Failures of Governor Kelly’s Administration: Unemployment Fraud

The Governor finally admitted that her administration’s unemployment program has been overrun by fraud. 

Despite interim committees asking for information, standing committees asking for information, and requests from legislators the Governor and her staff have not produced detailed information about this fraud. They cannot tell us how many fraudulent claims have been paid, how many dollars have been squandered in fraudulent payments or what steps they will take to stop it.

I was proud to stand with my Republican colleagues and support the introduction of a bill that would hold schools, universities, not for profits and businesses harmless from fraudulent claims. It was this action and the mounting pressure from our caucus that finally forced the Governor to admit the problems had gotten so big that she had to act. Our schools and businesses shouldn’t have to pay for the Governor’s mistakes.

The Unemployment Trust Fund

  • The Kansas Unemployment Trust Fund was strong when the pandemic started with over $1 Billion in reserve. The balance is now less than a third of that. Some experts estimate that somewhere between $300 and $400 Million of the trust funds may have been paid out as fraudulent claims. 
  • The two most common types of employers in the Kansas system are reimbursement employers and trust fund employers. Schools, public universities and not for profits are usually reimbursement employers. The state pays their claims and then sends them a statement to get paid back. The first quarterly statements have begun going out and in one Topeka school district there were $775,000 in fraudulent claims that the state had paid out. With federal reimbursement applied, that school district will still owe the state nearly $400,000 for claims that never should have been paid and that the school district never authorized to be paid. 
  • Businesses are trust fund employers. They pay for unemployment insurance that builds the trust fund and helps keep costs predictable. But when fraudulent claims are paid someone has to refill the trust fund. Our businesses will see their premiums skyrocket to refill the trust fund to cover the fraudulent claims the Governor paid out. It is predicted that some may see increases so large that they will pay more in unemployment insurance than they pay in income taxes.