Kansas could lose federal unemployment funds under bill changing policies, official says

Kansas probably would lose federal money to run the unemployment system if it does away with hiring exams and allows employees to be active in partisan politics, a federal official said in a letter released Monday.

The letter from a federal unemployment official brought Senate Bill 154 to a screeching halt, with legislators giving the Kansas Department of Labor time to regroup and respond.

The changes proposed by the Senate bill would jeopardize Kansas’ access to grants used to run the unemployment compensation system and offices that help displaced workers find jobs, said the letter from Gay M. Gilbert, administrator of the federal Office of Unemployment Insurance.

The amount of those grants was not immediately available, but it is substantial, according to Sen. Julia Lynn, R-Olathe, chairwoman of the Senate Commerce Committee.

Sen. Tom Holland, D-Baldwin City, asked for the federal analysis of the Senate bill.

He released the response letter, without warning, to members of the committee and the state Labor Department during a House-Senate conference meeting late Monday.

He said it shouldn’t have been a big surprise, because the answer he got is the same one he got four years ago, the last time the Legislature tried to pass a similar bill.

Justin McFarland, deputy general counsel at the state Department of Labor, said he doesn’t think the bill would actually make the state ineligible for the federal grants. He said the employees would still be selected on merit and bound by the Hatch Act, a law that prohibits federal employees from partisan politicking at work.

The bill has passed both chambers of the Legislature, and conferees are trying to work out differences between the House and Senate versions.

The main provision of the bill would cap the maximum unemployment benefit a jobless worker can get at the current level, $474 a week, until the average wage of Kansas workers rises by 9 percent.

At present, the maximum benefit is set at 60 percent of the average wage. Under the current version of SB 154, the maximum benefit would be set at $474 or 55 percent of the average wage, whichever is greater.

The maximum unemployment benefit would not rise for a period estimated between one and three years, officials said.

That’s a move strongly supported by the Kansas Chamber of Commerce and other business groups. It’s opposed by labor unions.

But the hangup on the bill involves provisions that would change the way employees of the unemployment department are hired and supervised.

Hiring now is based on a competitive examination administered by the secretary of labor to evaluate workers’ qualifications.

SB 154 would do away with that requirement.

That’s a problem, because federal regulations require that “state law must provide for a merit system … that ensures fair treatment of applicants and employees,” Gilbert’s letter said.

In addition, the federal office has concerns about the state allowing unemployment workers to be active in political campaigns, the letter said.

Current state law says those employees can’t be active in party politics or raise money for candidates for partisan offices.

If that rule is removed from state law, it means “employees would no longer be assured of being protected from coercion for political purposes, and would not be prohibited from using their official authority for the purpose of interfering with or affecting the result of an election or nomination for office,” Gilbert’s letter said.

This story was originally published March 30, 2015 at 9:28 PM with the headline "Kansas could lose federal unemployment funds under bill changing policies, official says."