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Colorado unemployment claims spike as federal benefits restart. But fraud is distorting the picture.

More than 75,000 Coloradans reopened their unemployment claim in order to collect new aid from Congress.

A small group of unemployed Coloradans gather at the Colorado Department of Labor downtown to voice their complaints that they have not received their pandemic unemployment payments on Feb. 8, 2021, in Denver, Colorado. (Kathryn Scott, Special to The Colorado Sun)
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The number of Coloradans on unemployment spiked last week as thousands who were eligible for federal pandemic benefits were invited back into the system, according to data from the state Department of Labor and Employment on Thursday.

At least 75,415 people on some form of pandemic benefits were able to reopen their claims for the first time since late December and get paid retroactively for up to five weeks. Each eligible week included a bonus of $300 made possible by the Continued Assistance Act passed by federal lawmakers on Dec. 27. 

But there was also a rise in new regular state claims by workers whose employers pay for unemployment insurance. Those initial claims jumped 27.6% to 14,018 for the week ended Feb. 6, compared with 10,989 the week before.

While state restrictions have eased and coronavirus vaccinations have become more available, there’s no clear economic factor causing the rise in new claims, said Ryan Gedney, a senior economist at the Department of Labor.  He said numbers and trends have been distorted by fraudulent claims filed after Dec. 26.

“Long answer short, it could be economic or it could just be that (after) we revise the data at some point, it may not show a trend,” Gedney said. “But really, in January and beginning of February, we’ve seen a steady decline. It’s been in that 14,000 to 10,000 range. Unfortunately we just can’t read too much into the week-to-week changes, but it’s just something we have to kind of deal with because of how fraud distorts economic interpretation.”

MORE: How scammers targeted Colorado’s unemployment system — and what the state is doing about it

Gedney estimated that 30,295 people reopened their Pandemic Unemployment Assistance (PUA) accounts last week and thus were counted as an initial claim. PUA is open to gig workers, contractors and the self-employed. Another 39,657 people on Pandemic Emergency Unemployment Compensation (PEUC) were also able to reopen their claims because they still had benefits left from the CARES Act.

Colorado started paying federal benefits to thousands of unemployed Colordans, including $145.7 million in Federal Pandemic Unemployment Compensation, or the $300 weekly payments. Another $69.8 million was paid to those who still had eligible weeks of pandemic employment because they were part of the Phase 1 of the federal benefit rollout.  

The number of people who continue to collect unemployment has dropped since December, but there should be another spike in a few weeks, when a second group of people eligible for federal pandemic benefits can reopen their claims. This Phase 2 of the federal benefits is expected to start Feb. 22. 

People in this group have gone seven or more weeks without a payment because they exhausted their CARES Act aid last year. Many thought payments would restart as soon as the Continued Assistance Act passed, but there was a gap in payments because the state had to wait for guidance from the U.S. Department of Labor and reprogram its system to add 11 weeks more to both the PUA and PEUC programs. 

MORE: Coloradans brave the cold to put a face on who’s been waiting more than six weeks for federal unemployment

About two dozen people in Phase 2 protested the delays on Monday in downtown Denver hoping to bring more attention to the plight of individuals and families who have gone weeks without a payment and are struggling to stay in their homes and pay bills.

“I’m hoping they will look at possibly sending out some kind of payments to get people through,” Cherie Ripley, a Colorado Springs resident, said during Monday’s event. “They announced the 22nd (for Phase 2), which really means the 28th and past the end of the month. That’s still not acceptable.”

Problems still being resolved

State labor officials said they’ve been working with the software vendor Deloitte for the past month to program in the $300 payments plus all new benefits enabled by the new relief plan.

But programmers are still trying to fix problems affecting those in the first phase of the federal benefits rollout, including one that has denied payments for the week after Christmas. 

“We’re still working on the fix to correct payments being denied for the week of Dec. 27,” Jessica Hudgins Smith, the labor department’s press secretary, said in an email. 

The labor department also has temporarily solved the problem of demands for repayment of overpayments that were forgiven last year showing back up this month. (Some PUA users were overpaid but later forgiven after the state deemed the PUA application confusing.) 

Smith said the agency is waiting on a permanent fix. “This means it may show up again and be removed again during this process,” she said. 

But those seeing an overpayment for the first time need to request a waiver (here is the waiver request form). If the waiver is rejected, the person can appeal. But, Smith said, if the overpayment is the result of fraud by the claimant, the overpayment cannot be waived (here’s information on how to appeal).

And the state is still working to allow people denied PUA benefits last week because they responded to an eligibility question in a way that disqualified them to recertify for the weeks they were denied.

“We are working on a fix to this, and it will be ready very soon,” Smith said. “These claimants will be sent instructions on next steps once the fix is ready. In the meantime, on Sunday (2/7) we adjusted the language on the eligibility screen in an effort to provide more clarity to claimants. When completing their weekly certification, PUA claimants should read each question carefully before submitting.”

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