Kentucky Politics

Gov. Andy Beshear’s administration might partner with the federal government to build a new unemployment insurance system.

Like much of the nation, Kentucky struggled to keep up with a surge of applications for unemployment benefits during the coronavirus pandemic.

The Beshear administration has blamed the problems on understaffing, antiquated software and security issues that have led to delays in overhauling the system.

During a legislative hearing on Tuesday, Labor Cabinet Secretary Jamie Link said the federal government is forming a consortium of five or six states to share a “core unemployment system” and Kentucky is considering joining.

But he said the state may decide to overhaul the system on its own.

“We’ll go down those paths to see which one provides the best service, or the best product for the commonwealth,” Link said. “At a strategic point, we’ll determine which path is best for the commonwealth’s interests and we’ll do that.”

The administration revealed earlier this month that the state was restarting its search for a contractor to overhaul the unemployment system.

That came shortly after former Labor Cabinet Secretary Larry Roberts said the state was almost ready to award the $40 million project to a contractor.

During the meeting Tuesday, Link said a finalist backed out after realizing more needed to be done to secure the unemployment system, which has been hit by data breaches and fraud over the last year.

“We felt like we were in the last stages of getting this project awarded. Surprising to us as well, the vendor, out of the blue, notified us that they were withdrawing their bid because they had severely underbid their response,” Link said.

Rep. Russell Webber, a Republican from Shepherdsville, said he was frustrated that the state was rebidding the project.

“I really have a difficult time believing this was new, that this was something somebody just discovered one day that ‘hey we haven’t adequately addressed this,’” Webber said.

Link also said the state was having trouble filling about 90 jobs in the unemployment system because the legislature funded the positions with coronavirus relief money that won’t renew next year.

“Employees aren’t willing to take a position that has a likely one-year existence,” Link said.

Rep. McKenzie Cantrell, a Democrat from Louisville, said the GOP-led legislature hasn’t adequately funded the state’s unemployment efforts.

“We can’t sit here in disbelief that things haven’t gotten done the way we’ve wanted you all to do them if we haven’t given the money to do it,” Cantrell said.

The state hopes the unemployment system overhaul is complete in the next two or three years.

Ryland Barton is the Capitol bureau chief for Kentucky Public Radio.