Commerce Secretary Mike Preston appeared before the Arkansas Legislative Council to answer questions about handling coronavirus related matters. He got little praise.
Preston talked about the Ready for Business grant program and the pandemic unemployment assistance program, both of which were dogged by problems in implementation.
Preston said he appreciated the legislators — “you guys,” he repeatedly called them — for being on the frontline to handle constituent complaints. He apologized for what he termed as a “miscommunication” for his failure (and Chandler’s) to appear at a legislative committee hearing last week. (Gov. Asa Hutchinson had said, however, that he’d instructed them not to appear.)
Preston touted the completion of 12,234 applications for $147 million in business grants. About 200 were withdrawn. Payments of $115 million have been released for almost 8,000 applications.
He then turned to the unemployment payments to independent contractors and what he termed a “data security incident” on the website. This was the open data the Arkansas Times reported to Workforce Services May 15. The website was taken down and a contractor was hired to review. FBI also was called. On May 20, the website was put back online. Preston reported on notice given to applicants of the incident and the offer of insurance protection for any data breaches. Checks begin going out last week. Charisse Childers, director of Workforce Services, said 39,000 applications had been made for PUA money in the first week. 21,100 have been approved. 12,200 filed claims and payments were sent to them. Another 16,000 received payments the second week. About $19 million has been paid.
FBI and forensic investigations are still ongoing, Preston said. But “we are not at a point we have information to share” and he said a grand jury subpoena made it impossible for the state to say more.
Childers outlined the development of unemployment payment programs and defended the emergency hiring of Protech Solutions to develop unemployment websites because of 20 years of experience with the state. It continues to be employed, she said. Her presentation included a slide listing reasons for the need of outside help.
She said the agency had “stood up” the program in a record amount of time. Other states that moved faster were states that had used previous disaster funding to put in updated unemployment benefit computer systems. That gave them an edge over states like Arkansas with outdated systems. She also objected to comparisons that showed Arkansas late to begin paying PUA money. She questioned the accuracy of the numbers. Some states listed as making payments were just taking applications and not making payments, she said. She also noted other states had problems similar to Arkansas’s.
“We have learned a lot of lessons through this process,” Childers said.
From the Q&A session
Sen. Linda Chesterfield asked about a “clawback” from Protech Solutions as a result of the system crash over security issues. Carder Hawkins of Workforce Services said, as we’ve reported before, that no payments had been made yet under the $3 million contract and there were some provisions in the contract for offsets. A final decision hasn’t been reached.
Some 13,000 applications for PUA have not received payments for various reasons. Some have not made the required return to the website to complete weekly claims, though applications have been approved.
Questioning revealed problems in use of mobile phones with the regular unemployment benefits system, said to be corrected on the new PUA system. Improvements are “in the hopper,” Hawkins said. But Childers said, in response to a question from Sen.Keith Ingram, the state didn’t have sufficient money available from federal assistance to fix the regular unemployment system.
Sen. Terry Rice complained about hearing from employers whose workers are refusing to return to work, though they haven’t been laid off, and seeking unemployment benefits. Childers said appeals can be filed on benefit determinations and all states are sensitive that businesses might face a burden if their contribution rate increases based on benefit payments. This was also a concern of Sen. Jonathan Dismang. Childers said a discussion of adjustments is underway with the Labor Department and others. Rep. Jim Wooten complained about constituents with long-pending claims, some for six weeks or more, and also about workers who refuse to return to work to continue unemployment benefits enhanced by a federal payment. Childers said employers could challenge such workers’ claims. Other legislators were heard on this point, too.
Rep. Robin Lundstrum asked about the state’s cyber insurance. The state has it and has made claims in the past, as we’ve reported, but no one had an updated report on claims (but our report had it).
Sen. Bob Ballinger questioned Preston on his failure to attend his committee meeting last week, supposedly for law enforcement considerations, and he noted that the governor had asked Preston not to attend. “Which was it?” he asked. Preston reiterated he’d been urged by the FBI not to speak publicly. Ballinger said Preston had been given leeway not to answer sensitive questions. He said he remained concerned that a state agency leader didn’t attend and two different reasons were given. “Why is that you’re able to be here today and you weren’t able to be there a week ago?” Preston said he’d thought it was acceptable for him not to attend last week.
Asked why Protech Solutions was chosen and would they hire them again, Childers said they were readily available under emergency procurement because they were an existing state contractor. Would we choose them again? That would depend, Childers said, if the state had other people readily available under emergency consideration. Has the state looked for additional qualified companies? No, but Hawkins said the state had received outreach from numerous companies that said they could do work. Hawkins said he’d use Protech again. “They’ve delivered quickly and they’ve been very professional to work with.” It was “unfortunate” that the state had the security issue, but he said they had delivered a “quality product.” He also defended continuing to use them for future work.
Sen. Will Bond asked about clearing the 13,000 applications still pending for PUA payments. Until they are cleared, they can’t pick up payments due for past weeks. Hawkins said there was a “sense of urgency” to get this done. He noted that 10,000 business grants were processed very quickly and the state still had applications pending and no back payments made on the self-employed seeking PUA benefits.
Sen. Alan Clark asked for a ranking of Ready for Business grants by amount given. The list legislators received was listed in order of time filed. We’ve provided it here.
Preston was questioned about the advance notice given to some about the Ready for Business grant program. It was effectively first-come-first-served and time was of the essence to apply, a factor that left out many small businesses, one legislator said. “It doesn’t seem fair when certain groups get a heads-up.” The legislator also pointed out businesses could spend up to $100,000 on marketing. The process was eventually opened up to all.
Sen. Joyce Elliott questioned the hiring of Protech and the continued problems with regular unemployment system. Hawkins defended Protech again. “It’s not Protech. We were asking them to move fast.”
Sen. Jason Rapert pressed Hawkins for saying it “was not anyone’s fault.” People’s information was exposed; money will be spent for insurance. “It’s odd that it’s no one’s fault.”
Rapert asked, “What are the consequences of this terrible fumble?” He said most contracts have penalties for non-performance. “Here we are spending millions of dollars and it’s nobody’s fault?”
Hawkins said there was fault, but it’s spread among multiple entities, including the vendor. He said there were consequences in the contract. “But those consequences have not been assessed yet.”
Rapert said his unhappy constituents had in some cases given up trying to navigate the payment process. He also complained that millions were being spent without legislative input.
After all the comments about employers, Chesterfield asked about employees with greater risks and whether employers are being talked with about making steps to keep employees safe. Childers said employers were understanding and were making accommodations.
Sen. Larry Teague asked how somebody could get a completed application filed four minutes after the website for Ready for Business opened. Preston suggested he asked them. “I’m asking you,” Teague said. He said he couldn’t guess, but they perhaps might have had experience with other applications that had them ready with the necessary information. He said the department had done a test on its own and they could complete an application in a minute.
Sen. Dismang said he had information that double payment had been made to certain entities. Jim Hudson, counsel for AEDC, said 36 double payments had been discovered and repayments had been requested, about $400,000 worth.
Doralee Chandler, director of the ABC, was next up.
She was grilled for 90 minutes by legislators over her decision to jerk the alcoholic beverage permit when Temple Live, a Fort Smith club, was threatening to go ahead with a live music show three days before clubs were to be allowed to reopen.
She said she’d been instructed to look for a way to shut Temple Live down, had been instructed to issue the shutdown order and had been instructed (by the governor, he’s said) not to attend a legislative committee last week. She said she believed the action she took was constitutional, though some legislators didn’t. The decision came without a hearing or opportunity for the club to argue or even before it had violated any rule.
As reported by Marine Glisovic of KATV:
Rep. Jim Dotson: Let me get this straight – you suspended a license for something that didn’t happen?
Chandler: We believed it was an emergency due to the health risk.
The club opened Monday, with the state’s blessing, with the same health guidelines they’d planned to apply Friday.
Also from Glisovic:
Sen. Alan Clark: If I announce that I’m going to speed – will state police take my license?
Clark: If I say I’m going to drive drunk, will they come and get my license?
Sens. Kim Hammer and Bob Ballinger were among other questioners. She told Hammer the license was pulled because the club didn’t comply with a cease-and-desist letter.