‘They’re never going to trust us again.’ Missouri lawmakers rip clawback of benefits
Cindy Knittig knows she ordinarily wouldn’t qualify for unemployment benefits.
In any normal year as a school bus driver, she would have “reasonable assurance” of returning to work in the fall. But there was nothing normal about 2020. Last spring, the Covid-19 pandemic forced schools in St. Louis County to shift to remote classes.
Knittig, 63, and sole breadwinner for herself and her retired husband, said she was assured by state unemployment workers that she was eligible for benefits when she was furloughed last May. She even received emails from the state’s labor department encouraging those who don’t traditionally qualify to apply.
After receiving three months of checks that helped pay her bills, she got a letter from the state saying she hadn’t been eligible after all, for an unspecified reason. In November, she got a bill for about $2,400. Her co-workers, she said, have received letters demanding repayment of up to $12,000.
“I just want it known that we did nothing wrong,” she said, of herself and other school bus drivers in the same situation. “And now we’re just supposed to start flinging out money.”
Knittig is one of 46,000 Missourians that state labor officials say received about $150 million of unemployment aid in error. The state is determined to get it back.
Gov. Mike Parson’s administration faces mounting condemnation over the repayment demands amid a pandemic that continues to strain the economy. The clawback has turned into a flashpoint between the governor and legislators, who are hearing from angry and fearful constituents.
On Tuesday, multiple St. Louis-area House Democrats filed two bills to stop collection of the erroneous payments and a resolution calling on Parson to forgive the mistakenly paid benefits.
The legislation came after two days of hearings this week where Parson’s top labor official has been grilled over the administration’s decision to pursue the overpayments.
Labor Director Anna Hui was staunch in her intention to re-collect the full $150 million, even though a significant share of that money likely came not from Missouri’s unemployment insurance trust fund, but the federal government.
The federal government last year gave states an additional $600 — and later $300 — a week for workers’ unemployment payments. It also provided funds for special unemployment programs for workers who do not traditionally qualify for the benefits, such as gig workers or the self-employed.
The average amount overpaid to Missourians from the trust fund was $990, while the average overpayment from the federal government was $3,370, Hui said.
The federal government issued guidance that states are not required to claw back any of the federal share of money mistakenly disbursed.
But Hui said Missouri is required by law to collect on the state’s share of overpayments, which it would return to the trust fund, and has the discretion to collect the federal share, which it would send back to Washington.
“If you were not eligible for that underlying state benefit … you would not have gotten the $600 plus-up” from the federal government to begin with, she said.
Both Republican and Democratic representatives chafed at Hui’s stance during a Tuesday hearing by the House Special Committee on Government Oversight.
“What do we get for going after federal money?” said Rep. Raychel Proudie of Ferguson, the committee’s highest-ranking Democrat. “This is a choice. We are going to collect money for nothing.”
“I think we need to figure out a way to let these people keep this money, because ultimately they’re never going to trust us again if we don’t,” said St. Charles Republican Tony Lovasco.
States have distributed unprecedented amounts of unemployment aid during the pandemic, and taken varying approaches when it is misdirected. In October, Colorado said it would write off $1.4 million in overpayments. Nevada has demanded that recipients of overpayments give the money back. And California is grappling with how to handle billions of dollars in possible overpayments.
In Kansas, state Department of Labor Secretary Delia Garcia abruptly resigned last year after the agency took back $7 million in duplicate payments. The action sparked a swift backlash after some unemployed residents had their bank accounts overdrawn.
Hui told legislators there is no provision in Missouri law that allows for waivers of overpayments, and no method
to forgive the federal benefits while still recouping the state’s share.
The new bills direct her not to go after the federal shares that were incorrectly issued, providing the recipient did not commit fraud.
Hui has described overpayment of benefits a normal bureaucratic hiccup, the result of delays in verifying claims after they’ve already been approved for payment.
The mistakes were compounded last year by an unprecedented number of first-time claims, she said, and the system was designed for quick payouts when people are in need.
