About 100,000 Arkansans claiming state unemployment benefits stand to start receiving extra weekly payments of $300 as soon as Labor Day under a proposal that gained preliminary legislative approval Tuesday.
The payments are an extension of pandemic unemployment assistance that President Donald Trump called for in an Aug. 8 executive order.
The Arkansas Commerce Department is seeking legislative approval to transfer an $800 million appropriation to add the supplemental benefit, which would be retroactive to Aug. 1.
"We're asking the Legislature to approve a funding process so we can begin to spend the $300 weekly benefit," Commerce Secretary Mike Preston said Tuesday.
The request was approved Tuesday by the Legislature's Performance Evaluation and Expenditure Review Subcommittee and now goes to the Arkansas Legislative Council for review this week.
"I am comfortable ... making a motion to approve the $800 million so you guys can get this to our constituents as soon as you find out the money is coming," Rep. Jeff Wardlaw, R-Hermitage, said at the hearing. "That way these guys have funds to live on while they are living through these tough times."
Trump's executive order gives states the option to add extra weekly benefit payments to support unemployed workers during the pandemic.
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The program, funded by the federal government, is an extension of the original $600 supplemental pandemic unemployment benefit that was approved as part of the Coronavirus Aid, Relief, and Economic Security Act that Congress passed in March. That $600 payment expired July 31.
"We've started our paperwork to opt in and part of that includes getting this legislative approval to spend the money," Preston said. "Once we have that, we can finish our application to the federal government."
States have until Sept. 10 to file for participation through the Federal Emergency Management Agency, which is administering the program in partnership with the Department of Labor.
Preston said the goal is to begin paying the benefit to about 100,000 unemployed Arkansans shortly after Labor Day, which is Sept. 7.
"The federal government seems to be turning around the applications pretty quickly," Preston added. "Assuming we have legislative approval this week ... we could have everything in place in early September or around Labor Day."
Implementation should be a simple plug and play, and doesn't require complex technology updates, according to Preston. "It's a fairly easy fix," he said "This doesn't require having to set up a whole new system or reconfiguring code."
FEMA is providing $44 billion in unemployment benefits from the federal Disaster Relief Fund to pay for the extended unemployment benefits.
Trump's Aug. 8 order outlined a process for states to offer claimants a total $400 weekly benefit, including $300 that would be reimbursed by FEMA and an additional $100 that the states could add but would have to pay for with state funds or coronavirus relief money.
Gov. Asa Hutchison noted recently that Arkansas has $250 million in coronavirus relief funds in reserve that could be tapped to pay the additional $100, but he added that the move would require adjusting other priorities.
After reviewing the state's options, Preston said Tuesday that Arkansas will not make the $100 payment because it would cost $265 million and "would have eaten up the entire set aside reserve of CARES funding."
On Tuesday morning, the legislative Performance Evaluation and Expenditure Review Subcommittee approved making the $800 million appropriation transfer. The $800 million to fund the program is not a new appropriation; it remains from the original request to pay supplemental unemployment benefits dating back to March. Language had to be approved to account for FEMA's new role in the process, Preston said.
Lawmakers approved transferring the money from the traditional unemployment insurance line to the disaster relief line in the Department of Workforce Services' appropriation.
At the hearing, state Budget Administrator Jake Bleed told lawmakers that Trump's order requires state unemployment payments of at least $100 weekly before the $300 can be paid out. State unemployment payments start at $81 and escalate based on previous earnings.
"We are still continuing to get guidance, but our understanding at this point is that the $100 that the state has to pledge will be credited or we will receive credit for the money we are already spending through our traditional unemployment insurance," he said. "So as a result ... we will not have to spend any more than we are already spending to pull out the additional $300."
Bleed said there is a proposal to use up to $4 million in federal coronavirus relief funds that the state has received to make sure that Arkansans below the $100 weekly threshold get to the minimum in unemployment benefits so they can qualify for the supplemental $300.
There was some discrepancy over the issue, however.
Bryan Hicks, assistant director of finance for the Division of Workforce Services, told lawmakers that the state received guidance Tuesday morning from the federal government that "just additional money from the CARES Act to make up the difference would be insufficient to qualify the person to receive the $300.
"The only option that's available to the states for that is to legislatively raise the weekly benefit amount to at least $100," Hicks added.
Under the new FEMA program, supplemental benefits will expire Dec. 27 or when the $44 billion is exhausted. The state's estimate of an $800 million cost for the extended benefits is based on the program lasting through the deadline.
Preston estimates there are 100,000 Arkansans who would be eligible for the $300 supplemental payment today. Unemployment claims are updated weekly.
"It's kind of a moving target right now," he added. "The key here is the layoff has to be covid-related. If it's not covid-related, they're not eligible for these extra funds."
Since the economic shutdown began in mid-March, Arkansans have received $1.3 billion in supplemental pandemic unemployment assistance and another $327 million in state funds, according to Preston.