A bill to forgive mistakenly paid unemployment benefit from 2020 will include a waiver for debts to the state but won’t include provisions limiting the duration of benefits, the sponsor, Sen. Mike Bernskoetter, said Tuesday.
Bernskoetter, R-Jefferson City, triggered a Democratic rebellion Monday over the bill that previously had bipartisan support when he tried to add language to a House-passed bill on unemployment debt that would limit how long people can receive benefits based on how many people are jobless in Missouri.
“It is going to cause a lot of heartburn and contention on the underlying bill, which is a very good bill,” Senate Minority Leader John Rizzo, D-Independence, told Bernskoetter on the floor.
The change would have reduced the current benefit standard of 20 weeks of payments to as few as 12 weeks.
After more than two hours of debate, Bernskoetter set the bill aside. On Tuesday, he said it is being rewritten.
“I am sure we will get it back on the floor,” Bernskoetter said. “The plan right now is to separate the two issues.”
Since late last year, thousands of Missourians have received messages from the Department of Labor and Industrial Relations demanding repayment of unemployment benefits paid by mistake. Estimates vary, but the total could be as much as $110 million from federal pandemic unemployment payments and an additional $50 million in state unemployment benefits.
Missouri paid out more than $5 billion in combined state and federal benefits during 2020 as unemployment soared.
The House passed a bill to forgive the federal portion of the debts by a 157-3 margin. There was little Senate opposition to also allowing the department to waive debts to the state fund and the Senate version of the budget includes $48 million to cover the anticipated cost.
Many Republicans were reluctant to address state unemployment debt without assurances that the loss to the state unemployment fund would be offset to prevent a tax increase on employers. The Senate tapped unspent federal COVID-19 relief funds to cover the debt, the same fund Gov. Mike Parson used to add $300 million to the state fund’s reserves.
The error rate on unemployment claims in 2020 was lower than past years but the total amount is far greater because of the large numbers of claims, department officials have told lawmakers.
Missouri has processed almost 1.2 million new unemployment claims since mid-March 2020.
More than half those claims, 639,000 were filed between March 7 and May 6, 2020, as businesses shed workers because of the COVID-19 economic slowdown and state and local stay-at-home orders were in effect.
In addition to regular state benefits, which pay a maximum of $320 per week, the federal CARES Act created new programs that expanded who was eligible and provided supplements to regular payments.
The CARES Act gave a $600 per week supplement to people who qualified for regular state unemployment benefits. Programs for workers who did not qualify for regular unemployment gave the $600 supplement plus an amount equal to what the worker would have received if their job had been covered by regular unemployment.
There were other supplemental payments when the CARES Act supplement expired at the end of July and currently, people receiving unemployment receive a $300 federal supplement.
The federal government anticipated that some people would receive payments they did not qualify to receive.
A week after the CARES Act was passed, the U.S. Department of Labor issued guidance to states that overpayments could be forgiven “if the payment was without fault on the part of the individual and such repayment would be contrary to equity and good conscience.”
Despite the outcry from lawmakers and constituents over the collection letters, Parson has refused to act on his own, prompting the legislative effort.
Reducing the duration of state unemployment benefits when joblessness is low has been a goal of Republicans since 2015. Then-Gov. Jay Nixon vetoed the bill and lawmakers voted to override the veto but the Missouri Supreme Court decided the override violated procedural rules in the Missouri Constitution.
The language Bernskoetter tried to include in the debt relief bill is from a bill he has sponsored to set the duration of unemployment benefits between 12 and 20 weeks. When unemployment in a base period is below 5 percent, anyone making a claim would get a maximum of 12 weeks. When unemployment in the base period is greater than 9 percent, the maximum would be 20 weeks.
Democrats denounced the proposal as cruel.
“It is just another hateful act,” Sen. Brian Williams, D-St. Louis, said. “We are just trying to make it harder for working Missourians to survive.”
If Bernskoetter’s language had been in effect in 2020, the limit on benefits would have been 12 weeks for the entire year. During the recession caused by the 2008 financial crisis, the limit on benefits would have been 20 weeks starting Jan. 1, 2010, and continued at that level to the end of 2011.
Only four states – Florida, North Carolina, Georgia and Kansas – provide less than 20 weeks of unemployment payments. Most states allow up to 26 weeks of benefits.
Many Republicans liked the change proposed by Bernskoetter.
“I also want to say that separate from what my colleagues have already said on the floor, that putting in a modest reduction in unemployment benefits when times are good has made a good bill a great bill,” Sen. Bill Eigel, R-Weldon Spring, said.