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Oregon’s Employment Department, like Oregon’s economy, has gradually rebounded.

That’s not to suggest life at the agency is all peachy-keen. Even if you don’t get a busy signal while calling about unemployment benefits, you might sit on hold for an hour. The department asks people instead to use the Contact Us form on its website, yet even that form can take weeks for an answer. Meanwhile, the department’s decades-old computer system automatically sends out form letters that too often are misleading to applicants.

But hear ye, hear ye, there has been substantial improvement since March 2020.

Benefits being paid on time: The latest in a line of federal pandemic relief package is called the American Rescue Plan Act. The Employment Department’s acting director, Dave Gerstenfeld, said this week that Oregon is among the first states paying those jobless benefits on time to most claimants.

Each time Congress and/or the president authorizes new pandemic relief, the Oregon Employment Department must wait on federal agencies for specifics on administering the jobless benefits, including who is eligible and how that eligibility is determined.

States have more leeway under traditional unemployment insurance (UI). These new programs are federal ones operated under contract with the states. The ensuing directions from the U.S. Department of Labor can be slow to arrive, and sometimes change along the way.

“We know we’re not yet meeting the service levels we need to, but we have seen real improvement and we’ll keep working to gain or surpass the pre-pandemic levels of high customer service,” Gerstenfeld told journalists Wednesday during his weekly briefing.

Nearly all regular unemployment insurance claims are now being processed within 21 days, which is the initial step toward approving benefits and distributing money

Last spring, the Employment Department responded so poorly to the surge of pandemic-related claims that Gov. Kate Brown, under intense pressure from Oregon’s congressional delegation and others, eventually ousted director Kay Erickson. “Thousands of Oregonians felt that they were going through red-tape torture being on the phone hour after hour after hour,” U.S. Sen. Ron Wyden said recently.

For the past year, Gerstenfeld said, the staff has been working overtime and on weekends. Along with adding phone lines and some new technology, the department substantially increased its workforce from 1,199 employees to 1,997.

I asked Gerstenfeld about the lessons of the past year. He said they included the importance of quickly, clearly and effectively communicating with claimants about their individual situations. In addition, the department’s technology and processes are not intuitive, baffling not only the public but also employees learning those systems.

The intense workload has forced the department to become more agile and nimble, which is good, Gerstenfeld said. Employees who were experts in one area have learned to pivot and assist in other areas.

“That’s changing everything from people who were helping people find jobs to instead quickly learning how to process PUA (Pandemic Unemployment Assistance) claims and do that instead,” he said.

While the department has broken some organizational silos, customer service remains a work in progress. Before the pandemic, the department answered 90% of calls within five minutes. That’s now 15%. Wait times are averaging 70 minutes, if people can get through.

Gerstenfeld said that by year’s end, the department intends to be back to that 90% average and to resolve Contact Us inquiries within seven days.

Still, a seven-day turnaround and a 21-day-or-longer wait for unemployment benefits seem way too long for jobless Oregonians wondering how to pay for rent, food, medicine and other necessities.

Confusing correspondence: The department’s IT systems automatically sends preprogrammed letters that were written over the years for traditional unemployment insurance, not PUA and other programs. As a result, some letters direct claimants to take steps that are unnecessary, to meet firm deadlines that might not apply, or to call phone numbers that are difficult to reach.

The department has revised those form letters that could be fixed easily. Gerstenfeld said the agency now is considering inserting clarifying notes with some preprogrammed letters.

Officials gave me this explanation for why they had not revised all the form letters: “Changing language, formatting or dates when they are to be sent would take programmers and UI experts away from the work needed to implement new programs and program updates.

“We do not know the full extent of the time involved, but we do know it would be enough to slow down the work needed to implement new programs and complete other federally required work. Even getting a good estimate of how much time it will take to make changes would take significant time from our IT programmers and UI program experts to complete. 

“Additionally, there is the ever-present risk that making any change to the system (such as when certain letters are, or are not, triggered in the mainframe) can have unintended consequences. It takes significant time to test to ensure changes have not done something that would create as much, or more confusion, or worse yet impact how claims are being paid or processed.

“With the continued pandemic recession conditions and new federal programs, the most logical path forward is to make changes to the letters as we modernize our IT system, which will begin later this year.”

Side note: Give the Employment Department credit for testing its IT changes. Inadequate testing helped create the infamous Cover Oregon fiasco.

A case of bipartisanship: Oregon’s unemployment insurance fund remains solvent and is likely to remain so even if legislators reduce or delay the payroll tax increases that have hammered some businesses because of the pandemic, particularly in the restaurant and lodging industries.

House Bill 3389 is a bipartisan proposal shepherded by Rep. Paul Holvey, D-Eugene. The other chief sponsors are Reps. Daniel Bonham, R-The Dalles, and John Lively, D-Springfield, and Sens. Bill Hansell, R-Athena, and Chuck Riley, D-Hillsboro. Over time, the changes proposed in the legislation could save Oregon employers an estimated $2.4 billion.

During Thursday’s public hearing, Bonham credited the Legislature’s presiding officers – House Speaker Tina Kotek, D-Portland, and Senate President Peter Courtney, D-Salem – with bringing the group together.

“I just want to emphasize how good this process was, being a member of the super-minority party,” Bonham said.

Gerstenfeld told the House Rules Committee that the U.S. Department of Labor had no problem with HB 3389 but the U.S. Treasury has yet to issue its guidance.

Unlike Oregon, 20 states have had to borrow money from the federal government to pay benefits. California’s unemployment compensation fund ran dry last spring, so the state has borrowed more than $21 billion already. That deficit is expected to hit $48 billion by year’s end. Employers also are paying a 15% surcharge on top of their regular unemployment taxes.

Meanwhile, the claims backlog in California is even worse than it was last July. The Employment Development Department website also tends to crash. “Challenges with certifying claims have been so pervasive that a website called ‘Is It Down Right Now?’ has sprung up to check whether EDD’s services are functional at any given moment,” according to CalMatters.

Serving Oregon households: More than 575,000 Oregonians have received $8.5 billion in jobless benefits since mid-March 2020, when the business shutdowns and other COVID-19 restrictions began.

That’s the good news. The bad news is that unemployment benefits in most cases are taxable income.

A tax break (with strings): Oregon has the nation’s fourth-highest personal income tax, but at least most people on unemployment will get a break. In the recent legislation, Congress exempted an individual’s first $10,200 in jobless benefits from federal taxation in 2020.

In Oregon, that break also applies to state income taxes. The Oregon Department of Revenue gave me this explanation: “For Oregon state income tax purposes, a taxpayer’s adjusted gross income (AGI) is the same as on their federal return. The Department of Revenue will correct returns for those who have already filed and reported unemployment income in 2020. The correction will lower their AGI (which is the same for federal and state tax purposes) and thus mean they will pay federal income tax and Oregon income tax on a lesser amount — up to $10,200 per individual. The $10,200 reduction in federal AGI will not increase their 2020 Oregon AGI.”

Certain restrictions apply, chiefly that individuals with high incomes don’t get the break.

Wyden pushes: Sen. Wyden was a key figure in getting Congress to provide benefits for gig workers, the self-employed and others who were never eligible for traditional unemployment under a federal-state system that had changed little since the 1930s.

Wyden now chairs the influential Senate Finance Committee. When I asked about what lay ahead, Wyden said Senate support is growing for bringing the unemployment insurance system into the 21st century, including tying benefits to economic conditions, continuing to make gig workers and independent contractors eligible for benefits, streamlining the process and modernizing technology.

“Senators are going to have problems going back to yesteryear now,” Wyden said. “They have seen the face of the modern economy.”