Northam proposes $936M for unemployment fund, VEC

$4.3B in stimulus funds to be allocated during August special session

Published July 27, 2021 by Katherine Schulte

Virginia Gov. Ralph Northam announced Tuesday that he wants to spend $935.6 million of $4.3 billion in federal aid on the state’s unemployment insurance trust fund and upgrading the Virginia Employment Commission.

The General Assembly will meet Aug. 2 for a special session to allocate the funding, which the state received through the the $1.9 trillion American Rescue Plan passed in March.

The governor’s proposal would put $862 million into Virginia’s unemployment insurance trust fund — which pays unemployment benefits — and $73.6 million into modernization efforts at the Virginia Employment Commission, including $37.4 million to increase call center capacity, $29.8 million for technology upgrades, about $4.6 million to hire more adjudication officers and $1.8 million for personnel support.

“Shoring up the commonwealth’s unemployment insurance trust fund is a smart investment that will prevent Virginia businesses from paying higher taxes and allow our economy to continue surging,” Northam said in a statement. “These actions will propel our modernization efforts forward so the Virginia Employment Commission can better serve those in need of assistance throughout our pandemic recovery and into the future. Together with the General Assembly, we are taking important steps to ensure Virginia remains a place where businesses, workers and families can all thrive.”

The Virginia Employment Commission struggled with unemployment claims in 2020. In May, following a lawsuit filed by five unemployed Virginia residents, a federal judge ordered the commission to get through a backlog of 92,000 cases by Labor Day. The VEC had brought the backlog down to about 23,300 as of July 17, but it has not said how many new cases have been added since.

Both the settlement and a directive issued by Northam required the VEC, then handling about 5,700 cases a week, to reach a weekly capacity of 10,000 cases by June 30 and of 20,000 by July 31. In May, Northam gave $20 million to the VEC to add 300 adjudication staffers and upgrade technology by Oct. 1.

The General Assembly’s 2020 special session budget included $210 million to backfill the Unemployment Insurance Trust Fund, and the 2021 budget dedicated $15 million to increase call center staffing levels and support IT system upgrades at the VEC, according to a news release from Northam’s office.

Northam has previously proposed spending $353 million of the American Rescue Plan funds on small business and tourism industry relief and $700 million on expanding broadband access. He also proposed using $250 million to improve ventilation in public schools and $411.5 million to improve water systems.

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