Brown replaces Employment Department director as claims pile up and calls left unanswered.

SCREENSHOT - David Gerstenfeld is the interim director of the Oregon Employment Department, replacing Kay Erickson. New director, clear priorities — but same problems.

In less than a week, Gov. Kate Brown fired the director of the Employment Department, whose performance came under fire, and gave her replacement clear priorities.

"I have directed the Oregon Employment Department to address the current backlog in unpaid claims, and to clearly communicate the status of any unpaid claims to Oregonians," Brown said Sunday, May 31, in announcing David Gerstenfeld, a top agency official, as the interim director to replace Kay Erickson.

"In these incredibly stressful times, Oregon families are counting on these benefits. We will make this right. Oregonians will receive the benefits that they are owed."

Brown acted the day after Erickson and Gerstenfeld testified for a second time to a virtual meeting of the House Business and Labor Committee, whose members were dissatisfied with what they heard earlier last week.

Oregon has seen a jump in the official unemployment rate from a modern low of 3.5% in March to a record high of 14.2% in April. Business activity shut down or was severely curtailed as a result of the coronavirus pandemic and Brown's stay-at-home orders to slow the spread of the virus.

PMG PHOTO: PETER WONG - Kay Erickson as she testifies Saturday, May 30, to a virtual hearing of the House Business and Labor Committee. One day later Gov. Kate Brown fired her as director of the Oregon Employment Department, which still has thousands of unemployment claims pending.A week ago, then-director Erickson announced a new effort to resolve about 40,000 of the most complex pending claims. A record 445,000 people, three times the number of Oregon jobs lost during the Great Recession a decade ago, have filed claims since mid-March.

Gerstenfeld said whittling the backlog is a priority, and communicating with people is, too.

"We recognize we have not done enough and we know many people are still waiting," he said in his new role Monday during a virtual meeting of the Senate Business and Labor Committee.

He said the agency was unprepared for the volume of telephone calls following the initial claims. When the agency set up email boxes as an alternative, "we were immediately flooded with tens of thousands of emails and it just wasn't possible to keep up with responding to them while also processing claims and getting benefits paid."

He said some of the agency's most experienced claims handlers will work on the backlog. Other employees will be assigned to take calls — some on a new line dedicated to people newly eligible for benefits, such as self-employed people and independent contractors — and return other calls.

"You can imagine that the public wants dialogue and some questions answered," said Sen. Kathleen Taylor, D-Milwaukie, the committee chairwoman.

Rep. Margaret Doherty, D-Tigard, said during the weekend House hearing that someone who lives near her has been trying to get through to the agency. She said he sought to clear up an erroneous impression that he was a professional athlete, whose case would require special treatment.

"He was a good lacrosse player. But he wasn't that good," said Doherty, a former committee chairwoman who is leaving the Legislature after 11 years. "It's not an easy process to get through. The question is: How can he get an answer … if he can't get through to anybody? I have nothing I can say to those people who call me."

Change at the top

Gerstenfeld led the unemployment insurance division from 2011 until 2019, when he assumed a different job within the agency. He succeeded Erickson, who had led the agency for four years until Brown asked for and received her resignation.

U.S. Sen. Ron Wyden weighed in with a call for Erickson's resignation just before the House committee's weekend meeting when she and Gerstenfeld both spoke. But only one member joined him.

"Maybe somebody else needs to take over the leadership of that department and try to get it up and running," said Rep. Jeff Barker, a Democrat from Aloha who once led the committee and is leaving the Legislature after 18 years.

Wyden's reaction Sunday: "Today's announcement of new leadership at the Oregon Employment Department provides a much-needed opportunity to get countless unemployed Oregonians the urgent help they are counting on during this economic and public health crisis."

Republicans did not engage in any verbal-bashing of Erickson, but some sought to pin blame on Brown and previous directors.

"I understand that Oregonians across the state are struggling," said Rep. Shelly Boshart Davis, R-Albany. "But I would point that the blame belongs on the priorities and decision-making leading up to the overwhelming of the Employment Department and the fact there was notice and there were audits."

New programs

The agency faces three new programs that Congress has passed as part of the $3 trillion CARES Act.

One expands eligibility for workers never covered before, another extends benefits for workers whose payments are about to end, and a third increases benefits by $600 per week through July 31. Gerstenfeld said Oregon was among the first states to pay out the extra $600 per week.

He said a separate telephone line will be reserved for callers filing claims under a new program, known as Pandemic Unemployment Assistance, that will pay benefits to self-employed people, independent contractors, gig and part-time workers. Most are ineligible for regular benefits, but Gerstenfeld said their claims still have to be validated.

So far about 55,000 people have applied under this program since April 28. They qualify for a minimum benefit of $205 per week, for up to 39 weeks, and some may eventually get more.

Gerstenfeld said some of these newly eligible people are already getting benefits because the state set up a pilot project involving about 10,000 people.

The department started May 21 to process claims for 13 weeks of extended payments to people who have already exhausted their standard 26 weeks of benefits. This is known as the Pandemic Emergency Unemployment Compensation program.


The officials also touched on WorkShare, a program started in 2016 to enable businesses to tap the unemployment trust fund to aid workers whose hours have been cut by 20% to 40%. Federal funds will pay all benefits through Dec. 26, so employers are not penalized by using it and then having to pay higher unemployment taxes later. Under the federal CARES Act, the range is now between 10% and 60%, although it may take changes in state law or rules for Oregon to use it.

"It has made it more appealing for reimbursing employers to use WorkShare than it ever has been in the past," Gerstenfeld said. "Because of that and the general economic crisis we are in, we are seeing a huge increase in the number of WorkShare plans."

Until mid-March, 168 employer plans affecting 3,018 people were processed. during the past year. Since then, 1,009 plans and 10,195 claims have been processed.

Gerstenfeld said WorkShare is more labor intensive and requires more data entries into the system.

Other issues

On other issues:

• Antiquated computers: The Employment Department has a mainframe computer system that dates back three decades, and depends on COBOL, a computer language first unveiled in 1959. The agency has developed workarounds, but Erickson said last week, "They are not fully integrated with each other and have limited compatibility with today's technology."

Gerstenfeld said the agency is prepared to choose from two vendors for a new system, years in the making, to process employer taxes and laid-off employee benefits. But in response to a question by Sen. Tim Knopp, R-Bend, he said full implementation may take three to five years.

• Waiting week: Gov. Brown says she wants the waiting week abolished so that benefits can get paid faster — something she repeated in her tweets — but it would require computer changes that Gerstenfeld said were deemed less urgent than processing thousand of claims.

• Fraud. The Washington State Employment Security Department recently disclosed that hundreds of millions have been paid out in fraudulent claims that are believed to have originated overseas, based on stolen personal information. At least six other states have been affected. "Oregon is aware of these issues and is actively taking measures to prevent them," Gerstenfeld said.

But Rep. Brian Clem, D-Salem, a computer expert, said: "I find it ironic that Nigerians are getting unemployment insurance claims paid — though illegally — while Americans can't get theirs."

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