LOUISVILLE, Ky. (WDRB) – When Gov. Andy Beshear announced June 30 that he was hiring accounting firm Ernst & Young on an expensive, no-bid contract to help the state’s beleaguered unemployment system, he set a goal: to resolve all of the nearly 56,000 initial jobless claims from March, April and May that remained unprocessed.

Two months later, the state is nowhere near that goal, according to figures released by Beshear’s Labor Cabinet Thursday evening.

Kentucky still has 40,425 “unresolved initial claims” from March, April and May, according to the figures.

In fact, when claims from July are included, Kentucky has about the same amount of backlogged unemployment claims today – 73,642 – as in early July when Ernst & Young was beginning its short-term contract work. (Kentucky had 73,979 backlogged claims as of July 9, according to figures the administration disclosed at that time.)

Made with Flourish

Beshear’s Labor Cabinet said in a statement Friday that state officials are “extremely pleased” with Ernst & Young’s work as the extended contract nears its Aug. 30 end date.

The backlog remains for other reasons besides the firm’s performance, such as the need to write formal letters finally dispatching thousands of claims on which the accounting firm worked, the cabinet said.

“No one in state government will be satisfied until all Kentuckians receive the unemployment benefits for which they qualify,” Labor Cabinet chief of staff Marjorie Arnold said in the statement. “The Kentucky Labor Cabinet and (Office of Unemployment Insurance) will continue to work each and every day until that is a reality for all qualified Kentuckians.”

Steven Borden, a 22-year-old from Louisville’s Pleasure Ridge Park, represents one of those backlogged claims.

He filed for unemployment in mid-June after accepting a separation option from a Starbucks in lieu of reduced hours.

“I’m trying to be as understanding as I can. But I definitely feel like I have been left behind,” said Borden, who lives with his parents but has fallen behind on car payments, insurance and other bills.

The figures released Thursday say nothing of a separate problem: People whose jobless claims have stalled after receiving some initial payments. State officials have acknowledged issues with “continuing claims” but never quantified how many are stalled.

“I’m just still in limbo,” said Darlene Lewis, 65-year-old widow from Fairdale, whose only income source is Social Security.

She had received $180 per week from the state, plus the $600 federal supplement that is now expired, from April through May 11, when her payments stopped.

She’s gotten help from rent and utility assistance programs while nearly exhausting her savings, she said.

“When you have everything going out and nothing coming in, it don’t take long to deplete,” she said.

Beshear: ‘We are getting closer and closer to being caught up’

Beshear announced that the Ernst & Young’s contract would be extended in late July, raising the total cost to $12 million.

State officials said July 27 that the firm had worked through about 63,000 claims. But a final step remained: State employees needed to pen a one- or two-page “adjudication” letter required by federal law to finally dispatch each of those claims.

As of Thursday, only about 20,000 “determinations” had been completed, or less than a third, the Labor Cabinet said.

While Beshear didn’t give specific figures during his briefing Thursday afternoon, his comments implied more progress.

“We are getting closer and closer to being caught up … We are trying to get those two-page letters out to the last remaining people. Sadly, we’re down to the point where many of the remaining claims are going to be denials,” Beshear said.

On Friday, the Labor Cabinet said the official “determination” letters remain a major hurdle.

“Those letters are time consuming and require a review of the accumulated file across two separate computer systems(,) one of which is a 1978-era mainframe. Our adjudication staff is able to complete approximately 3,500-4,000 a week when working at full capacity and approximately 2,500 a week when working our in-person events around the state,” Arnold said in the statement.

In the last two weeks, the cabinet shifted some Ernst & Young employees too drafting the letters, which was only possible after it got permission from the U.S. Department of Labor to have non-state employees write the letters, Arnold said.

But the Ernst & Young contract is up Aug. 30, and Beshear has said he does not plan to renew it.

“We believe we will see some positive results of that effort by early next week, but those results will be limited due to the fact EY’s help in the adjudication area only spanned the last two weeks of the contract,” Arnold said.

The Labor Cabinet said Thursday that Ernst & Young has “processed 135,549 claims.”

About half of those are “continuing claims” representing people whose payments have stopped, as opposed to people who never received payments in the first place, Arnold said Friday.

Besides the adjudication letters, Arnold said other hurdles keeping the state’s backlog of claims high are:

- The fact that claims for regular state benefits are often denied and immediately converted into claims for benefits under Pandemic Unemployment Assistance, the federal program created in March. “That means as the initial (regular unemployment) claim drops off, a new PUA claim replaces it in the count for a week or more.”

- The need to obtain wage information about an applicant from other states or the federal government

- Addressing offsets for prior unemployment overpayments, which must be calculated manually

- Investigating potentially fraudulent claims, a “careful” process not assigned to Ernst & Young

State Rep. Jerry Miller, an eastern Jefferson County Republican, said he continues to hear “gut wrenching” stories from his constituents who have had trouble with their unemployment claims.

Miller said the figures released Thursday don’t show much progress, despite all the attention on the issues with what he called “an antiquated” unemployment system.

“For all that effort and $12 million, we just don't see a lot,” he said.

Reach reporter Chris Otts at 502-585-0822, cotts@wdrb.com, on Twitter or on Facebook. Copyright 2020 WDRB Media. All rights reserved.