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The acting director says tens of thousands still await benefits because of complexities of new program.

PMG FILE PHOTO: JAIME VALDEZ - Boni Melchor delivers food for Grubhub in this 2019 file photo. So-called gig workers became elligible for unemployment benefits when the pandemic tanked the nation's economy.Oregon Employment Department officials have now worked through a backlog of 70,000 claims by people whom Congress has made newly eligible for unemployment benefits.

But the agency's acting director acknowledges that, while more people are starting to receive payments, tens of thousands are still waiting for benefits because their claims require more detailed review.

David Gerstenfeld said the agency reached its target almost a week before its self-imposed deadline of Friday, Aug. 8.

"We are hoping more people are seeing relief from their benefits," he told reporters on a weekly conference call.

While he conceded that processing is not the same as payment, "it is something that has to be done before anybody can start receiving benefits. For most people, that initial processing is what starts benefits going to them."

Self-employed people, freelancers and independent contractors, and gig and temporary workers were made eligible for benefits by the federal CARES Act, which was signed on March 27. Unlike regular businesses, which pay taxes into a trust fund, they do not pay those taxes and had been ineligible to draw benefits since the unemployment insurance system began in the mid-1930s.

The number of Oregon claims from these workers tops 100,000.

But the same federal law requires states to determine whether they are eligible for regular benefits from state trust funds before they can receive federal benefits under the Pandemic Unemployment Assistance program.

Gerstenfeld said some of their claims can be complex. He said people may qualify for regular unemployment benefits and federal pandemic benefits, depending on what kind of work they did, when they worked, and if they also worked in another state.

"There are bound to be tens of thousands of people whose claims have an issue to be adjudicated," he said. "We know that has caused delays for people to receive payments."

Gerstenfeld attributed the faster processing of these claims to several factors. Many claims for regular and pandemic benefits were duplicates. More staff members were hired for the greater workloads — the agency total now tops 1,000, compared with 100 before the pandemic in mid-March — and they have gained experience. A new Google-developed application allows the agency staff to link claims to the agency's mainframe computer system, which handles benefit payments.

According to the agency, about 36,000 people have been paid federal pandemic benefits totaling $82 million.

Meanwhile, despite more than half a million claims filed for regular unemployment benefits between March 15 and Aug. 1 — the total for a comparable period in 2019 was 57,000 — Gerstenfeld said only about 1,000 claims are pending, and the oldest dates back to July 21.

The agency faced a similar backlog of 38,000 claims at the end of May, when Gov. Kate Brown fired Kay Erickson as director and named Gerstenfeld as acting director.

A total of $3.6 billion in benefits has been paid out.

More and sooner

The agency has begun to advance benefits to some newly eligible workers if their unemployment is related to COVID-19 and they are likely to be eligible for either regular or federal pandemic benefits. Gerstenfeld said this is contrary to past practice, which disallowed any benefits before claims are vetted.

"For that large group of people, we know they are going to be eventually eligible for benefits," he said. "This new approach of benefits-while-you-wait will let us pay benefits while we do the required adjudication process to determine which program they will ultimately get those benefits from."

However, if people are determined later to be ineligible for benefits from either program, they are obligated to pay back the money.

Gerstenfeld said that, based on new guidance from the U.S. Department of Labor, which oversees state administration of unemployment benefits, his agency has changed its definition of "gross receipts." Now they can report gross receipts — the actual amount they receive that week — but subtract 25% of the previous month's overhead costs, such as rent, utilities, materials and supplies.

Gerstenfeld said the new definition would even the flow of money and allow for a more realistic accounting of costs — and more benefits.

"We know many self-employed people have been looking for this change," he said.

He said people can apply to make that change retroactive to past weeks, although it will take more time for those changes to show up in additional benefits.

Modernization

On a related matter, Gerstenfeld said the agency is still committed to obtaining a new computer system, which will replace a three-decade-old mainframe that still relies on COBOL, a programming language that dates back to 1959. The project has been more than a decade in the making, and Gerstenfeld said the agency has been preparing to announce a vendor.

"I am committed to modernization moving forward as quickly and responsibly as possible, and ensuring that we make it easy for the public and our employees to navigate through sometimes complex programs," Gerstenfeld said.

He did not specify it, but the Legislative Fiscal Office issued a report in July summarizing the project's history and concluded:

"Despite having available resources to embark on a modernization project for unemployment insurance taxes and claims, the Employment Department has not yet had the necessary combination of organizational stability and sustained professional and technical capacity needed to ensure project success. The scale and complexity of the needed improvements demand a level of sustained attention and effort that circumstances have, so far, failed to allow."

Gerstenfeld said Oregon has learned from other states, where even modern systems have been unable to cope with the volume and suddenness of claims during the pandemic — and may be unable to adapt to additional changes that Congress may make in its next coronavirus aid plan.

"I am committed to this vital work being completed successfully," he said.

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