Can labor department's old IT system handle increased dependent benefits?

Legislators are trying to provide bigger unemployment checks to Vermonters with dependents. Whether they can do so, though, may hinge on the capacity of the Department of Labor’s aging, troubled computer system.

A proposal from Sen. Kesha Ram, D-Chittenden, in the Senate Committee on Economic Development, Housing and General Affairs would boost unemployment benefits by $50 a week for those who claim one or more dependents. The change would help women and others who parent children and have had to pour their energy into child care amid the pandemic, Ram says.

For reasons that remain partly unclear to experts, Vermont women comprise a staggering proportion of people who have filed for unemployment insurance benefits since the pandemic began.

“The whole country’s calling this a ‘she-cession,’” said Ram, referring to the nationwide unemployment surge that has disproportionately affected women. “We know that Vermont is an intense outlier on that front.”

But the labor department is painting a dire picture of the effects that a dependent-based increase could inflict on the department’s aging IT systems.

“What I’m trying to do is prevent us from being in a situation where the system fails, and we can’t recover it, which would then wipe out our ability to deliver benefits across the board,” Labor Commissioner Michael Harrington told lawmakers Thursday. “That is an extreme risk. It’s one that’s shared by me, the administration and the Agency of Digital Services — that our mainframe is on the verge of collapse.” 

It wouldn’t be the first time the mainframe has failed during the pandemic.

The labor department has relied on the IBM mainframe computer to distribute unemployment benefits since the 1980s. As a deluge of people filed unemployment claims last spring, that system repeatedly froze and crashed — just weeks after Vermont abandoned a $10 million federal project that would have moved the system into the cloud.

The chair of the economic development committee, Sen. Michael Sirotkin, D-Chittenden, pushed back Thursday against Harrington’s assertion that the rickety computer system is a valid reason to withhold the dependent-based benefit. 

“I’ve felt this committee has helped the department in any number of ways throughout this process,” Sirotkin told the commissioner. “I’m not going to say that we’re not going to push forward on these concepts because the machinery is not there.”

Ram’s proposal would align Vermont with at least 10 other states that offer a higher unemployment benefit to people who have dependents. 

The legislation would substantially boost working families whose members have been laid off because of the pandemic, supporters said. 

“Regular unemployment benefits by design only amount to about half of what a person made in weekly wages while employed,” said Kelli Kazmarski, a Vermont Legal Aid staff attorney, in an email to VTDigger. “A dependent benefit would help Vermont families, many of whom live paycheck to paycheck, continue to make ends meet.”

The committee could pass the proposal as part of S.10, a bill that has prompted a debate among business and labor lobbyists — and, at times, members of the committee itself —  over the merits of increasing worker benefits while delaying a tax increase for businesses. 

The bill, first proposed by the labor department, would spread a massive increase in businesses’ unemployment insurance taxes over several years. Now, the increase is scheduled to kick in this July.

Business lobbyists argue the state’s Unemployment Insurance Trust Fund is healthy enough to delay the tax hike and give employers breathing room during the pandemic. Labor lobbyists maintain that, if businesses get state help at this stage of the recession, unemployed workers should, too.

Sirotkin has thrown his legislative weight behind adding unemployment benefits to the bill and on Thursday extended that support to the dependent benefit hike.

“If we can put Rover on Mars … I’m not going to stop this policy from going forward if this committee votes for that policy,” he told Harrington.

Harrington continued to argue his case to the committee. Because the state’s Unemployment Insurance Trust Fund is federally regulated, he told lawmakers, the dependent benefit would have to be added to claimants’ weekly distribution amount. For that to happen, the system would have to be able to track which claimants have dependent children and which don’t.

That would be a challenge for a mainframe that couldn’t even add claimants’ email addresses to their files until last March. Manually mailing the checks isn’t a great option, either, he said.

“No offense, but we saw what happened with the 1099s in January,” Harrington said, referring to a massive data breach that resulted from incorrectly mailed unemployment tax forms. “I’m trying to stay away from doing things manually.”

The argument that a benefits increase could topple the labor department’s computer system raises nearly as much alarm as the possibility that greater benefits aren’t easily possible, Ram said.

“Those are concerning things to say to legislators who have constituents counting on this system to function,” Ram told VTDigger.

Sirotkin said Thursday evening that he still hopes to include the full scope of the benefits — a 20% across-the-board increase, as well as the dependent benefit — in the legislation.

“I'm very hopeful that we can do the full lift for both the employers and those workers who have lost their jobs,” he said in an email to VTDigger. “I am also confident that we can find a solution, working with the administration, to find a reasonable means to get these much-needed benefits and tax cuts implemented.”

The committee’s vote on S.10 is scheduled for Friday, the Legislature’s crossover deadline.