Joint Labor and Industry hearing cancelled amid issues

David Weissman
  • Internal investigation reveals state's unemployment compensation office made funding mistakes.
  • Mistakes reduced state's federal unemployment funding and misled legislators on bill proposal.
  • A state Department of Labor and Industry employee responsible for errors has resigned.

An internal investigation into the state's distressed unemployment compensation system has led to the discovery of new issues that will further delay discussions on bringing back any or all of the state Department of Labor and Industry's furloughed workers.

SEIU Local 668 staff member Christopher Hundley, of Springettsbury Township, rallies with furloughed state employees and other representatives outside of Senator Scott Wagner's office in York City, Monday, Dec. 19, 2016. More than 500 labor department workers were affected by the furlough, due to lack of funding. Dawn J. Sagert photo

The House and Senate Labor and Industry committees were set to hold a joint hearing Monday morning to discuss the unemployment compensation issues, but that meeting was cancelled, according to the state's General Assembly website.

A spokesman for Sen. Kim Ward, who chairs the Senate Labor and Industry Committee, said Gov. Tom Wolf's office requested the cancellation in light of a letter sent on Friday by Randy Albright, secretary of the state Office of the Budget, to state Auditor General Eugene DePasquale.

DePasquale announced more than two weeks ago that his office would complete an audit of the Labor Department's Unemployment Compensation Service and Infrastructure Improvement Fund.

Albright's letter detailed that expenditures associated with that fund were reported incorrectly and resulted in reduced federal unemployment compensation funding. The letter does not state the amount lost due to the error, but Albright added that his office is working with the federal government to recover the funding.

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Albright also wrote that his office's investigation found that the department had requested an additional $15 million added to the fund for modernization costs that included selecting a vendor in January 2017. But an extension was granted to vendors in early October that would have made selecting a vendor in January impossible, the letter states.

"These errors are not acceptable, and the individual responsible has resigned," according to the letter.

The department directed questions regarding the identity of the employee who resigned and the letter to the governor's office.

J.J. Abbott, a spokesman for the governor's office, declined to elaborate beyond the letter and pointed out that the issues were not previously communicated to his office.

Abbott added that, despite the errors, fixing both still wouldn't erase the underlying issues facing the department, which still required more state funding.

The $15 million that was requested by the department was part of a bill introduced last session that would have provided $57.5 million to the department through the SIIF. The bill passed the House, 175-13, but Senate Republicans chose not to vote on the bill.

Sen. Scott Wagner, R-Spring Garden Township, said he led the charge against holding a vote because millions had already been given to the department, and it wasn't being held accountable for where that money was going.

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Jason High, a spokesman for Wagner's office, said Albright's letter proves what Wagner has been saying all along.

"The administration should've done this investigation before asking for more money," High said.

Shortly after the 2015-16 legislative session ended, the department announced it would be forced to furlough more than 500 employees and close three unemployment compensation service centers. Call-wait times have increased drastically, and a backlog of initial claims that need to be reviewed has developed.

Eric Kratz, a spokesman in Ward's office, said the hearing has yet to be rescheduled, but they hope to work with the governor's office to find another time soon.

Senate Minority Leader Sen. Jay Costa, D-Allegheny County, said at a recent rally involving the furloughed workers that fixing the unemployment compensation system was his highest priority, but he couldn't be reached for comment Monday.

— Reach David Weissman at or on Twitter at @DispatchDavid.