By Dick Miller
WE.CONNECT.DOTS: A look at the colossal screw-up involving Pennsylvania’s unemployment compensation (UC) program causes wonder. Can government still function to help people?
Like other states already had, Pennsylvania hopes to design an effortless, customer-friendly process. About 60 percent of the unemployed eligible for compensation apply and maintain their claims online.
The problem about eight or nine years ago — and it remains — is a horribly outdated computer system. Even in this age of digital whiz, applicants were (are) denied access to the system, their telephone calls were (are) cut short or they were (are) put on hold for an hour or more.
Between the “were” and “are” time frames, about $170 million in taxpayer money is likely wasted. The problem is still not solved, although some progress has been made.
Apparently, frustrated staffers during the administration of Democratic Gov. Ed Rendell determined the contact problems could be resolved by designing a new computer system to process claims.
Rendell contracted IBM on a fix-price basis for $109.9 million, with an agreed upon completion date of February 2010. No one ever gets fired for hiring IBM.
Republican Gov. Tom Corbett’s administration allowed the contract to lapse in 2013. Experts at Carnegie Mellon University reportedly told Corbett that “frequent personnel churn at IBM came to be a defining feature of the project.” CMU people recommended the state not continue with IBM because of the high risk of failure.
By that time, cost overruns elevated IBM’s take home to nearly $170 million.
A lawsuit the administration of Democrat Tom Wolf filed against IBM this spring alleges those failures.
Corbett succeeded Rendell in the Executive Mansion. Wolf is in the last half of a four-year term after defeating Corbett’s attempt at re-election.
By 2013, however, serious damage had been done in the everyday financing of UC in Pennsylvania.
Corbett’s department of Labor and Industry (L & I) apparently incorrectly reported UC expenses, costing the state millions in Federal unemployment dollars.
The two issues — failed renovation of the state’s computer system and incompetent management of the UC program — may have wasted state taxpayers an estimated half billion dollars or more. The exact loss of Federal dollars has yet to be calculated.
In any case, those funds will be harder to recoup from a Trump administration.
The colossal goof in Corbett’s L & I was not surprising. He offered the cabinet position of Secretary to at least five other prospects before landing Julia Hearthway.
A career prosecutor, she had been one of Corbett’s top deputies during his term as state Attorney-General. Hearthway managed the insurance fraud department for Corbett.
Corbett did not get her confirmed until June 22, 2011. He did not cancel IBM’s contract until after Hearthway had been in office for a year-and-a-half.
Hearthway, however, continued to oversee the underreporting of funds to the Feds until her term expired in January of 2015.
Following that performance, newly seated Democrat Governor Wolf appointed Republican Hearthway to the state Commonwealth Court.
The mess was then passed on to Wolf’s L & I Secretary Kathy Manderino . . . to continue to mismanage.
Auditor-General Gene DePasquale, a Democrat, said so. He declared fault for the shoddy operations was “upper management” in two administrations.
Soon the highly-partisan Republican legislature began to make its imprint.
Led by State Sen. Scott Wagner, R-York, lawmakers decided to stop appropriating funds for unemployment compensation until someone could show them how to get reimbursed from the Feds.
Mandarino’s proposal to fully fund UC without incident almost succeeded. The GOP-controlled House by 175-13 vote last October granted its blessing. At Wagner’s bidding, however, the Senate balked and the effort died in the last session.
Never mind that Pennsylvania is one of only three states where workers contribute to their own UC fund. Wagner hopes to be prevent Wolf from winning a second term in 2018.
Republican legislative leadership tightened the noose on Manderino’s purse strings. A few days before last Christmas the Wolf administration was forced to lay off 500 L&I workers who processed unemployment claims. They also shut three of the seven call centers.
These cutbacks obviously increased processing time for the unemployed.
Wagner bloodied two Democrat constituencies — state employees and fragile workers in the private sector.
Mandarino acknowledged to the press of the pending layoffs in early December. “Where” she made the announcement was unusual.
She informed the media at a reception tossed by a Philadelphia law firm at the annual Pennsylvania Society gala in Midtown Manhattan. Once an exclusive event for rich and powerful Republicans, in later years attendance has been swelled by ambitious Democrats.
To keep his Democrat credentials pure, even Wolf has ignored the PA Society for the past few years.
At one point the Wolf administration appeared to pin blame for the UC underreporting mess on deputy L&I Secretary Kevin Cicak.
Hired by Gov. Corbett, Cicak worked in the UC office since 2012. Mandarino and Wolf elevated him to the deputy’s job in charge of UC in 2015.
They implied he was let go from his $142,377 job at the end of last year, including his departure, as part of the improvement in Wolf’s management of the UC program.
Cicak was not fired, however. Today the former Teamster business agent is still employed in L&I as an arbitrator at about $80,000 annually.
As the Wolf administration works toward a solution to its underreporting problem and overall management of UC, the Republican legislature has loosened purse strings.
UC workers are being called back and the centers re-opened.
The lawsuit against IBM drags on.
Bottom Line: Famed Philadelphia Daily News columnist John Baer says “the egregious errors in running (this episode) violates basic principles of public service.”
Mr. Baer, this is Harrisburg.
