FRANKFORT, Ky. — The implementation of a new unemployment system has stalled again after a company Kentucky Labor Cabinet officials thought they had an agreement with abruptly stopped communicating with them, cabinet officials told lawmakers this week. 

What You Need To Know

  • It’s been more than two years since the pandemic caused a rush of unemployment claims in the state

  • Sen. Mike Nemes (R-Shepherdsville) said there are several problems still remaining with the system, including a lack of workers to handle the claims it gets

  • Labor Cabinet spokesperson Holly Neal said many states are attempting to replace and modernize their unemployment systems, which creates a limited number of companies that have enough experience to get the job done

  • The cabinet is still processing unresolved claims from early last year

It’s been more than two years since the pandemic caused a rush of unemployment claims, overrunning Kentucky’s system and highlighting the need for improvements.  

“I think we should be further along than we are,” Sen. Mike Nemes (R-Shepherdsville) said.

Nemes said there are several problems still remaining with the system, including a lack of workers to handle the claims it gets. “The old computer system could handle the upswing right now and some of the backlog if we had the people to do it,” he said.

Nemes sits on the committee that heard testimony from the Kentucky Labor Cabinet on Thursday, detailing some of the issues. The cabinet has been trying to find a company to build a new system since last year, and officials thought they had a company to do it: Sagitec Solutions LLC. Cabinet secretary Jamie Link said the company stopped responding to them, and late last month, two employees were indicted in federal court, so they’re moving on.

“In a way, I’d have to say I’m glad we didn’t get into a contract with a company that has two people under federal indictment now,” he said. Link said they hope to have a company on board by Spring next year, but the overhaul could take more than three years.

Cabinet spokesperson Holly Neal said many states are attempting to replace and modernize their unemployment systems, which creates a limited number of companies that have enough experience to get the job done. “Deploying a new unemployment system is a top priority,” she said in an email to Spectrum News. “We solicited bids for a new system and ultimately chose a vendor, but following negotiations, the company has failed to sign the contract and has stopped responding. The actions of this company forces us to issue a new request for proposal in order to provide a new, modern computer system to better process Kentuckians’ claims.”

Until then, the cabinet is still processing unresolved claims from early last year, and Nemes said more can be done to get more people working those claims.

“We should be cross-training people to be able to do the work when needed, and be able to help the ones that are allowed to get into the system to be able to get into the system,” he said. “If we had been doing that, we’d have less of a backlog. I know it takes time to train people, but we allocated the money in ’21 for them to hire these people.”

And he said the state should bring in some of the unemployed to help work those claims.

“I think it is as simple as that because I think Kentuckians do have the education and the background, enough of them, to hire, or at least start hiring,” Nemes said. 

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