Governor Kemp's proposed Amended Fiscal Year (AFY) 2024 budget included a net increase of nearly $844,000 for the Department of Labor (DOL) and covered $1,000 bonuses for agency employees. While overall DOL spending will decrease by 4% between FY 2024 and FY 2025, the FY 2025 spending proposals call for $443,000 in investments in specific areas, such as increases to cover the DOL's cost of living adjustments -Employees. Additionally, there will be significant reallocations of state resources within the DOL to modernize Georgia's unemployment insurance (UI) system. For fiscal years 2024 and 2025, Governor Kemp is proposing several fiscal adjustments, including migrating UI application files to a digital cloud environment, eliminating UI complaint process backlogs, and addressing customer service challenges.
Through the numbers
Proposed Revised Highlights for Fiscal Year 2024
- $844,000 was added to provide $1,000 bonuses to full-time eligible employees
- $1.95 million was transferred from DOL's Unemployment Insurance Division to migrate DOL files to a digital cloud[1]
- The Georgia Building Authority's spending was increased by $5.5 million to manage the migration of DOL files to a digital cloud
Proposed highlights for fiscal year 2025
- $35,000 was added to provide a 4% cost of living adjustment for all full-time eligible employees
- $1.95 million was transferred from the DOL's Unemployment Insurance Division to address disability claim hearing backlogs and customer service challenges
- $409,000 was transferred to DOL under terminated employment service workstation leases from the Georgia Technical College System; The amount was allocated to address UI complaint hearing backlogs and customer service challenges.
- $50,000 was transferred from the DOL Division Administration to address (as above) UI complaint hearing backlogs and customer service challenges
DOL modernization efforts should prioritize improving access for eligible and legitimate needy workers in Georgia
Modernizing the Georgia Department of Labor's UI system is an ongoing process of adapting agency systems and programs to meet the unmet needs of workers. Balancing the need to detect improper benefit payments with the needs of workers making claims is essential to resourceful and equitable system technology. A $3.1 million federal grant helped Georgia complete a modernization move in 2023 to improve plain language on applications for unemployment benefits.[2] The State of Georgia has proposed modernization spending plans for the Georgia Department of Labor (GA DOL). These plans include migrating the state's unemployment insurance (UI) system to a digital cloud, improving customer service and improving claims processing. However, it is important to ensure that these proposals include protections and equity goals that prioritize workers' needs and rights. Possible goals could be:
- Leverage new technologies to develop benefits programs that provide identity verification and prevent improper payments to gig workers, incorporating community input into strategic planning
- Set bold, forward-looking standards for the percentage of claimants who receive unemployment benefits on the same day they file
- Improve transparency of data related to fraudulent claims classification. This will help government officials and legislators evaluate processes that are prone to fraud or are unclear to applicants
Failure to design Georgia's unemployment insurance system to address the needs of workers suffering from structural inequality, including Black, Brown, and working-class Georgians, could result in legitimate claims being mislabeled as fraud. Among claimants who receive UI overpayments due to honest mistakes, GA DOL liability, whether partial or full, increased from 33.6% in FY 2021 to 39.4% in FY 2023, an increase of nearly 6% .[3] Meanwhile, over the same period, the share of UI overpayments determined to be fraudulent as a percentage of all payments fell from 6.2% in fiscal year 2021 to 3.7% in fiscal year 2023. New technologies should be developed with these data trends and the applicant minded and calibrated to protect those who are more likely to experience problems due to the following issues:
- Sharing an IP address, postal address or bank account with another applicant;
- Have a name that is incorrectly represented in databases OR
- Failure to compile required documentation due to arbitrary or incorrect submissions by the employer.
Through comprehensive modernization, Georgia can create a new path to employment and economic mobility for Black, brown, and working-class people, free from the shadow of a punitive prison system and society.
Impact on the overall budget
A significant portion of Governor Kemp's modernization-related spending proposals relies on eliminating nearly $4 million from DOL programs that are critical to administering UI benefits and collecting revenue for the UI Trust Fund. These tax measures threaten to erode trust fund revenues and create challenges for the agency in processing unemployment claims for laid-off workers seeking unemployment insurance benefits. Georgia has one of the lowest average employer contribution rates in the country, and the contribution rate is often made even more inadequate by the Legislature's routine cuts. Georgia's low employer contribution rate has left a UI trust fund underfunded and at risk of insolvency in a future recession.
While the federal government funds a significant portion of the Department of Labor's administrative functions, state appropriations play a critical role in compensating for fluctuations in federal appropriations. Many states, such as Georgia, rely on additional state revenue sources beyond federal funding or state general fund appropriations.[4] State lawmakers should consider the potential consequences of current tax proposals, including greater unmet needs from laid-off workers, steeper reductions in the public service backlog, and increased public distrust. These are common challenges when balancing maintaining operations and assembling new pieces within a state's UI system. Lawmakers should also consider how our unemployment system can leverage available revenue sources to equitably support modernization efforts and increase UI Trust Fund reserves to address future economic downturns without further restricting access to unemployment benefits.
Endnotes
[1] This transfer of state funds is proposed between two departments within the GA Department of Labor: Unemployment Insurance and Departmental Administration. The appropriation process allows state funds to be transferred between state agencies or between departments within a state agency to align budgets with spending or to reprioritize funding for targeted uses.
[2] US Department of Labor. (2023, August 31). The U.S. Department of Labor is providing $3 million to promote equitable access to unemployment benefits in Georgia. https://www.dol.gov/newsroom/releases/eta/eta20230831-0
[3] GBPI analysis of USDOL payment accuracy data reports. https://www.dol.gov/agencies/eta/unemployment-insurance-payment-accuracy/data
[4] To supplement federal and state general appropriations, Georgia employers provide administrative contributions to support the DOL's administrative needs. The passage of SB 160 in the 2023 Legislative Session restored this funding on January 1, 2024, after expiring on December 31, 2022 under previous law.
