come?’” said Larkin, who received his master’s and doctoral degrees from the University of Kentucky and who once conducted fall elk tours in the Appalachian area of the state. “It’s in a part of Kentucky that’s not often visited by a lot of people.”

A New Program, Another Promise

Nestled in the southeastern corner of the state at the juncture with Virginia and Tennessee, the land that would become Bell and Harlan counties was cemented in the region’s history when frontiersman Daniel Boone blazed a trail through the Cumberland Gap in 1775.

The counties also reflect in many ways the Appalachian region of which they are a part: They are breathtakingly beautiful, largely rural, overwhelmingly white and significantly poor. 

The remote counties, among 38 deemed economically distressed in eastern Kentucky, have long wrestled with high poverty and unemployment rates. But a struggling coal industry hastened economic contractions for rural communities in Appalachia.

In the past decade, coal production in the state’s Appalachian region dropped from 67 million tons to 13.6 million, forcing the elimination of most mining-related jobs, which plummeted from 13,000 in 2010 to 3,400 in 2019. 

“Coal’s hold over eastern Kentucky has long dampened creativity, long-term planning, alternative economic development, the ability to think in terms of the public good rather than personal gain and adequate taxes with which to support public infrastructure and services,” said Ronald D. Eller, former director of the Appalachian Center at the University of Kentucky and a retired history professor.

Rogers, the politician who earned the nickname “Prince of Pork” because of his success earmarking funding for his district, has been at the center of many of the infusions of federal dollars for the region he represents. In June 2015, he chaired the U.S. House Appropriations Committee, which pushed for the AML Pilot Program as part of the U.S. Department of the Interior and Environment Appropriations Bill.

Lawmakers created a new pot of money, setting aside $90 million in 2016 to create new job opportunities and stimulate the economies of Kentucky, Pennsylvania and West Virginia by developing reclaimed mine sites. The program later expanded to include three additional states and three Native American tribes.

The federal government distributes the money but allows state officials to develop their own criteria for selecting the projects and monitoring their progress.

“This is a thoughtful alternative to help hard-hit communities reinvigorate their economies by using abandoned mine land to develop hospitals, community centers and much more,” Rogers said in a June 2015 news release after his committee’s approval. 

Rogers has since promoted the program as a key economic driver in Appalachia. In a 2018 news release, he called it “one of the most successful job creation and tourism initiatives that we’ve ever had in Eastern Kentucky.” At the time, none of the projects had been completed.

Rogers defended the money spent on various projects that have drawn limited results. 

“There isn’t a silver bullet that can lift our region out of generational poverty, and none of our local officials who have applied for an AML grant believes that one project in an industrial park or an exciting new tourism project will lift their county out of poverty,” Rogers said in an email. 

Kentucky officials acknowledge that the state’s oversight of the projects focuses on planning and construction, not on expectations for economic development. Once construction is complete, state oversight largely ends, leaving no consistent accountability system for measuring whether the investments drew promised economic changes to the area.

John Mura, a spokesman for the state Energy and Environment Cabinet, said the administration of Gov. Andy Beshear is committed to helping to improve the economy in coal communities and considers the AML Pilot Program an effective tool. 

While agreements with grantees do not clearly articulate oversight responsibilities once projects are completed, Mura said the cabinet “may require that the grantee continue to submit an annual report on various metrics such as job creation.” 

“This program has brought a good measure of economic vitality to eastern Kentucky in the past four years and there is every expectation that under the Beshear administration, it will continue to produce new jobs and new economic vitality in this part of the state,” Mura said in an email. He did not respond to questions about which circumstances might trigger the request for annual reports.

Mura pointed to two projects that he said have led to an additional 44 jobs in eastern Kentucky. 

Dajcor Aluminum, a business operating in the Coal Fields Regional Industrial Park in Perry County, has hired 31 employees since the county received a $6.5 million AML Pilot Program grant in 2018 to buy equipment for the company. SilverLiner, a tanker truck manufacturing company, also has hired 13 employees, Mura said. The company is located in Pike County, in the Kentucky Enterprise Industrial Park, which received a $5 million AML Pilot Program grant in 2016. 

Stacy Kranitz, special to ProPublica

A coal miners flag in the front yard of a home in Middleport, Kentucky.

James P. Ziliak, an economics professor at the University of Kentucky, said the eastern part of the state could be in worse shape without government investments such as the AML Pilot Program. But he worries about the lack of a broader strategy. 

 “It’s kind of a failure of economic development policy,” Ziliak said. “A lot has been spent, but has it been spent in the right places? And there have been a lot of empty promises over the years.”

Banking on Tourism

The Appalachian Wildlife Center is not the only tourism project in eastern Kentucky banking on big promises to uplift the region.

A Letcher County nonprofit, the EKY Heritage Foundation Inc., was awarded two AML Pilot Program grants totaling nearly $3.5 million in 2018 and 2019 after promising to transform more than 100 acres of “stagnant land” into Thunder Mountain, a “world-class” sport-shooting and archery resort park. The park would draw an estimated 40,000 annual visitors, according to the nonprofit’s application.

The completed project would employ 40 to 50 people and include shooting ranges, campgrounds with cabins, an amphitheater and a training site for law enforcement and the military. 

The application offers no supporting evidence that Thunder Mountain could attract the number of tourists it projects. And while the application asserts that Thunder Mountain would be a “valuable resource” for personnel at a federal prison to be built in Letcher County, plans for construction of the prison were shelved last year.

Missy Matthews, president of Childers Oil Co. and of Double Kwik, a chain of more than 40 convenience stores and gas stations in the southeastern Kentucky region, formed the nonprofit that proposed the project. She did not respond to interview requests. 

State Rep. Angie Hatton of Whitesburg, an EKY Heritage Foundation board member, declined to discuss claims for the project in detail. She provided a statement that she attributed to Sally Oakes, a Childers Oil Co. employee who served as the foundation’s grant writer.

“The estimates in the grant application are based on various sources of information including reports, journals and magazines as well as communications with other owners/operators of shooting ranges,” the statement said. Oakes could not be reached for comment.

About 130 miles northeast of the proposed site for Thunder Mountain, another tourism-related project, in eastern Kentucky’s Boyd County, received a $4 million AML Pilot Program grant after pledging to double the number of visitors for an existing off-road park.

The grant, awarded in 2017 to Boyd County government, would assist with water, sewer and road improvements intended to primarily benefit Rush Off-Road, a business owned by E.B. Lowman III, who also is president of a real estate company in eastern Kentucky.

In its application, Boyd County government officials said the improvements would help the park increase to 100,000 the number of visitors. It did not provide a timetable for the increase and offered no evidence or documentation to support the claim. 

Project documents cite, but do not include, a market research study by Marshall University in West Virginia, which Lowman said found that the park had a $5 million-plus economic impact on the county in 2017. Lowman declined to provide KyCIR and ProPublica with a copy of the study, and university officials said they were unable to find one. 

Boyd County officials did not respond to repeated requests from KyCIR and ProPublica to discuss the project. Federal and state officials did not reply to specific questions about the project. 

Shawna McCown said she struggles to understand how the four-wheelers roaring by her house in Rush, Kentucky, will help her or her neighbors. 

“They’re saying it’s going to help the community, but we don’t see any benefit for us at all,” McCown, a schoolteacher, said of the project. “How does that help me? I want a community center, a library.”

Residents Left Waiting

Stacy Kranitz, special to ProPublica

Cynthia Gooch watches her niece Lillian Howard at the unfinished park in Pineville.

By now, the Appalachian Wildlife Center, which has rebranded itself as Boone’s Ridge, was supposed to be pumping millions of dollars into Bell County. It was expected to have created more than 1,000 direct and indirect jobs in the region, as many as the county’s two largest employers combined: Smithfield Foods, which produces a variety of hams and smoked meats with 500 workers, and the Bell County school system, which has about 430 employees.

Instead, a countdown clock on the project’s website winds down to the most recent opening date: 593 days away.

Meanwhile, Rome Meade, a 26-year-old who lives in the area, has for six months hunted for a full-time job without success. 

“I believe it’s gonna turn around,” Meade said. “At least I hope so.”

He’s better off than some. He draws a salary as pastor of the Winchester Avenue Church of God in Middlesboro. And he, his wife and their two young children live rent-free in the church parsonage.

Meade makes too much money to qualify for food stamps or most other government benefits, except for health care.

“I want a job. I’ve always worked, but I can’t get no help,” Meade said.

Meade wishes the government would focus more on helping create well-paying positions that will allow him to stay in the area and not “on things that don’t matter, like an industrial park.”

“All of the tax dollars are going for things that people see no benefit to,” Meade said. “They’re getting frustrated. People are bustin’ their tails, trying to make a living for their families.”

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This article was produced as part of the ProPublica Local Reporting Network.

The post The Elk, The Tourists And The Missing Coal Country Jobs appeared first on Kentucky Center for Investigative Reporting.

Gov. Beshear: Save Unemployment Money In Case Of Overpayment Debt Monday, Oct 19 2020 

At the daily coronavirus briefing on Monday, Gov. Andy Beshear acknowledged that Kentucky mistakenly overpaid people who requested unemployment benefits — and advised recipients to save that money if they’re notified of an investigation because the state may eventually ask for it back.

“We ask people, obviously, to save that money,” Beshear said while under quarantine at the Governor’s mansion.

As the pandemic stretches on, many Kentuckians who received unemployment insurance payments are learning the unemployment office deemed them, retroactively, ineligible. As KyCIR reported last week, many filed their unemployment claims after Beshear said his administration was expanding coverage to people who were afraid of catching the virus at work — only to be disqualified months later because the state said they took a “voluntary leave of absence.” 

[READ: Gov. Beshear Offered ‘Self-Quarantine’ Unemployment. Now State Is Backtracking — And Billing]

People who owe overpayment debts to state and federal unemployment agencies may be forced into a payment plan, face civil action or have future benefits docked to pay down the debt.

Beshear said the state will handle the overpayments issue eventually, but that the state’s top priority right now is to resolve the over 90,000 unemployment claims that were filed but haven’t been processed.

In the meantime, Beshear said people who think they may have been overpaid should watch their emails for an overpayment notice and save the money they’ve received. 

Beshear said the state will get to the overpayments issue eventually. 

“People who believe they are overpaid should wait for an overpayment determination before repaying,” Beshear said. “Claimants should watch their email for overpayment notices because the appeal period is limited.” Claimants have 15 days to file an appeal one they are notified of an overpayment.

Other states are also clawing back unemployment overpayments, as Beshear noted on Monday, but Kentucky’s unemployment office has been especially harried in its response to the pandemic. In May, the state fired its newly installed director of unemployment insurance at a time when no state had a larger share of its workforce on unemployment than Kentucky. The system required a $865 million loan from the federal government in June to bolster the unemployment insurance trust fund.

KyCIR reported in August that Kentucky’s unemployment office had violated federal rules by automatically approving self employed or independent contractors who applied for unemployment, likely creating overpayments like the ones addressed by Beshear on Monday. Kentucky entered into a corrective action plan with the federal Department of Labor that includes pursuing overpayment debts that stem from the state’s mishandling of unemployment claims.

Beshear’s office previously told KyCIR the overpayments for people who self-quarantined over a reasonable fear of catching COVID-19 at work were the result of shifting policies from the federal government.

A spokesperson for the Department of Labor, however, said in a statement that guidance alluded to by the governor’s office “did not change any policies, but clarified operating guidance based on state questions.”

Kevin Kinnaird, an information specialist at the Kentucky Labor Cabinet, said that the federal government’s guidance did in fact change. 

“Whether you call it changing or clarifying, the Department of Labor’s position shifted,” Kinnaird said in an emailed response to the federal government’s assertion.

“The state disagrees with the tightening of eligibility in the midst of a pandemic and global recession, when millions are struggling, and Kentucky will join other states to request flexibility to waive overpayments for Kentuckians who are self-quarantining during this pandemic to protect their health or reduce exposure for a loved one at higher risk,” Kinniard said.

Most states allow their respective unemployment agencies to waive overpayment debts when the claimant is not at fault. Kentucky is one of just 10 states without such a provision in state law.

The post Gov. Beshear: Save Unemployment Money In Case Of Overpayment Debt appeared first on Kentucky Center for Investigative Reporting.

Beshear Says Federal Changes Responsible For Unemployment Confusion Friday, Oct 16 2020 

Gov. Andy Beshear says he was passing along guidance from the federal government when he told folks who left work over fear of the coronavirus to self-quarantine to apply for unemployment insurance. 

That federal guidance changed about a month later, according to a statement from Beshear’s office in response to a KyCIR investigation which found Kentucky’s unemployment office is kicking people who met that criteria off unemployment benefits and billing them for “overpayment” debt. 

It’s unclear if state officials ever communicated the change to out-of-work Kentuckians after the state received new guidance in April. The state’s “frequently asked questions” page about unemployment insurance benefits still says that Kentuckians with a reasonable fear of contracting coronavirus are eligible, if their employer hasn’t offered telework or reasonable accommodations.

Screenshot 10/15/20

Beshear’s office didn’t respond to a request for an interview for the investigation, and the statement was provided by Beshear’s spokesperson after the story published. It says that the U.S. Department of Labor sets eligibility rules for unemployment insurance. The initial communications from the federal government was that individuals who left work because of concerns about their health or possible exposure to those living with them would qualify for unemployment, the statement said. 

“Based on that, the Governor passed along that same message and encouraged people who met the standards the federal government was applying to sign up for unemployment.”

The U.S. Department of Labor has not responded to requests for comment.

Beshear on March 25 said during his daily briefing that the state was expanding unemployment benefits to include the self-employed and people who self-quarantined because they had a reasonable fear of contracting the virus at work. Just weeks into the pandemic, and with the unemployment office understaffed to deal with hundreds of thousands of Kentuckians out of work at once, briefings and the state’s web sites were the primary sources of information about changes to who could file.

Tracy Hayes filed a claim for unemployment benefits two days after Beshear offered the option to self-quarantine and receive benefits. She was approved and paid benefits for eight weeks before the unemployment office opened an investigation. The state ruled that Hayes was retroactively ineligible because she was on a leave of absence and, in May, she learned she would have to pay back the $5,000 in unemployment benefits she had already spent.

Beshear’s statement says this happened because of the federal government’s changing guidance, and that Beshear understood why Hayes challenged the overpayment debt in a lawsuit filed in the Monroe County Circuit Court. He said he “hopes the federal government will reverse course so that she and others do not have to experience this hardship.”

“On April 27, the federal government changed its position and removed any legal ability for the state to provide unemployment assistance benefits on this basis alone,” the statement said. “Gov. Beshear disagrees with the federal government and believes that individuals can and should qualify on this basis, but Kentucky’s unemployment insurance office is obligated to follow federal law.” 

It is unclear that the new guidance was ever passed along to the rest of Kentucky. A spokesperson for the governor’s office did not know if the policy guidance had been discussed at a daily briefing. 

KyCIR reviewed Beshear’s briefings on April 27, 28, 29 and 30 where unemployment benefits were discussed. There was no mention that people who leave jobs to self-quarantine were no longer eligible.

The state’s website still describes a scenario where someone like Tracey Hayes should be eligible to apply for unemployment insurance. 

Federal Shift Confuses States

Early guidance from the federal Department of Labor gave states flexibility to extend unemployment benefits for those who quarantine out of fear of catching the virus at work, says Michele Evermore, an unemployment policy expert at the National Employment Law Project.

Evermore said the federal department of Labor did issue conflicting guidance that became less permissive as it became clear the pandemic was not going away anytime soon. 

“By the end of April they started walking some of that openness back,” Evermore said.

Evermore said even still, confusion surrounds the question of what defines a reasonable risk of exposure to the virus that would make someone eligible for unemployment benefits.

“The question has been, now and throughout the pandemic, what’s a reasonable fear versus what’s a reasonable threat,” Evermore said. “And that line has never been made clear.”

Evermore said its likely other states are pursuing overpayment debts for people who self-quarantined, especially as the immediate unemployment crisis lessons. 

One key difference: Most other states have passed laws allowing their unemployment agencies to waive state overpayment debts for equity and good conscience reasons, such as if a claimant doesn’t have the money to pay or if the debt stems from an agency error. Kentucky is one of just 10 states without such a statute, so Kentucky is obligated to pursue any and all overpayment debts, regardless of how they come about.

All states are bound to pursue overpayment debts connected to federal unemployment insurance programs such as the Pandemic Unemployment Assistance program created by the CARES Act. Beshear’s statement notes that Kentucky is requesting flexibility to waive overpayment debts for those who self-quarantined.

The post Beshear Says Federal Changes Responsible For Unemployment Confusion appeared first on Kentucky Center for Investigative Reporting.

Gov. Beshear Offered ‘Self-Quarantine’ Unemployment. Now State Is Backtracking — And Billing Wednesday, Oct 14 2020 

Tracey Hayes was working as a retail merchandiser in March, arranging products on store shelves around Glasgow to promote sales, when she decided she couldn’t risk exposing her mother to the coronavirus or handle child care for her two children by herself.

Hayes had been watching Gov. Andy Beshear’s daily coronavirus briefings, and she was sure Team Kentucky would have her back.

“I watched him everyday. He said, ‘Healthy at home,’” Hayes said. “So I was healthy at home.” 

Hayes stopped working, cared for her children and mother and avoided adding to Kentucky’s mounting number of coronavirus cases. She filed an unemployment insurance claim on March 27. For eight weeks, she received $112 weekly in unemployment, plus the extra $600 payment established in the CARES Act.

But in May, the unemployment office called to say they were investigating her claim. 

“I remember pulling over into the parking lot of a church. At that point I was shaking. I couldn’t drive,” Hayes said. 

Soon after, she got a bill ordering her to pay back every cent she’d received.

Hayes told the state she was just doing what Beshear had instructed. Their response was, essentially, that Beshear never told anyone what to do. Despite what she heard the governor say during his daily briefings and what she read in his executive orders, Hayes simply wasn’t eligible.

The governor’s office did not respond to a request for comment.

Hayes is one of many people who received unemployment benefits in Kentucky during the coronavirus pandemic and are now learning they were retroactively deemed ineligible. Not only does this cut people off from unemployment for crucial months during the pandemic, many of those found ineligible now owe a debt to the state or federal government that could mean their tax refunds or other money get garnished.

The number of people affected is unclear because the unemployment office didn’t respond to KyCIR’s questions, including how many recipients were later deemed ineligible. 

Kentucky’s unemployment system is under immense pressure during the pandemic: By May, Kentucky had the largest share of its workforce on unemployment benefits in the country, and the state’s unemployment insurance trust fund required an $865 million loan from the federal government to stay afloat over the summer. 

Several unemployment insurance lawyers told KyCIR they are hearing from more people who were denied eligibility than ever before, and many of them self-quarantined. The unemployment office approved their claim and started issuing payments, only to reassess after the fact and find those workers ineligible.

Hayes has challenged the practice in a lawsuit filed in the Monroe County Circuit Court. The eventual ruling on that case could extend to others who self-quarantined based on what she heard the governor say at his briefings.

The unemployment office has not yet responded to a request for comment submitted on October 6. That same day, Labor Cabinet attorney Amy Cubbage stepped to the podium during Beshear’s briefing to talk about the new, $400-weekly federal unemployment program. This time, Kentuckians watching heard a different message about who was eligible: “Unfortunately, fear of getting COVID is not enough to qualify.”

The Appeals Process

[/media-credit] Tracy Hayes

When the coronavirus made its way to Kentucky, Hayes was working for two companies: Driveline Retail Merchandising and SPAR Field Services.

She traveled to as many as three crowded stores a day.

She remembers building a barrier of shopping carts to try to keep customers six feet away from her and her coworker as they set up display stands of cosmetics, coloring books and CBD products.

Driveline paid her $10 an hour. It didn’t seem worth it.

“I just thought I was playing Russian roulette for, like, makeup,” Hayes said.

Both of her employers had signaled they would support workers who decided to stay home: An administrator at SPAR Field Services sent an email to employees that explicitly said workers would be eligible for unemployment, should they decide they needed to stay home.

Driveline CEO Randy Wilson sent a company wide email on March 22 saying the company would support employees with any decisions they made for the health and welfare of their families. Hayes worked her last shift on March 24 and emailed human resources to say she didn’t feel safe coming into work.

At that time, Beshear was talking about unemployment insurance almost daily at his coronavirus briefings. On March 25, the governor told Kentucky he had some good news: The state was expanding unemployment insurance to new categories of people, including contract workers, substitute teachers and “anyone who has had to leave their job because of quarantine.”

“This means that so many of you who are out there, who were worried, are now able to file, and we want you to,” Beshear said. While he spoke, viewers saw a slide which said people were eligible for unemployment if they were leaving their job due to a “reasonable risk of exposure (self-quarantine).”

Hayes thought this sounded like her, so she filed an unemployment claim on March 27. She could only put one employer in the application portal, so she listed Driveline. She sent an email to the unemployment insurance assistance account to follow up and explain her situation, but she got back a form response.

The state approved Hayes for about the same amount she’d be making if she was working full time, but much of that went towards childcare and supporting her mother.

The unemployment office began investigating her claim after it contacted her employer, as it always does to confirm that claimants lost their jobs through no fault of their own.

Driveline told the unemployment office that Hayes wasn’t fired and there was work available, according to an email from Driveline’s human resources contractor. The state worker told Hayes that meant she wasn’t eligible for the unemployment benefits she had already been receiving for eight weeks. The payments would stop immediately.

Driveline, headquartered in Coppell, Texas, has not responded to multiple calls for comment. Its human resources contractor, Trion Solutions, did not respond to an emailed request for comment.

Not every decision results in an appeal, but data suggests more claimants have been filing appeals as the pandemic stretches on. Appeals climbed 129% between May and August, according to data from the Department of Labor.

Employers often challenge claims because sending too many workers to the unemployment office can result in higher taxes in the next fiscal year. The Beshear administration removed some of that pressure in March by charging all UI claims straight to the unemployment insurance trust fund instead of individual companies’ accounts. But some companies still oppose claims.

Stephanie David worked at United Collections Bureau, a collections firm based in Indiana, when the pandemic hit.

She remembers working elbow-to-elbow and sharing computers with her coworkers. As businesses closed one after the other, David said her coworkers took bets on when their office would close. 

But the office stayed open. Human resources told employees that if they didn’t feel comfortable coming into work, they could stay home and wouldn’t be penalized. David lives with her mother and sister, and all three of them suffer from chronic conditions that make them especially vulnerable to the virus. 

David was told she could apply for unemployment benefits in Kentucky, where she lives, or Indiana, where she worked. She chose Kentucky and filed on March 29.

David was approved, and started getting payments. But in July, she learned her claim was under investigation because she left work voluntarily. The unemployment office considered David ineligible.

She appealed that decision and a hearing before the unemployment office was set for September 16. Her ailing grandmother was receiving end-of-life care at the time, and her heart rate plummeted a few minutes before the scheduled hearing. David was busy calling family members and arranging last goodbyes, and she called into the hearing late. She wasn’t allowed to present her case.

Now, David owes $2,592 to Kentucky and the federal government. 

Kentucky is evaluating her for federal unemployment benefits, but David may not qualify since the state believes she left work voluntarily. Even if David is found eligible for federal unemployment, the state will withhold 25% of her future benefits to pay her new “overpayment” debt.

It will be weeks before the first checks arrive. David doesn’t think that’s fair. 

“I’m thinking, how many more weeks can I go without any money?” David said. “We’re barely making it right now.”

A Reasonable Risk

Hayes was scheduled for her appeal on June 29, a phone hearing where she could make her case before a referee from the unemployment office.

Unlike most workers who appeal unemployment decisions, Hayes found an unemployment law attorney to represent her during the process: Robyn Smith, who at times has taken an adversarial role towards the unemployment system. She’s filed lawsuits challenging the unemployment system’s actions that have made it all the way to the Kentucky Supreme Court.

People come before the unemployment system at a low point in their lives, Smith says. Even if they win, they face weeks without any income.

“That starts people down a spiral. They’re not in a strong place, they’re making decisions that they don’t have any confidence in,” Smith said.

The unemployment office usually sides with employers when it finds workers ineligible for unemployment benefits. In 2019, the office issued 11,902 rulings on appealed eligibility claims in 2019, according to an annual report on the unemployment insurance trust fund. In cases where claimants were found ineligible for unemployment and appealed, the office ruled in favor of the claimant in 32 percent of its decisions.

Smith argued Hayes was following guidance from the unemployment office that said workers could self-quarantine if there was a reasonable risk of exposure in the workplace.

An executive order issued March 25 says that people were eligible for unemployment benefits if they left work due to a “reasonable risk of exposure (self-quarantine).” An employer handbook prepared by the unemployment office in April says that “if the employer and employee disagree about what is considered reasonable accommodations, those UI claims will have to be decided by a UI staff member on a case-by-case basis.”

Driveline’s representative never mentioned any accommodations made to keep workers safe at the appeals hearing, according to a recording of the proceedings. They simply said it was Hayes’ decision to stay home from work. When asked if she could think of any reason other than COVID-19 that Hayes wasn’t working, Driveline’s representative said no.

In her closing statement, Smith said that the coronavirus forced Hayes’ to lose work “by the fact that no reasonable employee in Ms. Hayes’ position would continue to expose herself to a germ that could have killed her mother.”

Driveline’s representative did not give a closing statement. They hung up before the hearing was over.

The referee determined that Hayes was on a voluntary leave of absence —  and thus, ineligible for the benefits she had already received. The evidence presented in this case establishes that the claimant was on a leave of absence from March 22, 2020, through June 15,” the referee wrote in a decision mailed to Hayes in July. “The employment relationship continues while the claimant is on a leave of absence.”

The unemployment office sent Hayes a bill for $896 in overpaid benefits and a request for at least $75 a month from Hayes, who had no income. Since she also collected the extra $600 in weekly federal unemployment payments, Hayes also owes nearly $4,200 to the federal government. Kentucky is bound by law to pursue this debt to the federal government.

James Maxson, an unemployment insurance lawyer, says he regularly hears from workers like Hayes — and he said the unemployment system is generally designed to say no to claimants. 

Maxson served as in-house counsel of Kentucky’s Office of Unemployment Insurance from 2008 until 2016. 

Maxson said pressure on the unemployment insurance trust fund may be leading Kentucky to reject the claims of people like Hayes, who were previously approved for state-based unemployment insurance, and shift them to federally paid benefits like the Pandemic Unemployment Assistance (PUA) program created by the CARES Act.

“It seems to me that some people who seem like they do have legitimate claims for unemployment benefits are being denied,” Maxson said,  “but kind of dangled the promise of PUA as a plan B.” The unemployment office did not respond to questions about this allegation.

PUA is paid by the federal government, but is usually less money than state aid and has more stringent requirements for what counts as unemployment directly tied to COVID-19.

The Commission 

Hayes had another chance to appeal the unemployment office’s decision by bringing her case before the Unemployment Insurance Commission.

The three-person commission is tasked with reviewing decisions made by the lower appeals process. They don’t hear new evidence, and instead review the facts of the previous hearing to determine if the unemployment office implemented its own regulations fairly. Dondra Meredith became the commission’s chairperson over the summer.

Meredith worked previously as a lawyer with the unemployment office. Muncie McNamara, Kentucky’s ex-unemployment director, objected to Meredith’s appointment because he said her experience gave her firsthand knowledge of the administration’s intentions for unemployment insurance, and the commission’s chairperson is supposed to be an independent arbiter of Kentucky’s policy.

Before he was fired in May, McNamara was told in writing to stop commenting on appointments to the unemployment commission, according to a written reprimand obtained through an open records request.

Meredith’s name didn’t appear on a recent commission decision; the state didn’t respond to questions about the commission’s current makeup. Meredith is a deputy executive director with the Education and Workforce Development Cabinet, according to a state salary database.

But when Hayes’ case came before the commission, Meredith as the chairperson issued her decision alone as the only attendee that day. Meredith maintained the decision made by the unemployment office’s referee on August 24 and decided in favor of Driveline.

In arguing against Hayes’ unemployment benefits, Meredith wrote that Hayes’ claim that she was following the governors order was “unfounded.”

The governor’s executive order says “all citizens of Kentucky are encouraged to take all feasible measures to engage in appropriate social distancing to prevent the spread of the disease,” Meredith wrote. However, “the order does not ‘direct’ any action by private sector essential employers or essential workers.”

Having lost the original decision, the appeal and before the unemployment commission, Hayes filed a lawsuit on September 13 against Driveline, the Kentucky unemployment office and unemployment commission, Labor Secretary Larry Roberts and Lt. Gov. Jacqueline Coleman as secretary of the Education and Workforce Development cabinet.

Hayes’ appeal alleges the unemployment office and commission are deliberately blaming  workers “for workplace safety circumstances they do not choose and cannot control.”

On October 4, Hayes was approved for pandemic unemployment assistance, a different federal benefit, that would retroactively cover four weeks in June and July when she was unemployed but did not receive benefits. Hayes will still pursue her case against the unemployment system to settle the matter for the potentially thousands of others in her situation.

Judge David Williams in the Monroe Circuit Court will hear motions in this case on October 15.

Hayes, meanwhile, is back at work for Driveline and SPAR Services. She doesn’t feel any safer, she says. Barren County, where most of Hayes’ work is located, has seen over 860 cases of the virus. “I don’t have the luxury to worry about safety now,” Hayes said.

Hayes says she doesn’t watch Beshear’s briefings anymore.

The post Gov. Beshear Offered ‘Self-Quarantine’ Unemployment. Now State Is Backtracking — And Billing appeared first on Kentucky Center for Investigative Reporting.

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