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67–361—PDF 2010

S. HRG. 111–1030 

REDUCING OVERPAYMENTS AND INCREASING 

QUALITY IN THE UNEMPLOYMENT SYSTEM 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

MAY 25, 2010 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

MAX BAUCUS, Montana, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

KENT CONRAD, North Dakota 

JEFF BINGAMAN, New Mexico 

JOHN F. KERRY, Massachusetts 

BLANCHE L. LINCOLN, Arkansas 

RON WYDEN, Oregon 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

CHUCK GRASSLEY, Iowa 

ORRIN G. HATCH, Utah 

OLYMPIA J. SNOWE, Maine 

JON KYL, Arizona 

JIM BUNNING, Kentucky 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

JOHN ENSIGN, Nevada 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

RUSSELL SULLIVAN, Staff Director 

KOLAN DAVIS, Republican Staff Director and Chief Counsel 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Baucus, Hon. Max, a U.S. Senator from Montana, chairman, Committee 

on Finance ............................................................................................................ 1 

Grassley, Hon. Chuck, a U.S. Senator from Iowa ................................................. 3 

WITNESSES 

Oates, Jane, M.Ed., Assistant Secretary for Employment and Training, Department of Labor, Washington, DC .................................................................. 4 

Gassman, Roberta, M.S.S.W., Secretary, Wisconsin Department of Workforce 

Development, Madison, WI ................................................................................. 6 

Cullen, Mike, managing director, On Point Technology, Colorado Springs, 

CO .......................................................................................................................... 8 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Baucus, Hon. Max: 

Opening statement ........................................................................................... 1 

Prepared statement .......................................................................................... 23 

Statement of Daniel I. Werfel, Controller, Office of Management and 

Budget ............................................................................................................ 26 

Cullen, Mike: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 33 

Gassman, Roberta, M.S.S.W.: 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 37 

Grassley, Hon. Chuck: 

Opening statement ........................................................................................... 3 

Prepared statement .......................................................................................... 45 

Oates, Jane, M.Ed.: 

Testimony .......................................................................................................... 4 

Prepared statement .......................................................................................... 46 

(III) 

(1) 

REDUCING OVERPAYMENTS AND INCREASING 

QUALITY IN THE UNEMPLOYMENT SYSTEM 

TUESDAY, MAY 25, 2010 

U.S. SENATE, COMMITTEE ON FINANCE, Washington, DC. 

The hearing was convened, pursuant to notice, at 10:08 a.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Max Baucus 

(chairman of the committee) presiding. 

Present: Senators Grassley and Bunning. 

Also present: Democratic Staff: Bill Dauster, Deputy Staff Director and General Counsel; Diedra Henry-Spires, Professional Staff; 

John Angell, Senior Advisor; Christopher Law, Investigator; and 

Randy Aussenberg, Detailee. Republican Staff: Steve Robinson, 

Chief Social Security Advisor. 

OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR 

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The committee will come to order. 

Duke Ellington said, ‘‘A problem is a chance for you to do your 

best.’’ 

Inaccurate payments are a problem for the Nation’s safety net 

programs. This problem gives us a chance to do our best and to correct the overpayments. We have a chance to redouble our efforts 

to make government work more efficiently. 

Making the government work more efficiently is the smartest 

and fairest way to reduce the budget deficit. Increasing efficiency 

does not cut benefits for people who need them, and increasing efficiency does not raise taxes on anyone. 

We can increase efficiency by targeting benefits to the people 

who really need them, and we can increase efficiency by making 

sure that the taxes that are already owed are, in fact, paid. 

We have already made some progress this year. The new health 

care reform law did much to curb fraud, waste, and abuse in health 

programs. As part of health care reform, Congress enacted almost 

two dozen new tools to fight fraud. 

The new law requires that all providers and suppliers are 

screened before they get billing privileges for Medicare or Medicaid. 

The new law suspends payments to providers who are under investigation for fraud. 

The new law expands the Recovery Audit Contractor program. 

The program has been a success in traditional Medicare. The new 

law expands it to Medicaid, Medicare Advantage, and the Medicare 

drug benefit. And the new law expands the health care fraud and 

2 

abuse control program. This program funds Federal offices that 

combat fraud on a daily basis. 

Several Senators on the committee helped to sharpen our focus 

on health care reform. I drafted most of the fraud provisions in the 

Senate-passed health care bill together with my very good friend, 

Chuck Grassley. Senator Grassley has long fought zealously 

against waste, fraud, and abuse. 

Senators Carper and Cornyn have also helped to lead the attack 

on health care fraud and inefficiency. 

Following our efforts to reduce fraud and inefficiency in health 

care, the Finance Committee turns next to increasing efficiency in 

the unemployment insurance program, the Social Security Administration, and the Internal Revenue Service. 

Today we focus on the unemployment insurance program. Unemployment insurance is a lifeline for more than 5 million Americans. 

When workers are laid off through no fault of their own, unemployment insurance is a bridge to their next job. 

Unemployment insurance helps people put food on the table, 

keep a roof overhead, and put gas in the tank while they search 

for work. 

The unemployment insurance program also helps the economy. It 

helps to dampen swings in economic activity. In a recession, unemployment insurance spending rises. This additional spending provides a boost to a sagging economy. 

Households receiving unemployment benefits spend them right 

away. That spurs demands for goods and services. It boosts production, and that leads businesses to hire more workers. 

With the Great Recession, in just over a year, claims for unemployment insurance benefits have doubled. Outlays for the program 

are now 4 times what they were in 2007, and people are receiving 

benefits longer. On average, unemployed workers are receiving unemployment insurance benefits 4 weeks longer than they did in 

2007. 

Because the program is now more important than ever, we must 

ensure that it is run as efficiently as possible. With the flood of unemployment claims have come instances of fraud, error, and inefficiency. This leads to overpayments of benefits. 

The Department of Labor estimates that last year, overpayments 

in the unemployment insurance program totaled $11.5 billion. 

The leading cause of overpayments is claimants who have returned to work, but continue to claim benefits. The second-largest 

cause of overpayments is errors in verifying that unemployed workers are, in fact, eligible for unemployment insurance benefits. 

The third-largest cause is workers who continue to receive benefits, despite not fulfilling the program’s requirements. This could 

include conducting an active work search or registering with the 

State employment service. 

Plainly, we need to improve the unemployment insurance program. We need to trim the fraud and error in the system. We must 

assure that benefits are targeted to those who deserve them. 

Last week, the Obama administration announced a proposal to 

address these issues. The proposal seeks to rein in overpayments 

by making the unemployment insurance program more efficient. 

Today, we will walk through that proposal. 

3 

Under the proposal, States could use a portion of the money that 

they recover from overpayments to strengthen their program integrity activities. States would also be required to impose financial 

penalties on people who defraud the program. 

Under the proposal, employers would be required to report the 

start dates of new employees. That will help to identify beneficiaries who have returned to work in a different State, but continue to receive unemployment benefits. 

The administration’s proposal is just one solution. States and private industry have also devised systems that reduce overpayments. 

They also have ideas on how to streamline unemployment insurance. 

I look forward to learning more about these proposals today. 

So let us recognize the problem that we have. Let us grab the 

chance to do our best. And let us redouble our efforts to make this 

work more efficiently. 

Senator Grassley? 

OPENING STATEMENT OF HON. CHUCK GRASSLEY, 

A U.S. SENATOR FROM IOWA 

Senator GRASSLEY. Thank you, Mr. Chairman. 

I think people know that our Nation’s unemployment insurance, 

on a regular basis, is designed to automatically respond to the ups 

and downs in our economy. 

As the unemployment rates have risen across the Nation in the 

past 2 years, unemployment benefits have increased accordingly. 

Congress has magnified that automatic response by providing additional benefits beyond those normally available. 

The sum of this assistance is substantial. Total unemployment benefits are projected to be $157 billion this year, and that would 

be up from $43 billion just 2 years ago. 

Unfortunately, with increased benefits come increased opportunities for honest mistakes and outright fraud. The Improper Payments Information Act of 2002 requires Federal agencies to identify 

improper payments. 

According to the latest estimate from the Department of Labor, 

10 percent of the regular State unemployment benefits were paid 

in error in fiscal year 2009. That represents more than $7 billion 

in improper payments. 

The most common improper payment is due to individuals working and collecting unemployment benefits simultaneously. While 

such activity is generally legal, workers must accurately report 

their earnings, and their benefits are subject to offset. 

Other reasons for improper payment include work separation 

issues, refusal to accept suitable work, alien status, identity theft, 

and failure to register or comply with State requirements. 

The purpose of today’s hearing is to examine these errors and 

identify ways to reduce and eliminate them. Hopefully, we can improve the unemployment program at the same time that we save 

taxpayers money. 

Mr. Chairman, I was trying to recall when I’ve dealt with unemployment compensation in my lifetime. I suppose I have been unemployed 5 times, a couple times by my own desire to improve myself; twice when I was a part-time worker at a factory. I was not 

4 

eligible for unemployment compensation. And then once, when a 

factory shut down, I was eligible for unemployment benefits and 

did collect. 

It is not a very ideal place to be. People want to work, and we 

want to make sure that our unemployment compensation laws do 

not discourage people from working. 

The CHAIRMAN. Thank you, Senator. And I appreciate you sharing your personal experience. Thank you. 

Well, I would like to turn to our witnesses. First, we will hear 

from Jane Oates, Assistant Secretary for Employment and Training at the Department of Labor. 

Ms. Oates, it is a pleasure to welcome you back. I was saddened 

not to see Jerry Hildebrand sitting behind you. His passing is a 

great loss. He provided tremendous advice and information honestly and accurately to all of us who asked; he was a tremendous 

public servant. We wanted you to know personally, and his family 

to know that we are thinking of him and very saddened that he 

is no longer with us. 

Ms. OATES. We cannot thank you enough for that. My career 

spans from the 1970s. A loss of that magnitude is just hard to get 

over. 

The whole career staff is remarkable, but Jerry was the highwater mark. He is sorely missed every day, particularly by me 

when we were prepping for this hearing. 

The CHAIRMAN. Well, he was a tremendous man. 

Ms. OATES. Thank you so much, Senator. And we will make sure 

his wife and daughter get your—— 

The CHAIRMAN. We just want you to know how much he meant 

to all of us. 

Ms. OATES. Thank you very much. 

The CHAIRMAN. You are very welcome. 

Our next witness is Ms. Gassman. Roberta Gassman is the Secretary of the Wisconsin Department of Workforce Development. 

Welcome, Ms. Gassman. 

Third, we will hear from Mike Cullen, managing director of On 

Point Technology in Colorado Springs, CO. 

So, Ms. Oates, why don’t you begin? 

As a reminder to all of you, your formal statements will be automatically included in the record, and I would ask each of you to 

speak about 5 minutes. 

STATEMENT OF JANE OATES, M.Ed., ASSISTANT SECRETARY 

FOR EMPLOYMENT AND TRAINING, DEPARTMENT OF 

LABOR, WASHINGTON, DC 

Ms. OATES. Thank you, Senator, for this opportunity. Ranking 

Member, Senator Grassley, and Senator Bunning, thanks so much 

for this opportunity. 

Obviously, reducing improper payments in the UI program is a 

top priority for the Department of Labor. 

I am pleased to report that the UI program does have a longstanding commitment to this financial integrity aspect of the UI 

program. We employ highly sophisticated sampling and audit 

methods; tools to prevent, detect, and recover improper benefit payments; and we use audits and other forensic processes to ensure 

5 

employers are not inappropriately avoiding taxation through worker misclassification or other means. 

To give you a sense of the level of improper payments in the UI 

program, preliminary numbers for last year, which are still being 

validated, show the annual UI overpayment rate is 8.9 percent. We 

are optimistic that that is going to continue, and it will be a reduction from the previous year. 

From our root cause analysis, we know that about half of those 

overpayments, 4.8 percent overall, is controllable. Less than 25 percent of the UI overpayments, in our estimation, are due to fraud, 

which represents only about 2 percent of all UI benefits paid. 

The two biggest reasons for improper payments, and Senator 

Grassley brought these up, as did you, Mr. Chairman, are individuals continuing to claim benefits after they have returned to work, 

and having insufficient information from the prior employers on 

the reasons individuals became unemployed. 

While the UI program has a robust integrity effort, it cannot rest 

on its laurels. We fully recognize the need to continue to improve 

our performance and to meet the expectations the President has expressed in his executive order on improper payments. 

The President’s fiscal year 2011 budget contains two key initiatives focused on integrity: funding to support worker misclassification and the legislative proposal designed to enhance UI integrity across the board. 

We are extremely pleased that the Unemployment Compensation 

Program Integrity Act of 2010 or, as we call it, the Integrity Act, 

was sent to you, and thank you for mentioning that, earlier this 

month. 

Here are some of its key provisions. It provides new dedicated resources by permitting States to use up to 5 percent of recovered 

overpayments and delinquent contributions for State integrity activities, ensuring that integrity activities are a priority. 

It requires a penalty of at least 15 percent on outstanding fraudulent benefit overpayments, similar to the penalty employers face 

for delinquent tax payments. States may use these funds for integrity activities or for the payment of benefits. 

Most States have these provisions in their State laws but allow 

the funds to be used for other purposes, frequently purposes that 

are not related to UI at all. 

Thirdly, it requires that employers’ accounts be charged if an 

overpayment is the employer’s fault due to failure to respond in a 

timely or adequate way to the State’s request for information. 

Fourth, it expands the ability to offset Federal income tax refunds under the Treasury offset program, which is now limited to 

cases of fraud, to permit recovery of overpayments that are the individual’s fault, continuing to claim benefits after returning to 

work. 

Lastly, it improves the usefulness of the national directory of 

new hires for overpayment detection by requiring employers to report the date the individual starts work, the first day of earnings. 

This is one additional data element, and it will vastly improve the 

ability of States to more readily identify overpayments. And we 

hope it will reduce the workload for States that now must independently verify all the start-date data. 

6 

We believe the Integrity Act provides a balanced approach with 

a huge benefit. Not only will UI integrity improve, it will save 

money. Estimated PAYGO savings are $734 million over 5 years 

and $1.6 billion over 10. 

Though not reflected in these estimates, the Integrity Act would 

also produce budgetary savings in the form of further reductions in 

improper UI payments and increased State unemployment tax collections. 

Before closing, I would like to mention several other integrity activities we are working on with the States. The Department is 

working with a group of States to pilot the State Information Data 

Exchange System. SIDES, as we call it, is designed to help employers provide required information to States more quickly by providing a secure, electronic data exchange between States and employers. 

We are working with the Department of the Treasury to aggressively implement the use of the Federal offset program for UI 

debts, which will position States to easily implement the expanded 

provisions of the Integrity Act, if passed. 

In addition, States have been provided software and implementation funds to improve their ability to detect employers who pay less 

than their fair share by dumping some of their State unemployment tax liability, commonly referred to as SUTA dumping. 

Finally, with Congress’s support, we continue to provide States 

with additional dedicated resources to improve UI integrity. We 

provided $3.5 million to States in fiscal year 2009 and will award 

an additional $10 million this year. 

In conclusion, I look forward to working with this committee as 

you consider ways to enhance Federal and State efforts to reduce 

improper payments. And I will be glad to take your questions. 

Thank you very much, Senator. 

[The prepared statement of Ms. Oates appears in the appendix.] 

The CHAIRMAN. Thank you, Ms. Oates, very much. I appreciate 

that. 

Ms. Gassman? 

STATEMENT OF ROBERTA GASSMAN, M.S.S.W., SECRETARY, 

WISCONSIN DEPARTMENT OF WORKFORCE DEVELOPMENT, 

MADISON, WI 

Ms. GASSMAN. Thank you, Chairman Baucus, Ranking Member 

Grassley, and Senator Bunning. I am Roberta Gassman, and I 

serve as the Secretary of the Wisconsin Department of Workforce 

Development. 

I have been honored to work with Governor Jim Doyle since he 

took office in 2003. 

A special thank you to your committee for all you are doing for 

our country during these very challenging times. 

We in Wisconsin have a very proud tradition of protecting workers, to keep our families and our State strong. Wisconsin was the 

first State to create an unemployment insurance program right in 

the depth of the 1930s. 

Today, our Nation finds itself emerging from the worst economic 

downturn since that Great Depression. Unemployment insurance, 

7 

including extensions passed by Congress and President Obama, 

have been a lifeline for unemployed workers. 

The challenge for States today is to meet the needs of the unemployed while getting checks to those eligible quickly and efficiently. 

We must also be vigilant about program integrity and protecting 

employer and public dollars. 

Reducing overpayments, whether inadvertent or intentional, is 

critical. This helps claimants, because for them, paying back unintentional overpayments can be a very tough financial burden. 

It helps employers by protecting them from inappropriate 

charges. It also reduces the overall expenditures of Federal funds 

for extended benefits. This is because States really are the collection agencies for overpayments of federally funded extension benefits. 

In Wisconsin, we have taken many steps to reduce overpayments, and we have almost doubled the amount of recovered overpayments since 2007. We have significantly increased our staff 

dedicated to detection, investigation, and collection of overpayments and tax delinquencies. 

We use a variety of methods to detect the accuracy of UI payments and collect overpayments. These include interagency and 

Federal cross-match data exchanges, tips from the public, claimant 

interviews, self-reporting, liens on private property, and an automated tax intercept system that facilitates recovering overpayments from State income tax refunds. 

Today, States are also increasing our emphasis on preventing 

overpayments. Wisconsin leads, and the Assistant Secretary mentioned this, a multistate effort called SIDES, the State Information 

Data Exchange System. SIDES is web-based, and it helps States 

collect information from large multistate employers to increase 

timeliness and accuracy. This will also go a long way toward preventing overpayments. 

Colorado, Georgia, New Jersey, Ohio, and Utah are participating 

with us in SIDES, and 14 other States are joining us, including a 

number represented on this committee: Iowa, Oregon, Texas, Arizona, Kansas, New York, and Michigan. 

Also, Governor Doyle has just signed legislation that expands our 

capability to enforce our States’ laws related to proper classification 

of employees. We support the President’s proposal to provide Federal tools to reduce misclassification of workers as independent 

contractors. 

The steps that States have taken to reduce overpayments and 

promote program integrity have been very important. Additional 

steps at the Federal level would help. 

We strongly endorse the new program integrity legislation proposed by the administration, as it would reduce erroneous payments and increase collections. 

Looking forward, States are poised for job growth as we emerge 

from this profound national recession. Just last week, we learned, 

in Wisconsin, that we gained more jobs this past April than in any 

other month over the last 14 years. 

Despite that progress, many Americans remain out of work and 

on UI. That is why we are working hard every day to meet our customer needs. 

8 

We appreciate that UI is a Federal-State partnership. It could 

not be more important than now. We look forward to working with 

you to keep America strong. 

Thank you, again, so much for inviting me, and I look forward 

to answering any questions you may have. 

[The prepared statement of Ms. Gassman appears in the appendix.] 

The CHAIRMAN. Thank you, Ms. Gassman. 

It is interesting to me over and over again how Wisconsin seems 

to be a State that is a little bit ahead of the game. 

Ms. GASSMAN. Well, we are very proud of our history and our 

traditions, and we are working hard to keep them going. 

The CHAIRMAN. We certainly need more new ideas, and, again, 

Wisconsin leads the way in many areas. 

Ms. GASSMAN. Thank you so much. 

The CHAIRMAN. Thank you very much. 

Mr. Cullen? 

STATEMENT OF MIKE CULLEN, MANAGING DIRECTOR, 

ON POINT TECHNOLOGY, COLORADO SPRINGS, CO 

Mr. CULLEN. Thank you, Chairman Baucus, Ranking Member 

Grassley, Senator Bunning. Thank you for the opportunity to testify this morning. 

I am Mike Cullen, managing director at On Point Technology. On 

Point Technology’s entire focus is unemployment insurance, and, as 

a company, we take pride in our employees’ experience and expertise in this area. 

Prior to joining On Point, I spent 14 years with the Colorado Department of Labor and Employment, serving the last 6 years as the 

unemployment insurance program director for Colorado. 

For over 20 years, On Point solutions have enabled 15 States to 

find and collect improperly paid benefits and helped them return 

hundreds of millions of dollars to their State trust funds. 

The unemployment insurance system faces its greatest set of 

challenges in a generation. The recession’s impact on State and 

Federal UI trust funds is clear and it is stark. To date, 35 State 

trust funds have been forced to borrow a combined $38 billion, and 

many of these programs still face insolvency. 

This problem is not exclusive to the States. Due to extended demand, Federal UI accounts have had to borrow an additional $37 

billion from the United States Treasury to support the numerous 

Federal unemployment insurance programs. 

To ensure the solvency of UI funds, States are being forced to 

take drastic action. In 2010, employers in 24 States saw UI tax increases. In Florida, payroll taxes jumped from $8.40 per employee 

to $100 per employee, a huge increase for any small business looking to hire new staff. If the trend continues, tens of thousands of 

employers in 28 States will face tax increases in 2011. 

The improper payment of benefits has exacerbated the challenges 

State UI programs face. In 2010, the United States Department of 

Labor determined this overpayment rate to be 9.6 percent. 

From December 2007 through today, more than $230 billion in 

unemployment benefits have been paid, over $22 billion of which 

was paid improperly. Moreover, the administration projects an adVerDate Nov 24 2008 14:18 Aug 01, 2011 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 R:\DOCS\67361.000 TIMD
9 

ditional $453 billion of UI paid over the next 5 years. Unless immediate action is taken, $44 billion of that will be paid improperly. 

Since 1992, Federal administrative funding for the UI program 

has remained static. State agencies have been required to cut service levels or compete for other State dollars to administer their programs. 

As a result, today UI automated support systems in those States, 

at an average, are 24 years old. With an investment in technology, 

we can both improve States’ capacity to process benefits, while dramatically enhancing the integrity of these payments. 

I have seen States work feverishly hard only to tread water or 

drown in unemployment insurance paperwork. These problems are 

avoidable through an automation of processes, the same type of 

modernization in which the private sector has invested for decades. 

Currently, most States have some automated processes to detect 

overpayments, such as the national directory of new hires, but the 

primary tool remains the 35-year-old cross-match system that is 

highly inefficient. 

After the detection of the overpayment, the processing typically 

leads to a classical paper jam. Adapting existing technology to 

eliminate paper processing can dramatically increase productivity. 

States should store information in a web-accessible system to enable automated reports, letters, and interfaces, thereby ensuring 

consistency, enhancing efficiency, and increasing productivity. 

Many States adjudicate every overpayment manually based on 

State statutes and UI case law. We have worked with State adjudication experts to translate State law and precedence into business rules in order to issue automated determinations. Using these 

techniques, States can see 70 percent of overpayment decisions 

simplified and automated. 

Organized fraud exists. In June 2005, the U.S. Department of 

Labor’s Office of the Inspector General testified before Congress 

about a single organized fraud ring that stole 15,000 identities and 

committed $58 million of unemployment insurance fraud. 

This type of illegal activity can be detected by employing automated software to search disparate databases for known patterns 

of fraud. Moreover, the use of updateable audits of known fraudulent patterns enables information-sharing between States, drastically reducing the spread of some of these schemes. 

We believe there are several ways that Congress can invest a 

comparably small amount, yet yield substantial results to both the 

U.S. Treasury and State UI trust funds. 

Congress should provide dedicated administrative funding for 

software to support effective integrity activities with each UI extension and through the annual appropriations process. Purposing 10 

percent of the administrative funds for integrity technology to protect dollars from fraud and abuse could return significant multiples 

on that investment in the first year of implementation alone. 

Based on our experience, investments in software for State integrity programs can easily return $10 each year for each dollar spent 

in the first year. 

Along with the Department of Labor and States, we support the 

idea of adding the first day of work to the National Directory of 

New Hires. This would help State agencies reduce the span and 

10 

scope of the investigative cycle and make the NDNH an even more 

effective tool for identifying overpayments. 

In concert with the Department of Labor and States, we encourage Congress to consider a long-term legislative solution to the unemployment insurance integrity problem. In this context, we believe the proposed Unemployment Compensation Integrity Act is a 

much-needed first step towards a thoughtful legislative resolution. 

Our unemployment insurance system is a vital lifeline for millions of Americans, and we must act to preserve the integrity of 

this system to ensure its continued viability for those in need. 

Fortunately, we can strengthen the UI trust fund to help ease 

the tax burdens employers are now facing. A modest investment in 

integrity technology will yield significant savings for the government, our employers, and our taxpayers. 

Thank you for the opportunity to testify. I am available for any 

questions that you might have. 

The CHAIRMAN. Thank you, Mr. Cullen. 

[The prepared statement of Mr. Cullen appears in the appendix.] 

The CHAIRMAN. I would like to begin with you, Ms. Oates. Just 

explain what in the current law is the major impediment to either 

the Department or States being more efficient in detecting overpayments and collecting overpayments? 

Ms. OATES. I think you have heard all three, and it is pretty universal. If we could get that first date of hire mandated, that would 

drastically help all of us get at what we think is the most common 

cause, which is poor education in terms of people. 

I think law-abiding citizens make the mistake of collecting their 

unemployment until they get their first paycheck, not stopping the 

collection the first day of work. 

So that would be the single biggest help to us, I think, in getting 

things done. There are so many other things. Getting some continuity across the board so that States understand how each other 

works; SIDES. When Roberta talked about the SIDES process, not 

only has the process been great, but the ability of States to talk 

to each other—and I think you can see that with eight other States 

joining into the process this year. 

The CHAIRMAN. On the first date of a new hire, what would happen? What would be the thought here? What would be required? 

Ms. OATES. Well, the data that is included in our current data 

collection. So it is not collected like that right now in the database 

of new hires. So it would be the date of first hire. 

The CHAIRMAN. So what would the data be? 

Ms. OATES. The first day you go to work. See, Senator, think, 

when I started at the assistant secretary, my first day of work was 

2 weeks prior to my first paycheck. 

So, literally, now, somebody in my position could have thought, 

‘‘Oh, I think I can still collect. I am unemployed, and I think I can 

still collect until I get my next check.’’ It is not that illogical. It 

does happen to be illegal. 

So, therefore, I think if we—and I think people in Montana, just 

like people in Virginia, where I live, people make that mistake, because they do not think they are double-dipping. They did not get 

a check from their employer yet. 

11 

So I think if we make that clear and we make it very easy for 

States to check that data, we would be able to cut improper payments immediately. 

The CHAIRMAN. What is it about the SIDES system that makes 

it successful at reducing improper payments? 

Ms. GASSMAN. I am glad to speak, Senator, to the power of that, 

and I would be interested to hear from the Assistant Secretary as 

well. 

Right now, the process is a paper process. From the time when 

someone files, the issues and information are passed via letters. If 

we would have the SIDES system in place, which would be webbased, the information would move in a much more timely way, 

and it would be much more accurate. 

So there is great power in us being able to have the data. It is 

online. It moves electronically. It moves between us and employers, 

and it moves across States and we can check the validity of it. 

So the timeliness and the accuracy are key. One State, Utah, 

which is actually represented on this committee, has been the first 

to actually come online and get the system set up in terms of having the IT, the technology capacity. 

We, in Wisconsin, and the other States have not yet gone online 

with the new system. We will be. We are getting ready to do that 

shortly. 

The workload of all of us during the Great Recession and the IT 

demands on our agencies to meet the responsibilities of the extensions, which we have been glad to meet, have led us to not yet have 

the capacity to get all the IT improvements in. 

But SIDES, this interstate information system, will allow us to 

move much more quickly and efficiently and will eliminate many 

inaccuracies. 

The CHAIRMAN. Was there some provider that set this up? Are 

there any interoperability problems with implemeting the system? 

Is it one system? Is it one software? What exactly is SIDES? Is it 

a collection? 

Ms. GASSMAN. I will answer briefly and then maybe Mr. 

Cullen—— 

The CHAIRMAN. Mr. Cullen? 

Ms. GASSMAN. I will just say that there are—Utah has used a 

provider and they have a small program that is set up at this point 

with one provider. So there are different approaches, then, for getting this set up in more States. 

The CHAIRMAN. Mr. Cullen? 

Mr. CULLEN. Thank you, Mr. Chairman. 

I was in Colorado when Colorado did their work on SIDES. 

SIDES was funded by the U.S. Department of Labor through a 

grant process. There were six initial States. 

Yes, the Information Technology Support Center, on behalf of the 

Department of Labor, put together the core of the SIDES project, 

and then each individual State had a State grant which allowed 

them to take their back-end systems and essentially make modifications necessary to hook it to SIDES. 

From a private employer’s perspective, they did work on their 

end in order to hook into this central hub of SIDES. So that exchange passes through an item that was built on behalf of—— 

12 

The CHAIRMAN. My time has expired. But I would just like to ask 

each of the three of you. The estimate I have seen of overpayments 

is roughly $11 billion. I do not know if that is accurate or not. 

Can you provide, with the help of this Act, the resources that you 

are requesting and maybe with SIDES, a very rough estimate as 

to how much you could reduce that $11 billion in overpayments, by 

how many billion dollars? 

Very quickly, because my time is up. Your best guess. 

Ms. OATES. I would say we could reduce it by 25 percent in the 

first 2 years of implementation. 

The CHAIRMAN. Ms. Gassman? 

Ms. GASSMAN. I would want to check with staff as to the actual 

percent. So I would be glad to get back to the committee on that. 

We know it would be helpful. 

The CHAIRMAN. Mr. Cullen? 

Mr. CULLEN. I think it is going to reduce it perhaps $1 billion, 

but I also think that the money that is provided to the States can 

increase that based on how they use it. 

The CHAIRMAN. By a greater amount. Thank you. 

Senator Grassley? 

Senator GRASSLEY. For Ms. Oates and Ms. Gassman, your testimony seems to suggest the single-biggest cause of overpayment is 

due to individuals working and collecting unemployment benefits 

at the same time. But there seems to be some discrepancy about 

how much of a problem it really is. 

Ms. Oates, your testimony was 30 percent. Ms. Gassman said 

about 50 percent. Would you both elaborate on your numbers? 

Ms. OATES. We are getting our numbers nationally. Roberta’s 

numbers might be specific to Wisconsin; I do not know. But those 

are our best national estimates, again, using our modeling and 

sampling technology that we use for other things, Senator. 

Ms. GASSMAN. I am glad to say, Senator—and that is an excellent question—that is our biggest category, when people are working and earning money, but also collecting benefits. 

Now, some of that involves—some overpayments involve fraud 

and some do not, and I will speak to that briefly. There might be 

a situation where an overpayment has been made, because someone first filed for unemployment, and the employer challenged the 

claim. 

In our process, we found, even though the employer challenged, 

based on the facts, through our adjudication of the case, we found 

that the employee was eligible. The employer then appeals and 

upon going up to appeal with one of our administrative law judges, 

while we have been paying benefits, we or the ALJ, the administrative law judge, finds that, no, the employer is correct, benefits 

should not have been paid. 

That is an overpayment. So that is one kind of overpayment, and 

it counts as an overpayment. We then go back and communicate 

that we must collect the dollars that have been paid. It counts as 

an overpayment. It is not fraudulent, but there was an overpayment. 

There are times when someone gets benefits, then gets a job. We 

give people a grace period of about one time or up to $1,000 if we 

see that they have been on benefits, there has not been an appeal, 

13 

and we see that not only have they been on benefits, but they have 

been working. We determine that by doing our cross-checking. 

We communicate with them. We send them a letter. We tell 

them, ‘‘You cannot be employed and earning money and get benefits at the same time,’’ and we go after them, we pursue them, we 

get that money back. We put that into collections, and we get the 

money back. 

If it happens a second time and there is a pattern, that counts 

for us in the fraud category, not the overpayment non-fraud category. That is overpayment and fraud. We can assess penalties or 

fines for that, and, depending on how many weeks that would go 

on and how serious it would get, our actions would also move up 

in steps. 

But to your question, yes, most overpayments are happening 

when people are working and getting benefits. Sometimes it happens through fraud, as we perceive it, and sometimes not. 

Senator GRASSLEY. A question for Ms. Oates. In 2004, Congress 

authorized the State workforce agencies to use a national directory 

for new hires, and this was to identify improper payments. 

The national directory includes new hire information from every 

State, as well as Federal and military new hires, new hires from 

multistate employers that report to a single State. 

According to the Department of Labor 2009 performance accountability report, as of July 1, 2009, most States were using either the 

national directory or a State directory, and four States were using 

neither. 

Could you please tell us how many States and territories, DC, 

Puerto Rico, Virgin Islands, are currently using the national directory of new hires to verify all these beneficiaries, and when do you 

expect 100-percent participation? 

Ms. OATES. Senator, I just looked back to my staff. I do not have 

that answer for you, but I will get it for you by the close of today. 

I know we are working with—so I will not wait for the answer— 

with the chair’s permission, I will not. Since that is a question that 

was asked orally that I do not have the information for, I would 

like to, through the chair and ranking member, get that answer to 

Senator Grassley, if I may, by the close of business today. 

Senator GRASSLEY. Then, also, when would you expect 100- 

percent participation? 

Ms. OATES. Well, I think, Senator, we are trying a number of different efforts—we talked about SIDES at great length—to get 

States to work with each other, as well as working with us. 

We are, in all of our discussions with the National Association 

of State Workforce Agencies (NASWA), encouraging that. It might 

be something that, as we have discussions with you on the Integrity Act, we want to mandate. 

Right now, we cajole, we suggest, we strongly recommend, but we 

do not mandate the use of the directory. 

Ms. GASSMAN. Senator, I will just share with you that we in Wisconsin do use the national directory. We use as many tools as we 

can. My written testimony lists all of them, and I mentioned some 

of them today. 

I will also say that for us, in our State, the tool that provides 

very valuable information for us is, as employers give us their 

14 

quarterly reports of who is working for them, we can match then 

who is working, what have they earned, and we can cross-match 

that with people who are filing for benefits and telling us that they 

are not working, and then we can check the information that way, 

and our detection staff work with that data aggressively. 

Senator GRASSLEY. Thank you. 

The CHAIRMAN. Thank you very much. 

Senator Bunning? 

Senator BUNNING. Thank you, Mr. Chairman. 

Ms. Oates, is it the administration’s position that Congress 

should not pay for the extension of unemployment benefits? 

Ms. OATES. No, Senator. I do not think that is—— 

Senator BUNNING. No? 

Ms. OATES [continuing]. That is the administration’s position, no. 

Senator BUNNING. All right. It is ironic that the reason Congress 

cannot pass benefit extension quickly is that Congress keeps calling it emergency spending and refuses to pay for it. 

The quickest way to get the benefits out to the people would be 

to pay for them. A Payfor bill could pass the Senate 100–0. This 

continued practice of adding billions to the deficit with each extension is what has caused the benefit extension to expire over and 

over again. 

Would the President veto an unemployment extension benefit 

that was offset and did not add to the deficit? 

Ms. OATES. Senator, I do not feel equipped to speak directly for 

the President, but I have to tell you that I cannot imagine that he 

would be opposed to the—— 

Senator BUNNING. The Payfors. 

Ms. OATES [continuing]. The Congress paying for this. Historically, just to go back to the last several times—— 

Senator BUNNING. I am going to. 

Ms. OATES [continuing]. It was not paid for. Yes, Senator, go 

ahead. 

Senator BUNNING. Last October, the President signed an unemployment benefit extension that was fully paid for and passed the 

Senate 98–0. If a weak economy is justification for not paying for 

the extensions, is the economy in worse shape now than it was in 

October of 2009, when Congress passed and paid for the extension, 

and would the administration have preferred that the last October 

extension add to the deficit instead of being fully offset? 

Ms. OATES. Senator, it is difficult to answer that question. First 

of all, I think the economy is showing impressive signs of improvement in May of 2010. 

Senator BUNNING. My question, though, is, where we are now, 

2010, April 20-something, I do not know what it is, 26. 

The CHAIRMAN. Five. 

Senator BUNNING. Twenty-five. Thank you. Compared to October 

of 2009, I think we were in a little worse position economically. 

We paid for that extension and now, for the last three extensions 

of unemployment benefits, we have declared emergency spending 

and not paid for them. Now, we are getting to the point where we 

are going to pass an extension bill that is hugely not paid for, to 

the point of only paying for about one-quarter of $200 billion, which 

includes unemployment compensation. 

15 

You testified that the administration recently sent to Congress 

unemployment program integrity legislation. Some provisions, like 

worker reclassification, are pretty controversial. 

Why has the administration not pushed for some of the lowhanging fruit in all these unemployment extensions we have been 

passing? 

For example, last year, the House passed your proposal to report 

the first day of earnings to the directory of new hires, but it was 

never enacted—never enacted. And your proposal to expand Treasury’s authority to withhold tax refunds for overpayment has been 

around since the President’s first budget in 2009. 

I have proposed amendments that include both provisions. So 

you would have bipartisan support. Why has the President not 

pushed Congress to immediately fix a program that wastes billions 

of dollars each year? 

Ms. OATES. Senator, we are ready, willing, and able to work with 

you to expedite the passage of the improved act, after you have put 

your finishing touches on in this committee, and work with you as 

it passes on the floor. 

I think it is very difficult to talk about priorities of crises. So I 

think that right now, we are willing to get this done and, hopefully, 

we can get it done before you go out for this Congress. 

Senator BUNNING. Last question. The Wall Street Journal reported that the White House Economic Adviser, Larry Summers, 

said in 1999 that government assistance programs, like unemployment insurance, contribute to long-term unemployment by providing an incentive and a means not to work. 

Does the administration agree with Larry Summers’s views? 

Ms. OATES. Well, I have great respect for Larry Summers, when 

he was president of Harvard and every other position he has held, 

but I will not speak for the administration. But, Senator, I can tell 

you that I disagree. 

I have traveled to 20 different States since I have been appointed. I have not met one person who wished they were unemployed. Instead, I have seen hardworking people who are dying to 

get back to work, getting into retraining, looking to shift their sector. 

So I believe that the unemployment compensation has given 

them the safety net to pursue training and—— 

Senator BUNNING. Then the Department of Labor disagrees with 

Larry Summers. 

Ms. OATES. The Assistant Secretary of Employment and Training, Senator, does disagree with Mr. Summers. 

Senator BUNNING. Thank you. 

Ms. GASSMAN. If it would help to hear a perspective from the 

States, Senator, just in terms of those who are unemployed in our 

State, it is extremely—— 

Senator BUNNING. What is your rate of unemployment in Wisconsin? 

Ms. GASSMAN. Right now, we have just dipped down to about 8.7 

percent. And I will say that we have right now just under 100,000 

on regular benefits and about another 113,000 who are on extensions. So we are about in the range of 213,000 who are on benefits. 

16 

For these folks, unemployment insurance has been an absolute 

lifeline. They have been in crisis. Our staff are the ones on the 

phones who hear the calls, who hear the panic, ‘‘Will I be able to 

make the rent payment, the car payment, fare to get to the job 

interview, clothes for the kids to go to school?’’ 

There has been great urgency for the unemployed in our State. 

Now, because of the national economy, we are seeing some gains, 

which we are encouraged by. 

We, also, in our State, list job openings on an excellent website, 

jobcenterwisconsin.com, and we have right now about 23,000 job 

openings that employers in our State have listed with us. 

When I go out and meet with unemployed people, as I do, they 

are very actively trying to see, can they go after those jobs; do they 

have the right skills? Of course, when you have 213,000 people or 

so out of work, that is many more than those 23,000 job listings. 

So we are working with people. We are helping to up-skill them. 

We are helping, with your support, to enroll them in training at 

the technical colleges and through our programs so they will have 

the skills to get those jobs. 

Of course, our Governor has been very active with our legislature 

in providing incentives to businesses to help them be strong and 

healthy and competitive and grow, be lean, so that they, in fact, 

will become more healthy and have the jobs to offer those who are 

unemployed in our State. 

But in our State, the unemployment insurance has been seen as 

more of just a way to get through a crisis, not a way of living. It 

is not a choice that, in our State, most—any of the folks I have 

talked with—consider a substitution of what a paycheck would 

bring and the stability that a paycheck would bring to their families. 

The CHAIRMAN. Thank you, Senator. 

I would be curious to know how you expect States to use this 5 

percent in overpayments they collect. 

How will they use that 5 percent, most likely, to help make the 

program more efficient? 

Ms. OATES. I think, most likely, it will be hiring staff, Senator. 

I think that to do the work of investigation is people-intensive, and, 

as you get into really the fraudulent cases, it is a lot of court involvement, and all of us know, when you go to court, you end up 

sitting and spending a lot of time. 

So I think staff will be one, and I think that number two will 

be technology upgrades. I think both the other witnesses brought 

up the antiquated technology in the States. All the States are asking for help with that. 

So I would say the first two things that we would expect are staff 

and technology. 

The CHAIRMAN. Ms. Gassman? 

Ms. GASSMAN. I just want to support what the Assistant Secretary has said. Having the technology, being able to automate our 

processes, would be extremely helpful to us, and having the staff 

to then work with the technology and actually do the work. 

It is very labor-intensive. We have increased our staff significantly, the folks who are doing this work. But having additional capacity so we could even take additional steps in automation and 

17 

hire people to do this important work would be very beneficial to 

Wisconsin. 

The CHAIRMAN. Why haven’t more States implemented the 

SIDES system? 

Ms. OATES. It was limited at first, Senator. It was only States 

that were invited. So it was five or six. It was an excellent program 

started by the last administration. So I ride on their coattails on 

this one. 

Those States were invited, and now new States are being invited 

to join. 

Ms. GASSMAN. Right. It is about 14 now that have joined the 

original core that first signed on with seed money from the Department of Labor in the previous administration, which we were very 

pleased to have. 

The CHAIRMAN. Good. You already answered this, in part, but 

what about administrative errors that result in overpayment? For 

example, this poor woman, she gets this overpayment, and it is not 

her fault, it was an administrative error. How do you deal with 

that? 

Ms. OATES. I think the biggest mistake is employer error, like 

the reason for separation. Someone thinks they were laid off, but 

the employer says they really were not laid off, it was for lack of 

performance or they were fired. 

So I think that is probably the biggest error that has to be corrected. And I am sure—I do not want to mitigate—just like we 

make mistakes at the Department of Labor, I am sure there are 

administrative—the first applicant gets put on top of the others 

and they get taken out of sequence—I think there are administrative errors, but I think that is probably a small fraction of what 

we are talking about. 

Ms. GASSMAN. We do have staff who are well-trained and very 

aggressive, and they take it seriously, because we take it seriously, 

and they spend time talking with the individuals and actually investigating. 

If there was an honest misunderstanding, we view that one way. 

Very often, people will tell us, as we push them, that they were, 

in fact, gaming the system. We can determine that. That is unacceptable. That is not your money; that is the employer’s money and 

the government’s money. 

That is why, in all cases, we go after the money, but that is why 

that goes under the fraud category with penalties. 

The CHAIRMAN. Mr. Cullen? 

Mr. CULLEN. Mr. Chairman, one of the reasons SIDES came 

about is that the reason for—the major reason for inconsistency 

and agency error is usually incomplete or inconsistent information. 

By using an electronic data exchange, it requires employers, as 

they exchange information with the agency, to go through a series 

of edit checks that make certain that the information is complete 

and the information is consistently told back to the agency. 

Once you have a complete, consistent set of information, it allows 

that adjudication of that claim to be more accurate and more 

prompt. So that was one of the basic reasons behind the idea, besides the speed of electronic data exchange, but to add consistency. 

18 

Ms. GASSMAN. I do want to second what Mr. Cullen has said. 

When the process is done completely by paper, it is harder to ensure that every single question will be answered completely and 

fully. 

When you have an electronic, web-based form, it is going to come 

in as required and in a way where we have enough to go on. 

The CHAIRMAN. I suppose it is like when you are buying something online and using—— 

Ms. GASSMAN. They do not let you go forward. 

The CHAIRMAN [continuing]. A credit card, they do not let you go 

forward unless you complete the required data fields. 

Ms. OATES. That ugly red that says ‘‘required field.’’ 

The CHAIRMAN. Yes, exactly. The red required field. Exactly. 

Senator Bunning? 

Senator BUNNING. Thank you. According to the most recent statistics, we have either 15 million unemployed or partially, parttime workers presently. 

If, as most economists predict, we do have a reasonable recovery, 

it is not going to be as the past recoveries were. In other words, 

they are looking at about 3.5 million jobs in the new recovery. 

That leaves about 11.5 million people without a job or whose jobs 

have moved or they are going to have to be retrained to get into 

some other business with a different job, because the jobs have 

moved offshore, they have gone to China, they have gone somewhere, and the business is no longer. 

How can we continue to pay about 11.5 million people unemployment benefits and keep extending them if this recovery is, as most 

economists predict, going to be pretty jobless? 

Ms. OATES. Senator, if I may just start that, and I hope the other 

witnesses will share their thoughts as well. 

We have already started, at the Department of Labor, to do 

things a little bit differently. I am sure you know that we put out 

money for on-the-job training, a scarce $90 million, but trying to 

get States to look at getting the long-term unemployed into actual 

employment. 

Senator BUNNING. We did that up here, too. 

Ms. OATES. Yes. So I think that that as a plan—if an employer 

sees a talented worker, they are much more likely to create a job 

to keep that worker so that they do not go to their competitors. We 

are hoping that that job growth continues. 

In addition, we are seeing new industries that did not exist before, and people may believe in the great promise of green to varying extents, but I have seen battery plants opening all over the 

country that did not exist, that that job title did not exist here, just 

like the job title of health IT workers. 

I think there will be some growth in job areas that are brand 

new, under green, under health care. But mostly, Senator, if I may, 

it has caused us at the Department of Labor to really look at foreign labor certification. 

Just like our country is fighting to end its reliance on foreign oil, 

we need to start working actively to reduce our reliance on foreign 

labor. 

So, whether it is welders on the Gulf Coast who are from Eastern 

Europe, or loggers in Maine who are from Canada, we are now hopVerDate Nov 24 2008 14:18 Aug 01, 2011 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 R:\DOCS\67361.000 TIMD
19 

ing to give, through new regulations, the States a much more active role to make sure that they are able to advertise those jobs to 

American workers before we allow H–2A/H–2B visas to come in, 

and H–1B, which will take us longer, because, obviously, the people 

who take those H–1B visas are a higher talent. 

We cannot create an engineer overnight. But I think and I hope 

that the reform of our educational system will drive many more 

young and not so young people into science, technology, engineering, and mathematics, so we can start to dilute our dependence on 

foreign brilliance to come in here and take those jobs. 

Ms. GASSMAN. Senator, I would just like to—first, I want to give 

you correct information on our unemployment rate, because I know 

we had gone down from the 8.8 that we were in Wisconsin in 

March. 

Actually, if you look at our April rates, the seasonally adjusted 

rate dropped from that 8.8 it had been down to 8.5. And, if you look 

at the non-seasonally adjusted rate, in our State, it went down to 

8.2. So I did want you to know that. 

In terms of this issue of, will workers just stay on benefits indefinitely, of course, they will not, because the extensions only cover 

a certain amount of time. So people cannot stay on indefinitely. 

Senator BUNNING. We are up to over 150 weeks now. 

Ms. GASSMAN. Ninety-nine. 

Senator BUNNING. So 99 and counting. 

Ms. GASSMAN. So in our State—— 

Senator BUNNING. It depends how far back you go. 

Ms. GASSMAN. In our State, it is at 99. Now, of course, there are 

some jobs in our economy—let us say health care, let us say education, let us say the skilled trades—these are jobs that are not 

going to go overseas, and we will always need nurses; we will need 

plumbers; we will need electricians; and we need not just to 

make—— 

Senator BUNNING. But we need work for them. They have to 

have someplace to work. 

Ms. GASSMAN. Yes. So in our State, we are putting a very big 

emphasis on having more education past high school, whether you 

pursue going into the trades—and we need more skilled trade 

workers—and go to our excellent technical colleges, or go to 4-year 

colleges, because we do need more engineers. 

Senator BUNNING. I want Mr. Cullen to answer, also. 

Mr. CULLEN. I will take a different perspective. I think that the 

unemployment insurance program has been a great safety net. In 

some ways, I think that it goes back so long, almost 75 years, that 

we need to relook at the dynamic around the program. 

We ought to be considering other options out there on how to use 

that unemployment insurance money, whether it is wage supplements, whether it is a program along the lines of a Georgia Works, 

whether it is a work share program, but use it as an incentive, a 

real bridge back to employment. 

Education is wonderful, and it really allows folks to get new 

skills, but if there was a way that we could take the concept of education and then use the unemployment insurance dollars in some 

method as a bridge to get that connection back between employers 

and the unemployed through a supplemental program—seeing it 

20 

almost as a supplement to an employer hiring someone—that 

might be a new way to look at things. 

The CHAIRMAN. If the Senator would yield. 

Senator BUNNING. Yes, go right ahead. 

The CHAIRMAN. That is an interesting concept. I wonder, Mr. 

Cullen, if you could explain some of those alternatives in more detail. 

Mr. CULLEN. It would be very difficult to do, because I kind of 

made it up as I was sitting here. 

The CHAIRMAN. Do the best you can. 

Mr. CULLEN. But the idea is that—I believe the Georgia Works 

program essentially says something along the lines that, for a period of time, an unemployed claimant can continue to draw unemployment insurance and go work for an employer as almost an internship, a trial period. 

It says it allows the employer—it gives him a bonus, because he 

is—— 

Senator BUNNING. He is looking at the employee. 

Mr. CULLEN [continuing]. He is looking at the employee and that 

work gets supplemented. 

A work share program, where a job can be shared between folks 

and they can still draw some portion of their unemployment benefit, again, provides not quite a full wage, but it provides a better 

wage than if they were sitting on unemployment. 

So they are able to draw the benefit, they are able to supplement 

the benefit, and then the same idea around a wage supplement. If 

you could provide a—— 

Senator BUNNING. We had a program called TTA—Trade TA— 

trade assistance, and it worked extremely well, and I am considerably worried about the replacement of all of these jobs or part-time 

jobs presently. 

We had 5,000 workers leave one very small county in Kentucky, 

Taylor County, when—and then Amazon.com came in and gave 

2,500 of those workers—retrained and put them to work on Amazon, and now that county has more employment, even though they 

lost 5,000 Fruit of the Loom jobs that went to Mexico and Guatemala. 

Now, TTA was able to train, with about $600,000, at the local 

university, all those workers, and now they are all reemployed. 

But I am afraid the Amazon.coms are not going to be able to 

come in and suck up the workers that are either part-time or fully 

unemployed presently, because we are losing our industrial base. 

We are losing our manufacturing base to other areas. 

The CHAIRMAN. I think, Senator, that is the answer to your question. We just have to do a better job of creating more jobs in this 

country, including—— 

Senator BUNNING. I agree 100 percent. 

The CHAIRMAN [continuing]. Increasing the manufacturing base. 

I believe that getting more Americans back to work is the best way 

to deal with the issue of unemployment benefits. 

Thank you all very, very much. I can tell you are all very dedicated in what you do, and you provide a great service both in the 

public and the private sector, and I want to thank you very much 

for taking the time to come and testify. 

21 

It has been very interesting, and we hope to follow-up with the 

legislation this year. 

Thank you. The hearing is adjourned. 

[Whereupon, at 11:10 a.m., the hearing was concluded.] 

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