State spent millions to answer unemployment calls, thousands are still waiting


In May, then-Secretary of the Department of Workforce Development Caleb Frostman said the unemployment backlog would be fixed by October.

Now, three weeks into November, more than 74,000 regular unemployment applicants and over 20,00 Pandemic Unemployment Assistance (PUA) claimants are either in pending status or in adjudication, the process of weeding out mistakes and uncertainties on unemployment claims.

That’s a total of 94,000 jobless residents are waiting for benefits. Including Karrie Suhr, a Cedarburg woman who lost her job at a public pool in June.

“They said everything would probably go through,” Suhr said.

“Processing takes less than two weeks normally. It has now been eight weeks since that message has been posted,” she also said.

While Suhr fought with the state, she found out the ovarian cancer she beat back in 2018 had returned.

“That’s been the difficult part because I had to borrow money from family just to pay my own health insurance to make sure that I was covered for all these cancer treatments,” Suhr said.

When the order to stay at home to slow the spread of the coronavirus came down in March, hundreds of thousands of people lost their jobs, many for the first time.

From March 15 to June 30, 781,000 workers filed initial unemployment applications, 11 times more than the number that filed in that time period last year.

The unemployment system crumbled under the pressure. Emails obtained by the nonprofit news service Wisconsin Watch through an open records request show urgency and concern within the Department of Workforce Development in the early days of the pandemic.

The day after the stay at home order, a DWD spokesperson wrote, “We are getting more and questions and negative comments on Facebook and Twitter.”

Later that day, then DWD Secretary Caleb Frostman wrote, “We are getting inundated with press inquired about long wait times and we can only keep the negative press at bay for so long.” He added, “We have to find a way to get more answers to more people.”

At that time, there were only 90 employees in the department’s call center. From March to July, the I-Team found that the department added more people to answer the phones than to process and adjudicate claims.

DWD staffing records indicate they hired 667 call center workers, compared to 438 adjudicators. Many of the new workers came through no-bid contracts.

The DWD gave two contracts to a company called Nelnet to bring on 300 adjudicators and claims processors.

One contract was for $7.4 million, and the department has paid $2.4 million on the other one so far.

Meanwhile, the DWD spent $14.6 million on call centers between two communications companies.

One of the companies, Alorica, received $12.6 million. Just before the pandemic hit Wisconsin, the company laid off more than 150 workers from a Wisconsin call center, according to mass layoff documents filed with the DWD.

The Legislative Audit Bureau found from March to July, only one in 200 unemployment calls were actually answered. Also, Alorica wasn’t fully staffed until mid-July.

The deputy DWD secretary wrote in response to the audit that after July wait times decreased as call centers came up to full staff.

The I-Team spoke with dozens of people out of work during the pandemic, and they told us even when the phone line opened up, it didn’t mean their problems were solved.

“You would wait 20 to 30 minutes for someone who would literally regurgitate what you could read online,” said Chenon Times-Rainwater.

Times-Rainwater is an administrator of the Facebook group Wisconsin Unemployment Support Group, which has more than 5,000 members looking for answers where the state has not provided them. She waited months to receive PUA benefits back in the spring.

Times-Rainwater said sometimes a person would get lucky and get a helpful answer on the phones. But other times, they were less helpful.

“A client specialist would say, oh, yes, somebody accidentally checked this box, I’ll uncheck it… A couple of weeks would pass and then you’d get you’d open up your portal and you would see that you were back in adjudication for the same reason because that box was now unchecked,” Times-Rainwater said.

The costs of the call center contracts did not include overtime paid to DWD staff, which was more than $1 million, 10 times what the department spent in 2019.

“It tells me that they spent a lot of money for no progress,” Times-Rainwater said.

Frostman was asked to resign by Gov. Tony Evers back in September. He has been replaced by Transition Director Amy Pechacek.

The I-Team and Wisconsin Watch have asked to interview Pechacek about changes to be made in the department in October. The governor’s office told us she would not be made available.

The DWD has not accepted our requests for interviews, which stem back to the first week of October. The Department of Administration, which oversees the DWD, also did not respond to interview requests.

Instead, the DWD and governor’s office have told us they would be willing to answer questions via email, days before this report.

“The people of Wisconsin need accountability, they need our administration and our legislation, our governor to accept responsibility for where we are right now with this, and no one, no one has done that,” Times-Rainwater said.

“This isn’t going away,” Suhr said. “COVID is getting worse and I feel like more and more people are going to probably be applying for unemployment.”

The DWD did not respond to interview requests from the I-TEAM. Instead, they answered some questions via email.

We gave them a deadline of 5 p.m. on Friday, Nov. 13. We received the following response at 5:11 p.m.

We are finding that now that people are getting through on the phones, they are still waiting, some starting brand new adjudications. Why is this happening?

Call center staff are not adjudicators. Those are two different positions. Call center staff help claimants with questions on the claim filing process or the status of their claim. Adjudicators conduct investigations on eligibility issues. Those eligibility issues are raised by claimants, employers, or third parties. If a new eligibility issue arises, that issue needs adjudication. An adjudicator is assigned to an eligibility issue; a claimant is not assigned one adjudicator for the duration of their claim.

Additionally, The newly hired adjudicators have been trained on specific claim types, so a person may have multiple claims. While one claim may be adjudicated, there may be other weekly claims that must still be adjudicated by other specialized adjudicators.

As of July, there were 660 call center employees added compared to 438 additional adjudicators. Why was the emphasis on call centers and not people that could fix disputes on the claims?

The Department was simultaneously working to hire other positions for the division, including adjudicators who require a different skill set and experience level; however, staffing up the call center was an important first step so that claimants were able to ask questions and receive assistance in filing their initial claims. Many of the people who filed this spring were first-time filers so had many questions about the process. Even individuals who had applied before had questions about the new state and federal programs and law changes.

Our total numbers as of 11/11/20:

Total # of Adjudicators as of 11/11/20: approximately 525

Total # of Call Center Staff as of 11/11/20: approximately 681

It’s important to remember that during our peak in April DWD received 5.7 million calls in one week.

Records show the department reached out to five companies in 2019 regarding a potential contract to replace or upgrade the COBOL system. There are no further records after that. Where did those discussions lead and why did it not move forward?

As addressed in its agency budget request https://doa.wi.gov/budget/SBO/2021-23%20445%20DWD%20Budget%20Request.pdf [doa.wi.gov], building an accessible, responsive, and robust UI program is a top priority for the Department. DWD is working with the Governor’s Office to develop an appropriate UI modernization funding strategy throughout the budget process that appropriately recognizes both the urgent need for improvements and the state’s fiscal condition. One of the most glaring lessons learned coming out of the Great Recession—which went unaddressed by previous administrations–was the desperate need to modernize the unemployment insurance base benefits system, yet Wisconsin is still saddled with one of the most antiquated and inflexible systems in the country. Early in 2019, UI briefed DWD leadership on the state of the systems and recent modernization efforts, and we began that work immediately. The Evers Administration recognized that modernization of the UI system must be a top priority, even in the midst of a low unemployment environment. In the Spring of 2019, DWD leadership directed UI to investigate systems in the marketplace to accelerate our modernization efforts. The Department identified subject matter experts to provide input on the potential applications and modernization strategies. Staff participated in a feasibility study with vendor demonstrations, which took place between August and October. After analyzing the options and receiving cost estimates in the tens of millions of dollars, UI and DWD leadership began looking at multi-year funding options and how to engage the Unemployment Insurance Advisory Council and the Legislature on ways to fund these proposals throughout the winter. Unfortunately, COVID-19 hit with full effect before the Department could move forward with any of these options. The outdated systems have delayed the state’s ability to implement new federal UI programs and state and federal law changes, thereby delaying economic relief to Wisconsin residents.

You said Beyond Vision was a certified work center so the department did not need to go out for bid on their contract. Why did the DWD not put the contracts awarded to Alorica and Nelnet out for bid?

DWD sought and was awarded a waiver from Chapter 16 purchasing requirements. However, DWD still followed a competitive process in making its selection. The method of award was defined in Section 11 (see below), with the actual specifications defined in Section 8.

11. METHOD OF AWARD

Award(s) shall be made on the basis of the most responsive bidder with the lowest total cost who meets specifications. Timeliness of implementation and/or transfer may be considered when making this award.

Additional percentage discounts may not be considered when determining award. However, they shall apply to orders issued on this contract.

8. CONTRACT REQUIREMENTS, BIDDER QUALIFICATIONS

See the Statement of Work for all requirements and qualifications.

To be eligible for a contract award, you must be qualified and able to provide all services listed below. Respond on attached “Bidder Response Sheet” Attachment C.

9.1 Bidders must have the technical competence and expertise in management of high-volume, large-scale call center operations. Expertise for this contract is defined as having a minimum of 5-years of high-volume (≥ 1,500,000 calls per week) operational experience, specifically with federal or state aid/benefit programs.

10.1 Bidders must have at least five-years of technical competence and expertise in management of a high-volume data entry operations involving federal or state aids/benefit type programs.

11.1 Bidders must have the organizational ability to flex staffing based on call volumes or claims entry that may continue to increase and/or have a sudden decrease.

12.1 Bidders must supply references of recent (within previous 5 years) agencies or businesses to which similar products/service have been provided for a comparable-sized entity or company. If contacted, all of those references must verify that a high level of satisfaction was provided. Use form DOA-3832, Section 3 to list references.

13.1 Pursuant to WI State Statute 16.705, all services provided under this contract must be performed in the United States. All information must be stored in the United States.

14.1 Contractor must provide DWD Procurement a Certificate of Insurance and maintain the minimum limits specified in the Standard Terms and Conditions Section 23. prior to issuance of a Purchase Order. All policies must be issued with a 30-day cancellation notice, by an insurance provider licensed to do business in the State of Wisconsin, with a minimum AM Best rating of A1, and signed by an authorized agent.

15.1 Bidders must be willing to submit validation that they conduct a criminal background check on all hires, or subcontractors, if contract awarded.

Was Alorica’s recent layoffs in Green Bay considered whey the department decided to bring them on to handle unemployment calls?

No. See above the factors the state could consider in selecting a vendor.

The audit said the department was not tracking the process of the contracted call centers’ abilities to solve problems, despite the contract saying they should. Is that being tracked and can you share that data?

DWD has been tracking the vendors ability to solve problems through the quality measures that are required by the contract. The vendor is required to conduct quality reviews for each agent on a weekly basis. DWD also conducts a quality review on a random sample of calls. The quality reviews are focused on whether proper protocols were followed and if the correct information was provided to the claimant. For last week (week of November 2nd) the quality scores for the UI Benefit Call Center were over 92% for all levels of the call center.

Records show the department spent $1 million in overtime so far this year. How is the department covering those additional overtime costs?

SFY 21 overtime costs for Pay Period #1 through Pay Period #9, total $1,009,531.49. Of this $1,009,531.49 total, overtime costs in the Division of Unemployment Insurance account for $928,738.10. Divisions with the next highest overtime costs are Worker’s Compensation and Operations with $38,743.71 and $32,064.72 respectively.

Unemployment Insurance (UI) administration costs (which include overtime costs) are primarily federally funded. UI’s federal funding for administration costs is in appropriation s. 20.445(1)(n) and in SFY 21 includes the following:

  • Standard federal base grant and above base grant funding for UI Administration (above base grants provide formula funding for caseloads above that included in the base grant)
  • Families First Coronavirus Response Act (FFCRA) Emergency UI Administration Grant Allotments I & II
  • Coronavirus Aid, Relief, and Economic Security (CARES) Act funding provided directly to states’ UI programs for CARES related administrative costs
  • CARES Act funding for states’ pandemic related administrative costs provided to DWD UI through the Department of Administration

UI administrative costs are also supported with the amounts available in appropriation s. 20.445(1)(v); Unemployment Program Integrity; from segregated fund 228.

  • Worker’s Compensation administrative costs are paid using the amounts available in appropriations s. 20.445(1)(ra) and s. 20.445(1)(rp), Workers Compensation operations; from segregated fund 227.
  • Division of Operations administrative costs are paid through the Department’s General Administration rate and made available under appropriation s. 20.445(1)(kc), Administrative services.

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