Lawmakers question Missouri’s tough stance on unemployment overpayments
Federal guide from Trump Administration says to forgive debts if ‘contrary to equity and good conscience’
Missouri will demand repayment of any unemployment money it paid in error to residents since the COVID-19 pandemic began — regardless of whether the overpayments came from state or federal funds, the director of the Department of Labor and Industrial Relations said Monday.
During a House Budget Committee hearing on the $799 million supplemental spending bill proposed by Gov. Mike Parson, Labor Director Anna Hui defended her department’s decision from criticism by lawmakers that demanding Missourians return the money would create additional hardships for families already struggling to pay bills.
Hui’s statements expanded on remarks by Parson last week in a session with the Missouri Press Association. The labor department estimates that about $96 million was overpaid.
The bill includes authority to collect up to $5 million in overpayments by intercepting tax refunds.
“State statute requires us to collect overpayments,” Hui said. “The fund was established by employers and those are taxpayer dollars.”
State Rep. Peter Merideth, ranking Democratic member of the committee, noted that the federal government has given states the option of waiving repayment of the federal supplements if no fraud was involved.
“You have to come up with a payment plan to pay back the state for something when you did not do anything wrong,” Meredith, D-St. Louis, said. “It just sucks to live in Missouri if you are unemployed this year.”
The supplemental bill covers spending that is needed before the fiscal year ends on June 30. The biggest portion, about $700 million, would cover increased costs in the Medicaid program.
The bill also includes money to hire two attorneys and pay other increased costs as the Administrative Hearing Commission considers more than 850 appeals from companies denied licenses to grow, process and sell medical marijuana.
When the COVID-19 pandemic hit last year, businesses shed hundreds of thousands of workers. In the CARES Act passed in March, Congress included a supplemental payment of $600 per week for everyone eligible for state unemployment benefits.
The CARES Act also included federal benefits for workers normally ineligible for unemployment and extended benefits for people who had trouble finding a new job. When Congress was unable to agree on a new round of support in the summer, President Donald Trump created a $300 per week supplement for people who were receiving at least $100 a week in state benefits.
Much of the money identified as an overpayment is due to mistakes or delays in verifying eligibility, Hui said. Her department put a priority on getting benefits started, not checking every record, Hui said on Monday.
In many cases, the payments were started and later stopped because of an objection from one or more employers. People who leave a job voluntarily or are dismissed for misconduct, for example, are not eligible for benefits.
She noted that about 450,000 people in the state filed for unemployment for the first time in their lives.
So far, she said, the department has found the overpayment rate was about 3.3 percent of the $4.8 billion paid out. In the regular system, which has a maximum weekly payment of $320, the average overpayment was $990, she said.
In the program that provided an extra $600, the average overpayment was $3,370.
Under the federal guidance issued in April 2020, the U.S. Department of Labor gave states the ability to waive repayment of the supplemental benefit.
“The state has authority to waive repayments of FPUC if the payment was without fault on the part of the individual and such repayment would be contrary to equity and good conscience,” the guidance states.
Missouri does not report the debt to credit agencies, Hui said under questioning.
That led one lawmaker to suggest it should be last on the list of family bills.
“I will recommend that people wait until they have the money to repay,” said state Rep. Steve Cupps, R-Shell Knob.
The supplemental request for dealing with medical marijuana appeals is not large, just $49,450, but it represents a down payment on costs that will continue through mid-2022, state Budget Director Dan Haug told the committee.
That is enough to hire two staff attorneys for the final three months of the fiscal year and court reporters to take down testimony, he said.
Merideth said the expense is a waste because it takes money from a fund that supports veterans services. Taxes on medical marijuana and money from license fees that is not used for administration of the program are deposited in the fund.
“It seems like yet again we are spending more of veterans’ money in lawsuits when we could have just given them licenses and let them participate in the economy,” Meredith said.
The controversies over marijuana licensing will be given greater scrutiny by the committee in coming weeks, said House Budget Committee Chairman Cody Smith, R-Carthage.
“We will look into how they have awarded and denied licenses in this industry,” he said.
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