Report Ok Legislative Office of Fiscal Transparency Oesc Pandemic Ui Rapid Response 2021

Summary

Rapid Response Evaluation: Unemployment Compensation and the Oklahoma Employment Security Commission, issued in January 2021 by Oklahoma's Legislative Office of Fiscal Transparency (LOFT). Its three findings are that there was little opportunity to prepare for the pandemic's demand, that OESC responded as well as conditions allowed, and that the unemployment insurance trust fund remains at risk. LOFT reports that the trust fund went from $1.2 billion at the beginning of 2020 to under $100 million in January 2021, that $100 million in Coronavirus Relief Funds had been received to stabilize it, and that it will need another $669 million to prevent the highest tax rate increase at the end of FY2021. It notes OESC raised the maximum tax rate from 5.5% to 7.5% and lists policy considerations, including bonding and tying the $25 million surcharge trigger to an index.

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Legislative Office of Fiscal
Transparency

Rapid Response Evaluation:
Unemployment
Compensation and the
Oklahoma Employment
Security Commission

January 2021
Legislative Office of Fiscal Transparency
State Capitol Building, Room 107
2300 North Lincoln Blvd.
Oklahoma City, OK 73105
okloft.gov

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
2
Table of Contents
LOFT Oversight Committee ........................................................................... 3
Executive Summary ....................................................................................... 4
Introduction .................................................................................................. 6
Finding 1: There was little opportunity to prepare for the unprecedented
demand, new federal guidance, and high-risk environment created by the
pandemic. ...................................................................................................... 8
Finding 2: OESC responded to the pandemic as well as conditions allowed.
 ..................................................................................................................... 17
Finding 3: Oklahoma’s unemployment insurance fund remains at risk. .... 24
Summary of Policy Considerations.............................................................. 26
Appendices .................................................................................................. 27
Appendix A: Process Map – Applying for Unemployment.................. 27
Appendix B: Unemployment rate over the past twenty years (%) ..... 28
Appendix C: The United States Secret Service bulletin ...................... 31
Appendix D: Rate tables ...................................................................... 32
Appendix E: Strategic change initiatives pursued by OESC ................ 34
Agency Responses ....................................................................................... 36

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
3
LOFT Oversight Committee

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
4
Executive Summary
The State’s unemployment system, managed by the Oklahoma Employment
Security Commission (OESC), has a critical function: to not only provide
unemployment insurance (UI) to laid-off workers but to also maintain trust
fund stability to pay out those benefits. At the end of every fiscal year, the
agency calculates the next year’s unemployment insurance tax rate based on
the ratio of benefits paid out to the balance of the fund itself, with different
rates resulting from different quotients. In addition to this tax assessment,
there is also a 33.3% surcharge that is statutorily determined and
implemented quarterly should the balance of the fund ever fall below $25
million. In September 2020, OESC announced a tax rate increase from a
maximum of 5.5% to a maximum of 7.5%.
Through this limited-scope evaluation, the Legislative Office of Fiscal
Transparency (LOFT) sought to provide clarification to the Legislature
regarding the impact of coronavirus on the state’s unemployment insurance
trust fund, the unemployment tax environment, and any process
improvements that could result in better outcomes for Oklahoma.
Summary of Findings
Finding 1: There was little opportunity to prepare for the
unprecedented demand, new federal guidance, and high-risk
environment created by the pandemic.
The impact of coronavirus on unemployment cannot be overstated. Peak
unemployment resulting from the virus was more than twice the peak
unemployment from the Great Recession in 2007-2009. Regionally, Oklahoma
went from the lowest unemployment in January 2020 to one of the highest in
March and April. Relative to its neighbors, Oklahoma had the highest jump
from January to March. This increase in the number of unemployment claims
was impacted by the growing number of fraudulent claims experienced
nationwide.
LOFT’s analysis reveals that the unemployment insurance tax rate increase,
effective on January 1, 2021, would have been difficult to avoid. The amount
of benefits paid out and the balance of the fund, both factors in the tax rate
determination formula, were adversely impacted in 2020.
Although federal loans are available to struggling states, the federal
Department of Labor requires states to exhaust available resources before
applying. To date, $100 million dollars have been received in Coronavirus
Relief Funds to stabilize the unemployment insurance trust fund and prevent
the statutorily mandated 33.3% surcharge from being assessed on employers.
Key Objectives:
 Examine agency’s
response to the
COVID-19
pandemic.
 Evaluate efficacy
of resources
available for
delivery of
services, including
IT infrastructure.
 Examine
occurrence of
fraudulent
findings.
 Examine
opportunities to
better meet
constituent needs.

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
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Policy Considerations:
• Allow for bonding to support the Unemployment Insurance trust fund. The
State may consider instituting a cap on bond issuance, like Arkansas, or
allowing debt issuance only under emergency declarations.
• Consider tying the $25 million surcharge trigger to an index, such as total
benefits paid out. Utilizing a static threshold will make no difference in
good years and blunt the impact in bad years.
• Create a response plan for economic events that requires analysis of the
State’s Unemployment Insurance trust fund, and that prioritizes use of
federal economic aid for stabilizing the balance to minimize tax increases.
Finding 2: OESC responded to the pandemic as well as conditions
allowed.
Over the past several fiscal years, OESC has served more constituents while its
budget has remained relatively flat. The United States Department of Labor
data indicates that Oklahoma’s payment promptness, an indicator of quality,
was high: 93.25% of first payments were made within three weeks, above the
US DOL-mandated 87%. This number has varied in 2020 due to coronavirus for
not only Oklahoma but neighboring states as well.
OESC has accelerated long-planned systems upgrades due to coronavirus.
These overhauls include fraud prevention, workflow automation, and digital
claim management, allowing the agency to respond to another economic
disruption more deftly. These upgrades are paid for by a technology upgrade
fund established in 2017 and capped at $39 million.
Policy Considerations:
• Consider a dedicated and appropriately controlled technology upgrade
fund for all state agencies to proactively strategize updates to key
government services in times of distress.
Finding 3: Oklahoma’s unemployment insurance fund
remains at risk.
LOFT’s analysis indicates that the unemployment insurance trust fund will
need another $669 million to prevent the highest tax rate increase from being
calculated at the end of FY2021. There are other types of unemployment
insurance programs that Oklahoma could pursue to ensure that needs of
Oklahoma’s unemployed are met and that the trust fund remains stable.
Policy Considerations:
• Consider alternatives to traditional UI programs like Short-Term
Compensation (in which employers scale back hours with UI making up the
difference) and Self-Employment Assistance (in which UI claimants are
encouraged to start their own businesses).

Key Statistics:
 Oklahoma had the
biggest jump in
unemployment
due to COVID in
the region – from
3.1% in March to
14.7% in April.
 Peak
unemployment
from COVID is
more than double
peak
unemployment
from the Great
Recession – 14.7%
vs. 7.1%,
respectively.
 Between 2015 and
2019, OESC
exceeded the DOL-
mandated 87% 3-
week first
payment
promptness.
 The UI trust fund
went from $1.2
billion at the
beginning of 2020 to
under $100 million
in January 2021.

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
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Introduction
The Oklahoma Employment Security Commission (“OESC”) occupies a critical role in ensuring
economic stability. By administering the unemployment insurance (“UI”) system, it pays out
tens of millions of dollars every month while ensuring fund stability for future downturns. OESC
levies and collects UI taxes that vary from employer to employer. Each employer’s rate is based
on the total claims paid out by the organization relative to the firm’s total taxable wages for the
same period of time. Should the ratio of the balance to benefits paid ever fall below specific
limits, tax increases are automatically levied on employers.
Critical to this process of managing different systems with different stakeholders is the filing
process itself, shown below in Figure 011.
Figure 01: The process for applying for unemployment insurance can be simplified into five macro-level
steps.

Source: Legislative Office of Fiscal Transparency
This routine government function took on new significance with the coronavirus pandemic. The
Bureau of Labor Statistics2 has compiled data on the economic aspects of coronavirus
nationally:
• In June, 40.4 million people reported they had been unable to work at some point in the last
4 weeks because their employer closed or lost business due to the coronavirus pandemic.
These workers were either temporarily unemployed or underemployed. This figure was
down from 49.8 million in May.
• Fifteen percent of the June respondents reported receiving at least some pay from their
employer for the hours not worked. Again, down from May, when 18 percent of those
unable to work because of the pandemic received pay.

1 This is a simplified representation of the unemployment process. To see a more detailed process map, please
refer to Appendix A.
2 https://www.bls.gov/cps/effects-of-the-coronavirus-covid-19-pandemic.htm. As of January 28th 2021, individual
state data, including Oklahoma, was not available.
Citizen files
request for UI
Employment is
verified
Benefits are
paid out
Recertification
is necessary
on a weekly
basis
Job seeking is
required

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
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• In July, about 1 in 4 employed people teleworked or worked from
home for pay due to the coronavirus pandemic.
As a result of the profound impact on employment, Congress passed
the CARES Act, a relief bill that provided billions of dollars to states
and cities to fight the pandemic and provided aid to struggling
individuals, families, and businesses in the form of grants and
forgivable loans.3 Several additional unemployment programs were
established in this Act, and OESC acted as a disbursement entity for
individuals to receive federal dollars. Although the dollars were
federal, the work of processing applications for these programs fell
on OESC staff, explaining some of increasing unemployment
application processing times explored in Finding 2. LOFT has focused
this report exclusively on the state unemployment process since it is
most under the State’s control.
In May 2020, at the height of the impact of coronavirus, Oklahoma’s
Governor announced a change in executive leadership for the
Oklahoma Employment Security Commission.
With this evaluation, the Legislative Office of Fiscal Transparency
sought to assess the readiness of OESC and the UI system to
withstand another economic downturn similar to the one
experienced in 2020, as well as analyze the factors that led to the
long wait times of constituents.

3 https://home.treasury.gov/policy-issues/cares/assistance-for-american-workers-and-families

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
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Finding 1: There was little opportunity to prepare for
the unprecedented demand, new federal guidance, and
high-risk environment created by the pandemic.
The impact of coronavirus on employment cannot be overstated. Oklahoma faced a significant
increase in unemployment relative to the height of the Great Recession, as Chart 1 displays.
Chart 01: Peak unemployment due to coronavirus was more than twice the peak unemployment rate
during the Great Recession.

Source: Legislative Office of Fiscal Transparency analysis of Bureau of Labor Statistics numbers
The average unemployment rate over the past twenty years, excluding these ten months of
economic turmoil, is roughly 4.6%4, indicating the severity of coronavirus-caused
unemployment. Additionally, Oklahoma had some of the biggest spikes in unemployment
relative to neighboring states, due in part to the impact of coronavirus on energy and
agricultural markets5
In February and March 2020, unemployment averaged 3.1% before spiking to 14.7% in April.
That spike of 11.6% between March and April is the largest in the region, as Table 1 shows.

4 To review this data set, refer to Appendix B. Data at the time of publication was current through the period of
October 2020, though November 2020 was available on a preliminary basis. Preliminary numbers were not
included in this analysis.
5 https://extension.okstate.edu/coronavirus/business-and-economic-development/site-files/docs/general-
economies.pdf

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
9
Table 01: Month over month change in unemployment. Positive numbers indicate increasing
unemployment, while negative numbers indicate a decline. Color rankings are made across states for the
same month, indicating which states performed strongest. Oklahoma had the largest regional jump in
unemployment, though recovery has occurred to some extent.
Texas
Arkansas
Colorado
Kansas
Louisiana
New Mexico
Oklahoma
April 2020
8.4
5.8
7
9.1
8.4
5.6
11.6

May 2020
-0.5
-1.2
-2
-1.9
-0.9
-2.8
-2.1

June 2020
-4.6
-1.5
0.4
-2.5
-4.7
-0.7
-6.2

July 2020
-0.4
-1
-3.2
-0.3
-0.1
4.3
0.7
Source: Legislative Office of Fiscal Transparency analysis of Bureau of Labor Statistics numbers
Data from the Oklahoma Employment Security Commission indicate unemployment insurance
claims have spiked in FY2020 relative to prior periods, as indicated in Chart 2.
Chart 02: Initial and Continuing UI Claimants by Fiscal Year indicates the impact of the pandemic: There
has been a jump in initial and continuing unemployment insurance claims.

Source: Legislative Office of Fiscal Transparency analysis, using Oklahoma Employment Security Commission data,
as of June 30, 2020.
It should be noted that while there is some correlation between UI claims and the unemployment rate,
not all unemployed file claims for UI. Estimations of unemployment from the Bureau of Labor Statistics
are compiled from monthly surveys, not benefit payments.6

6
https://www.bls.gov/cps/uiclaims.htm#:~:text=Workers%20who%20lose%20their%20jobs,beginning%20a%20period%20of%20
unemployment.&text=While%20not%20related%20to%20the,and%20local%20area%20unemployment%20estimates.
104,306
106,954
86,465
73,085
85,161
839,226
74,962
89,152
75,870
59,224
59,714
394,113
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
FY2015
FY2016
FY2017
FY2018
FY2019
FY2020
Initial UI Claimants
Continuing UI Claimants

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
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In addition to economic need, federal guidance eased
longstanding controls, which increased fraud in the
United States (see inset)7. The urgent nature with which
the DOL advised states to pay UI claims required
relaxation of some regulatory processes. In March of
20208, the DOL released the following guidance
regarding “waiting periods” intended to avoid fraud and
even goes as far as to penalize States for continuing to
utilize a “waiting period”:
“In most states, an individual who is otherwise eligible
for benefits must first serve a waiting period. This is not
federally required, although it is a longstanding practice
in the UI program that may give states time to assess
eligibility and deter fraud. However, to facilitate
individuals’ ability to comply with quarantine orders,
states should consider temporarily waiving such
requirements. States should understand that if they
trigger Extended Benefits while the waiting week is waived, they will
not be reimbursed for the federal share of the first week of all
Extended Benefit claims. (Section 204(a)(2) of the Federal-State
Extended Unemployment Act of 1970).”
The DOL then later updated its guidance (12/30/2020) regarding UI
payments to reflect the following9:
“It is critical that states implement UI programs and provisions to ensure
that payments are being made to eligible individuals and that states
have aggressive strategies and tools in place to prevent, detect, and
recover fraudulent payments, with a particular emphasis on imposter
fraud by claimants using false identities. The programs and provisions
within the Continued Assistance Act, EUISAA, and the CARES Act operate
in tandem with the fundamental eligibility requirements of the Federal-
State UI program.”
Although the DOL provided flexibility to states regarding disbursement
of UI funds to claimants, the original guidance provided for PUA was
much more structured regarding the processes and controls to be
utilized while processing claims. The following is from the DOL PUA
Guidance10, dated April 5th, 2020:

7 To review this bulletin, please refer to Appendix C.
8 (DOL unemployment insurance program letter 03/12/2002) https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=8893
9 (DOL Updated Guidance on UI 12/30/2020) https://www.dol.gov/newsroom/releases/eta/eta20201230-1
10 (DOL 4/5/2020 PUA Guidance) https://www.dol.gov/newsroom/releases/eta/eta20200405
“The United States Secret
Service has received
reporting of a well-organized
Nigerian fraud ring exploiting
the COVID-19 crisis to
commit large-scale fraud
against state unemployment
insurance programs. The
[primary state targeted so far
is Washington, while there is
also evidence of attacks
in…Oklahoma.”
- United States Secret Service
Informational Bulletin –
‘Massive Fraud Against State
Unemployment Insurance
Programs’, dated 5/14/2020

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
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“States are required to do the following to ensure the efficacy and
integrity of the self-certification process:
•
Include information on the self-certification form (either paper or
on-line), that the claimant completes, including:
Separate from the actual certification, an acknowledgement
that the claimant understands that making the certification is
under penalty of perjury; and
o Information that advises the claimant that intentional
misrepresentation in self-certifying that he or she falls in one
or more of these categories is fraud.
• Provide clear messaging on-line that claimants may be subject to
criminal prosecution if they are found to have committed fraud. I-7
States are also required to take reasonable and customary
precautions to deter and detect fraud, such as, for example, a random
audit of a sample of claims to detect fraud.”
The Unemployment Insurance (UI) Trust Fund, managed by the United States
Treasury, is the fund used to pay out unemployment insurance claims and is
refilled with contributions from employers and employees. According to the
federal Department of Labor, Oklahoma’s fund has ranked as one of the top
ten most solvent in the United States between 2014 and 2020, which
represents the latest report to date11.
The balance of Oklahoma’s UI fund has significantly declined due to the
economic impact of coronavirus, as Chart 03 shows:

11 To review these reports, please visit https://oui.doleta.gov/unemploy/solvency.asp. State UI Trust Fund Solvency
Reports are released in February: therefore, the 2020 report does not capture any impact on unemployment
compensation because of coronavirus.

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
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Chart 03: In January 2020, the balance of Oklahoma’s UI fund was approximately $1.1 billion. By
February 2021, the beginning balance declined to approximately $98.9 million, indicating an average
decline of 6.4% month over month. (All numbers in millions)

Source: Legislative Office of Fiscal Transparency analysis, using US Treasury Data with OESC commentary.
In October and November, OESC received two installments of federal relief administered by
Oklahoma’s CARES FORWARD team: $25 million in October and $75 million in November. The
low fund balance put Oklahoma at risk for triggering two different statutory tax increases on
businesses. The first is a requirement that the UI trust fund maintain a balance of at least $25
million. Should the balance fall below that threshold, a surcharge of up to 33.3% is immediately
applied to employers for the upcoming quarter.12 The $100 million in federal relief was
specifically granted to avoid the prospect of this tax increase.13
The second is an unemployment insurance rate, determined annually, based on the ending
balance of the UI trust fund and the sum of benefits paid out over the twenty consecutive
preceding calendar quarters as of July 1, divided by 5.14 Table 02 below shows the results of
different balance-to-benefits ratios.

Table 02: The balance of the UI trust fund and the sum of benefits paid out over the previous twenty
consecutive calendar quarters impact the condition factors used to determine the tax rate on employers.

12 Title 40, Section 3-114
13 Meeting with the CARES FORWARD Team, Exit Conference
14 Oklahoma Employment Security Act, Section 3, as well as the Rate Table on pages 167 and 168. This section and
the rate tables can also be found in Appendix D.
$1,116
$99
$0
$200
$400
$600
$800
$1,000
$1,200
January, 2020
February, 2021
Balance of the UI Trust Fund (in Millions)

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
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If the UI Fund
Balance: (Benefits
Paid / 5) ratio is…
...Then
the
Condition
Factor is…
...And the impact on
employers with a
benefit to wage ratio
of 0 will result in a
contribution rate
increase of…
...the impact on
employers with a benefit
to wage ratio greater
than 0 but less than .1%
will result in a
contribution rate
increase of…
...and the impact on
employers with a
benefit to wage ratio
greater than .1% will
result in a
contribution rate
increase of...
Less than 3.5 but
greater than 3
A
0.10%
0.20%
0.30%
Less than 3 but
greater than 2.5
B
0.20%
0.30%
At least .40%
Less than 2.5 but
greater than 2
C
0.30%
0.40%
At least .50%
Less than 2
D
0.40%
0.50%
At least .60%
Source: Legislative Office of Fiscal Transparency
Any assessed condition factor results in a tax increase. The total amount of benefits paid out
over the preceding twenty consecutive calendar year quarters as of July 1, 2020 equaled $1.7
billion. Dividing by 5, the benefits amount used to calculate the condition factor is $344 million.
The ending balance of the UI trust fund as of June 30th, 2020, was approximately $587 million,
indicating a ratio of 1.70, which activated Condition Factor D. Table 03, on page 13, shows how
much investment was needed to avoid or minimize tax increases.
Table 03: By examining Oklahoma’s ending balance as of June 30, 2020 and calculating the amount of
benefits paid out over the preceding twenty consecutive calendar quarters, it can be derived that an
additional $2.8 million would have prevented Oklahoma from experiencing Condition Factor D, which
carries the steepest tax increase.
Min Ratio
3.5
3
2.5
2
No Conditional Factor
Condition A
Condition B
Condition C
Needed Ending Balance
 $      1,206,679,078.47   $ 1,034,296,352.97
 $  861,913,627.48   $ 689,530,901.98
Actual Ending Balance
 $         586,702,931.00
 $     586,702,931.00   $  586,702,931.00   $ 586,702,931.00
Needed Contribution
 $         619,976,147.47
 $     447,593,421.97   $  275,210,696.48   $ 102,827,970.98
CRF Contribution
 $         100,000,000.00
 $     100,000,000.00   $  100,000,000.00   $ 100,000,000.00
Marginal Contribution Needed
 $        519,976,147.47
 $    347,593,421.97
 $ 175,210,696.48
 $     2,827,970.98
5-year Ave Benefits
 $         344,765,450.99
 $     344,765,450.99   $  344,765,450.99   $ 344,765,450.99
Source: Oklahoma Employment Security Commission
It should be noted that increased unemployment insurance taxes act as a counterbalance to
higher benefits paid out to ensure the stability of the fund. To avoid reaching Condition Factor
D, which in January increased the maximum tax rate from 5.5% to 7.5%, the fund would have
needed the $100 million investment sooner. However, without the tax increase, there is an
increased likelihood that the fund would have dropped below $25 million and triggered the
33.3% surcharge.

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
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States had two methods to prevent tax increases triggered by low trust fund balances: taking
Federal loans15 and depositing Coronavirus Relief Funds directly into their UI trust fund.
However, Oklahoma was not eligible for Federal loans because the fund’s balance was not
depleted. Under Section 1201 of the Social Security Act (emphasis LOFT’s):
“(B) the amount required by any State for the payment of compensation in any month
shall be determined with due allowance for contingencies and taking into account all
other amounts that will be available in the State’s unemployment fund for the
payment of compensation in such month…”
The federal Department of Labor interprets this as a requirement “…that states exhaust all
available resources before obtaining federal advances.”16
Therefore, the only option Oklahoma had to increase the balance of the trust fund was
depositing Coronavirus Relief Funds. To prevent what Oklahoma has experienced, other states
have made significant investments in their Unemployment Insurance Trust Funds. Table 4 on
page 14 shows how Oklahoma ranks among an analysis of ten states with comparable
allocations of relief funds. These states, including Oklahoma, had strong Unemployment
Insurance Trust Fund solvency rankings at the start of 2020 before the pandemic.17
Additionally, the 2020 unemployment rates in these states were similarly impacted: the
average unemployment rate for these ten states range from 4.4% (Nebraska) to 8.2%
(Mississippi). Oklahoma had the third highest average unemployment from January to
November at 6.7%, behind Mississippi and Arkansas at 6.8%.18

Table 04: State Analysis of UI Investment as Percentage of Total Relief.19 Although Oklahoma was
ranked in the top 10 states for UI solvency as of January 2020, the system required more investment.

15 As outlined the Social Security Act, section 1202.
16 Discussion with representative of the federal Department of Labor.
17 US Department of Labor, Trust Fund Solvency Report, January 2020. Find here:
https://oui.doleta.gov/unemploy/docs/trustFundSolvReport2020.pdf
18 Data comes from the Bureau of Labor Statistics. November 2020 is the latest month for comparison. November
2020 numbers are still preliminary and may change. To see the regional comparison, please refer to Appendix B.
19 Information on UI trust investment from NCSL.

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
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State
Allocation
 UI Investment
(Sorted by) % to UI
UI Fund Solvency Ranking
Iowa
 $1.25B
 $490M
39%
14
Nebraska
 $1.25B
 $427M
34%
6
Idaho
 $1.25B
 $200M
16%
10
Montana
 $1.25B
 $200M
16%
11
Alabama
 $1.90B
 $300M
16%
31
Mississippi
 $1.25B
 $181.8M
15%
4
Arkansas
 $1.25B
 $165M
13%
19
South Dakota
 $1.25B
 $100M
8%
5
Oklahoma
 $1.53B
 $100M
7%
7
Wyoming
 $1.25B
 $16.4M
1%
3
Source: Legislative Office of Fiscal Transparency analysis of National Conference of State Legislatures data
To avoid the prospect of triggering that $25 million threshold, it is likely that more investment
was needed after the calculation of the Condition Factor in June 2020. Preliminary information
for the month of January 2021 indicates that the trust fund balance is still declining, from $125
million to $98.9 million as of February 1st, 2021.Some states have options apart from federal aid
or loans. For example, Arkansas’ statutes allow for up to $500 million in bonds to be issued
through the state’s finance authority.20 Texas has previously utilized bonding capacity to avoid
an increase in unemployment taxes.21 And, Michigan took on $3.8 billion in debt to weather the
effects of the Great Recession.22
A 2004 NELP analysis of states that utilize bonds to stabilize unemployment trust fund balances
indicate several best practices for positive results:23

20 Title 11, Chapter 10, 1004.
21 https://www.oaoa.com/news/government/texas-workforce-commission-re-funds-unemployment-insurance-
bonds/article_26ce6054-cc9f-11e3-87be-001a4bcf6878.html
22 https://www.nelp.org/publication/urgent-need-federal-loans-state-unemployment-agencies/
23 https://www.nelp.org/wp-content/uploads/2015/03/bond-final1.pdf

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
16
1. Any bond program should only be used to offset events. It would
not be good practice to use bonds for long-term solvency issues.
Both Texas and Michigan have used bonds to amortize high
unemployment costs (caused by different factors) without
addressing the underlying issues contributing to insolvency in the
first place.
2. Bond programs must have flexible terms. The NELP report notes
that fund utilization projection is an inexact science. Therefore,
callable bonds that invest in short-term loans as opposed to more
rigid and long-term investments are ideal.
3. Ensure that projected savings materialize. Bonds often
incorporate lower interest rates than Federal advances, however,
analysis reveals that savings might not materialize without
thorough projections.
The tax increase that went into effect on January 1st, 2021 resulted
from a confluence of events: the deep economic impact of the
coronavirus pandemic; the Federal requirement that states exhaust
their resources before receiving advances; underinvestment of
Coronavirus Relief Funds; and a statutory lack of flexibility in how
the State may replenish the fund.
Policy Considerations
1. Allow for bonding to support the Unemployment Insurance trust
fund. While this should not be used to cover up underlying
structural solvency issues, the fact that Oklahoma so regularly
ranked as one of the most solvent funds prior to coronavirus
indicates the typical level of stability. The State may consider
instituting a cap on bond issuance, similar to Arkansas, or allowing
debt issuance only under emergency declarations.
2. Consider tying the $25 million surcharge trigger to an index, such
as total benefits paid out. As periods of economic instability will
invariably occur, the ending balance of the trust fund is variable.
Utilizing a static threshold will make no difference in good years
and blunt the impact in bad years.
3. Create a response plan for economic events that requires analysis
of the state’s Unemployment Insurance trust fund, and that
prioritizes use of federal economic aid for stabilizing the balance
to minimize tax increases.

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
17
Finding 2: OESC responded to the pandemic as well as
conditions allowed.
As OESC responded to rising unemployment claims from the past several years, their budget
has held steady from FY2015 levels as Chart 4 shows below. These continuing claim numbers
are presented net of fraudulent claims.
Chart 04: Despite a relatively stable budget, OESC has greatly expanded the number of constituents it
serves annually (presented net of fraudulent claims).

Source: Legislative Office of Fiscal Transparency’s analysis of information presented in executive budget books and
information provided by the Oklahoma Employment Security Commission.
One of the metrics for quality from the DOL is called “First Payment Promptness,” defined as:
“First Payment Promptness: % of all 1st payments made within 21 days24 after the week ending
date of the first compensable week in the benefit year (excludes Workshare, episodic claims
such as DUA, and retroactive payments for a compensable waiting period).25”
DOL also asserts that the acceptable standard is for 87% of first payments to be made within 21
days. If that standard is not reached, as Pew reports, there are “no penalties but requires states
to have a plan to correct the problem.26” Pew further notes that, as of November 1st, 2020, only
three states reached that standard.

24 This presumes a waiting week requirement. Oklahoma and the states in the immediate vicinity all utilize a
waiting week under normal circumstances.
25 https://oui.doleta.gov/unemploy/docs/ui_directors_Mar2020.pdf
26 https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2020/12/02/unemployment-payments-
weeks-late-in-nearly-every-state
0%
50%
100%
150%
200%
250%
300%
350%
400%
 FY2015
 FY2016
 FY2017
 FY2018
 FY2019
 FY2020
Net Continuing Claims to Budget
 Budget
 Continuing Claims
Linear ( Budget )
Linear ( Continuing Claims )

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
18
Interpretations from state-to-state comparisons on this topic should be made carefully.
Multiple differences in legislation, available technology, and underlying economic factors could
exist that skew analysis. Data from the DOL indicates that Oklahoma’s processing percentage
was comparable to other states in the region, as Chart 5 below shows:
Chart 05: From 2015 to 2019, Oklahoma on average paid out 93.25% of its claims within three weeks,
comparable to other states in the region. DOL requires 87%.

Source: Legislative Office of Fiscal Transparency analysis of federal Department of Labor data

93.25%
96.66%
91.72%
93.87%
94.54%
92.25%
95.01%
87.35%
85%
89%
93%
97%
Oklahoma
Arkansas
Texas
Kansas
Colorado
Louisiana
New Mexico
Missouri
2015 - 2019 Average First Payment Timeliness

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
19
This key metric was negatively impacted in the region. Chart 6 shows how payments processed
within 1 week declined precipitously.
Chart 06: The regional impact of coronavirus on UI processing time. Many states experienced severe
variation.

Source: Legislative Office of Fiscal Transparency analysis of federal Department of Labor data
Two of Oklahoma’s neighbors have since returned to the DOL-required 87% of payments
processed within 3 weeks.
Chart 07: First Payment Timeliness generally improved after three weeks, though the variability
throughout and the dip in September is a common feature for most of these states.

Source: Legislative Office of Fiscal Transparency’ analysis of federal Department of Labor data

0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
% First Payment Timeliness by State and Month - > 1 Week
Oklahoma
Arkansas
Texas
Kansas
Colorado
Louisiana
New Mexico
Missouri
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
% First Payment Timeliness by State and Month - > 3 Weeks
Oklahoma
Arkansas
Texas
Kansas
Colorado
Louisiana
New Mexico
Missouri

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
20
Comparing the region’s Insured Employment Rate, which is the number of continuing claims
relative to covered employment (providing a common-sized measurement for comparison),
shows that Oklahoma has consistently had the third or fourth highest claims in the region for
much of 2020.
Chart 08: States did not experience a uniform impact on their unemployment insurance claims. Louisiana
was hit particularly hard, while Missouri was hit relatively light.

Source: Legislative Office of Fiscal Transparency’ analysis of federal Department of Labor data

OESC is currently in the process of upgrading its technological and business processes to ensure
better outcomes for claimants and more security, a plan long in the works. In 2017, House Bill
1110 was enacted, dedicating 5% of annual employer contributions to a Technology Fund27,
whose balance may accumulate until 2022, up to a maximum of $39 million. Chart 9 below
displays the historical inflows, outflows, and balance of the fund:

27 https://www.ok.gov/oesc/documents/2018%20Rate%20Change.pdf
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Insured Unemployment by State and Month
Oklahoma
Arkansas
Texas
Kansas
Colorado
Louisiana
New Mexico
Missouri

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
21
Chart 09: Expenditures, Deposits, and the Ending Balance of the Technology Fund by Fiscal Year since
inception. This fund was created to provide OESC with the capital necessary to replace technology
systems.

This plan was referred to as the ‘5/39 Initiative’ and began in 201928
To combat fraudulent claims while also updating current legacy processes, OESC has
implemented the BT-40 plan to replace and quicken implementation of aspects of the 5/39
initiative. This plan aims to update “40 years’ worth of technology” while also streamlining
claim application, payments, and security. OESC has expedited this transition to be
implemented in two phases, to be completed within 18 months. To aid in this project, OESC
also received $17 million in Coronavirus Relief Funds on July 8th, 2020, expressly for replacing
the decades-old mainframe.29 30 In September 2020, OESC announced an updated 18-month
technology improvement project incorporating lessons learned from the pandemic31, with
detailed plans in place, outlined below.

28 Based on communication with OESC executive leadership.
29 Based on data sent to LOFT by the CARES Forward Team.
30 https://tulsaworld.com/news/legislative-offices-swamped-with-requests-for-help-on-unemployment-
claims/article_50fe588f-bf62-5683-b75c-a282ff817c88.html
31 https://oklahoma.gov/oesc/about/newsroom/2020/september/press-release-2020-09-29.html

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
22
The first phase, undertaken between July and August 2020, aimed to
be a “rapid assessment to define future state experience and
technology landscape for OESC’s transformation”.32 Work
completed in this phase included assessments of the agency’s
existing services, platform, controls to prevent fraud, and data
management to streamline implementation of any solutions.
The second phase includes building out solutions first identified in
Phase 1. These solutions are more directly focused on constituent
experience and relieving immediate process bottlenecks. These
direct solutions, in order of priority, and their estimated complete
implementation, include:
• Automated intake management, allowing for scanning and
extracting of all required data for the ‘Notice of Application for
Unemployment’ (estimated complete implementation: Q4 2021).
• The ability to schedule Re-employment Services and Eligibility
Assessment (RESEA) meetings digitally, which provide claimants
access to a job counselor and customized labor market
information to reduce their time on unemployment (estimated
complete implementation: Q1, 2022).
• An improved ability for small and mid-size businesses to respond
to separation notices digitally (estimated complete
implementation: Q1, 2022).
• Automated flagging of fraudulent activity and assigning for review
(already implemented).
• A virtual assistant for claimants to have their questions answered
for initial and pandemic unemployment assistance.
• Automated, queue-based workflows for both claims and appeals
(estimated complete implementation: Q1, 2022).
• A unified claim submission design for all types of benefits,
including Pandemic Unemployment Assistance, Pandemic
Emergency Unemployment Compensation, and other federal
programs (estimated complete implementation: Q4, 2021).
• Automated reporting capabilities for core operations of the
agency (estimated complete implementation: Q4 2021).

32 To review more details of this plan, please refer to Appendix E.

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
23
The unprecedented nature of the coronavirus pandemic and its economic
effects discussed in Finding 1 impacted the agency in such a way that
caused severe slowdowns of service to constituents, as evidenced by
Oklahoma’s above-average three-week payment timeliness rating. This
situation might have been untenable were it not for the Technology Fund,
and the current leadership’s ability to implement necessary changes
quickly and holistically.
Policy Considerations
Consider a dedicated and appropriately controlled technology upgrade
fund for all state agencies to proactively strategize updates to key
government services in times of distress.

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
24
Finding 3: Oklahoma’s unemployment
insurance fund remains at risk.
Despite the several ambitious but achievable change initiatives OESC
is undertaking, the state remains in a vulnerable position if another
economic event were to occur before the fund balance could be
replenished.
Unfortunately, due to the much higher than usual benefits paid out
in 2020, projections indicate another unemployment tax rate
increase is probable in 2021. LOFT estimates that the unemployment
insurance fund will require $670 million to avoid a consecutive year
of receiving Conditional Factor D, as Table 05 shows:
Table 05: Projections of necessary investment to avoid another Condition D
and its ensuing tax increases before June 30, 2021.
Source: Legislative Office of Fiscal Transparency
It should be noted that because of the effect twenty quarters of paid
benefits has on the Condition Factor process, additional investment
will likely be needed in any year in which deposits are made to
ameliorate the possibility of tax increases. This pattern may be
reflected for several years until the coronavirus-linked quarters, and
their higher than average payouts, fade.
Fund investments, devoid of tax increases, could result in a less-
stable fund over time; tax increases act as a stabilizing function on
the balance of the fund. Oklahoma should be careful to not create
inflow cannibalization.

No Conditional
Factor
Condition A
Condition B
Condition C
Needed Ending
Balance
$1,751,671,924.47 $1,501,433,078.12
$1,251,194,231.76 $1,000,955,385.41
Projected Ending
Balance
$331,450,972.72
$331,450,972.72
$331,450,972.72
$331,450,972.72
Needed
Contribution
$1,420,220,951.74 $1,169,982,105.39
$919,743,259.04
$669,504,412.69

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
25
Alternatives to UI Programs Exist
Short-Term Compensation (“STC”)
STC is a program that has been implemented in 26 states and D.C. Under
this program, employers reduce their worker hours between 10% and 60%
and the workers then receive a pro-rata portion of their lost wages through
unemployment.33 Oklahoma does not currently have a STC program in
place.
According to the Department of Labor’s latest Unemployment Insurance
(UI) Weekly Report, 86,498 of UI beneficiaries are receiving their benefits
through STC.34 Although States are not required to enact an STC program,
“the employer’s plan must be consistent with employer obligations under
applicable Federal and state laws.”35
Self-Employment Assistance (“SEA”)
DOL also documents the Self-Employment Assistance program that is
offered in various states, but is not available in Oklahoma. SEA programs
help unemployed individuals create their own jobs by providing financial
assistance while participants start a small business. Eligibility for SEA
includes:
• Eligibility for UI
• Engaged on a full-time basis in activities relating to the establishment of
a business and becoming self-employed
• Identified as likely to exhaust benefits
• Participating in self-employment activities including entrepreneurial
training, business counseling, and technical assistance.
However, Federal law states that no more than five percent of individuals
receiving regular UI benefits under a state program participate in the SEA
program. Participants actively engage full-time in activities relating to the
establishment of a business and becoming self-employed, while still
considered to be unemployed.
Policy Considerations
Consider alternatives to traditional UI programs like Short-Term
Compensation and Self-Employment Assistance.

33 A basic overview of each states’ operational STC program details can be found on p. 4-9 of
the DOL Extensions and Special Programs report.
34 A basic overview of each states’ operational STC program details can be found on p. 8 of
the DOL Extensions and Special Programs report.
35 Ibid.

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
26
Summary of Policy Considerations
To increase the probability of accurately addressing the needs of Oklahoma, LOFT’s
recommendations include increasing flexibility for maintaining a healthy trust fund balance and
delivering services, prioritizing investment, and indexing surcharge-trigger amounts. LOFT
suggests the following recommendations be implemented:
Policy Considerations
Finding
Page
Allow for bonding to support the
Unemployment Insurance trust
fund during economic crises.

There was little opportunity to
prepare for the unprecedented
demand, new federal guidance, and
high-risk environment created by the
pandemic.

16
Consider tying the $25 million
surcharge trigger to an index, like
the amount of benefits paid out.

There was little opportunity to
prepare for the unprecedented
demand, new federal guidance, and
high-risk environment created by the
pandemic.

16
Create a response plan for
economic events that requires
analysis of the state’s
Unemployment Insurance trust
fund, and that prioritizes use of
federal economic aid for stabilizing
the balance to minimize tax
increases

There was little opportunity to
prepare for the unprecedented
demand, new federal guidance, and
high-risk environment created by the
pandemic.
16
Consider a dedicated and
appropriately controlled
technology upgrade fund for all
state agencies to proactively
strategize updates to key
government services in times of
distress.

OESC responded to the pandemic as
well as conditions allowed.
23
Consider alternatives to traditional
UI programs like Short-Term
Compensation and Self-
Employment Assistance.
Oklahoma’s Unemployment Insurance
Fund remains at risk.
25

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
27
Appendices
Appendix A: Process Map – Applying for Unemployment

Source: Legislative Office of Fiscal Transparency

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
28
Appendix B: Unemployment rate over the past twenty years (%)
Local Area Unemployment Statistics
Year
Period
Oklahoma
Kansas
Texas
Louisiana
Colorado
Missouri
New Mexico
2010
Jan
7.1
7.2
8.3
7.4
8.3
9.8
8.0
2010
Feb
7.1
7.2
8.3
7.5
8.5
9.8
8.0
2010
Mar
7.0
7.2
8.3
7.6
8.6
9.7
8.1
2010
Apr
7.0
7.1
8.2
7.7
8.7
9.7
8.2
2010
May
6.9
7.0
8.1
7.8
8.7
9.6
8.3
2010
Jun
6.8
7.0
8.0
7.9
8.7
9.5
8.3
2010
Jul
6.7
7.0
8.0
8.0
8.8
9.4
8.3
2010
Aug
6.6
7.0
8.0
8.2
8.8
9.5
8.2
2010
Sep
6.6
7.0
8.1
8.3
8.9
9.5
8.1
2010
Oct
6.6
7.0
8.1
8.3
8.9
9.5
8.0
2010
Nov
6.5
7.0
8.1
8.4
8.9
9.5
7.9
2010
Dec
6.4
7.0
8.1
8.3
8.9
9.4
7.8
2011
Jan
6.2
6.9
8.0
8.3
8.8
9.3
7.7
2011
Feb
6.1
6.9
7.9
8.2
8.7
9.1
7.5
2011
Mar
5.9
6.8
7.9
8.1
8.5
8.9
7.4
2011
Apr
5.9
6.6
7.9
8.0
8.4
8.8
7.4
2011
May
5.8
6.5
7.9
7.9
8.3
8.7
7.4
2011
Jun
5.8
6.5
7.9
7.8
8.3
8.6
7.4
2011
Jul
5.9
6.4
7.9
7.7
8.3
8.5
7.5
2011
Aug
5.9
6.4
7.8
7.7
8.2
8.4
7.5
2011
Sep
5.9
6.3
7.7
7.6
8.2
8.2
7.6
2011
Oct
5.8
6.3
7.6
7.6
8.2
8.0
7.6
2011
Nov
5.7
6.2
7.4
7.6
8.2
7.8
7.6
2011
Dec
5.6
6.1
7.2
7.5
8.2
7.6
7.6
2012
Jan
5.5
6.0
7.1
7.5
8.2
7.4
7.5
2012
Feb
5.4
5.9
7.0
7.4
8.1
7.2
7.3
2012
Mar
5.3
5.9
6.9
7.4
8.1
7.1
7.2
2012
Apr
5.2
5.8
6.9
7.4
8.1
7.0
7.1
2012
May
5.2
5.8
6.9
7.3
8.0
7.0
7.1
2012
Jun
5.2
5.7
6.8
7.2
8.0
6.9
7.0
2012
Jul
5.2
5.7
6.7
7.0
7.9
6.9
7.0
2012
Aug
5.2
5.6
6.6
6.8
7.8
6.8
7.0
2012
Sep
5.2
5.6
6.5
6.7
7.7
6.8
7.0
2012
Oct
5.2
5.6
6.5
6.7
7.7
6.8
7.1
2012
Nov
5.3
5.6
6.5
6.8
7.6
6.9
7.1
2012
Dec
5.3
5.6
6.5
6.9
7.5
6.9
7.0
2013
Jan
5.3
5.6
6.5
7.0
7.4
6.9
7.0
2013
Feb
5.3
5.5
6.5
7.1
7.3
6.8
7.0
2013
Mar
5.4
5.5
6.5
7.2
7.2
6.8
6.9
2013
Apr
5.4
5.5
6.5
7.1
7.1
6.8
6.9

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
29
2013
May
5.3
5.4
6.4
7.0
7.1
6.8
6.9
2013
Jun
5.3
5.4
6.3
6.9
7.0
6.8
6.9
2013
Jul
5.3
5.3
6.3
6.8
6.9
6.8
6.9
2013
Aug
5.3
5.3
6.2
6.6
6.8
6.7
6.9
2013
Sep
5.3
5.2
6.1
6.4
6.6
6.6
7.0
2013
Oct
5.2
5.1
6.0
6.2
6.4
6.6
7.0
2013
Nov
5.2
5.0
5.9
6.0
6.3
6.6
7.0
2013
Dec
5.1
4.9
5.8
5.8
6.1
6.6
6.9
2014
Jan
5.0
4.8
5.7
5.7
6.0
6.7
6.9
2014
Feb
4.9
4.8
5.5
5.7
5.8
6.7
6.9
2014
Mar
4.8
4.7
5.4
5.7
5.6
6.6
6.9
2014
Apr
4.7
4.7
5.3
5.9
5.4
6.5
6.8
2014
May
4.6
4.6
5.2
6.1
5.2
6.3
6.8
2014
Jun
4.5
4.6
5.2
6.3
5.0
6.2
6.7
2014
Jul
4.4
4.5
5.1
6.5
4.8
6.0
6.7
2014
Aug
4.3
4.4
5.0
6.7
4.6
5.9
6.6
2014
Sep
4.3
4.4
4.9
6.9
4.5
5.8
6.5
2014
Oct
4.2
4.3
4.8
7.0
4.4
5.7
6.5
2014
Nov
4.2
4.3
4.7
7.0
4.3
5.6
6.4
2014
Dec
4.2
4.3
4.6
6.9
4.3
5.6
6.4
2015
Jan
4.2
4.3
4.5
6.9
4.3
5.5
6.4
2015
Feb
4.2
4.4
4.4
6.8
4.2
5.5
6.5
2015
Mar
4.3
4.4
4.4
6.7
4.2
5.5
6.5
2015
Apr
4.4
4.4
4.4
6.5
4.1
5.4
6.6
2015
May
4.4
4.3
4.4
6.4
4.1
5.3
6.6
2015
Jun
4.5
4.2
4.4
6.2
4.0
5.1
6.5
2015
Jul
4.5
4.1
4.4
6.1
3.8
4.9
6.5
2015
Aug
4.4
4.1
4.4
6.1
3.7
4.8
6.5
2015
Sep
4.4
4.0
4.4
6.0
3.6
4.6
6.4
2015
Oct
4.5
4.0
4.5
6.0
3.6
4.5
6.5
2015
Nov
4.5
4.0
4.5
6.1
3.5
4.5
6.5
2015
Dec
4.5
4.0
4.4
6.1
3.5
4.4
6.5
2016
Jan
4.6
3.9
4.4
6.1
3.5
4.4
6.5
2016
Feb
4.7
3.9
4.4
6.1
3.5
4.4
6.5
2016
Mar
4.7
4.0
4.4
6.1
3.5
4.4
6.6
2016
Apr
4.8
4.0
4.5
6.1
3.5
4.5
6.6
2016
May
4.9
4.0
4.6
6.1
3.4
4.6
6.7
2016
Jun
4.9
4.1
4.7
6.1
3.4
4.7
6.7
2016
Jul
4.9
4.1
4.7
6.1
3.3
4.8
6.7
2016
Aug
4.9
4.1
4.7
6.1
3.3
4.8
6.7
2016
Sep
4.9
4.1
4.8
6.1
3.2
4.8
6.6
2016
Oct
4.8
4.1
4.8
6.0
3.1
4.7
6.6
2016
Nov
4.8
4.0
4.8
6.0
3.0
4.5
6.5
2016
Dec
4.7
4.0
4.8
5.9
2.9
4.3
6.4
2017
Jan
4.6
3.9
4.7
5.8
2.8
4.1
6.4

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
30
2017
Feb
4.5
3.8
4.7
5.7
2.7
4.0
6.3
2017
Mar
4.4
3.7
4.6
5.5
2.7
3.9
6.2
2017
Apr
4.3
3.7
4.5
5.4
2.7
3.8
6.1
2017
May
4.3
3.7
4.4
5.3
2.7
3.8
6.0
2017
Jun
4.2
3.7
4.3
5.1
2.7
3.7
5.9
2017
Jul
4.2
3.6
4.2
5.0
2.8
3.7
5.8
2017
Aug
4.1
3.6
4.1
4.9
2.8
3.6
5.7
2017
Sep
4.1
3.6
4.1
4.8
2.9
3.6
5.6
2017
Oct
4.0
3.5
4.1
4.7
2.9
3.6
5.5
2017
Nov
4.0
3.5
4.0
4.6
2.9
3.5
5.4
2017
Dec
3.9
3.5
4.0
4.6
2.9
3.5
5.3
2018
Jan
3.9
3.4
4.0
4.7
3.0
3.4
5.2
2018
Feb
3.8
3.4
4.0
4.8
3.0
3.4
5.1
2018
Mar
3.7
3.4
4.0
4.9
3.0
3.3
5.0
2018
Apr
3.6
3.3
4.0
5.0
3.1
3.3
4.9
2018
May
3.5
3.3
3.9
5.0
3.1
3.2
4.8
2018
Jun
3.4
3.3
3.9
5.0
3.2
3.1
4.8
2018
Jul
3.3
3.2
3.8
5.0
3.2
3.0
4.8
2018
Aug
3.2
3.2
3.7
4.9
3.2
3.0
4.8
2018
Sep
3.2
3.2
3.7
4.9
3.3
3.0
4.8
2018
Oct
3.2
3.2
3.7
4.8
3.3
3.0
4.9
2018
Nov
3.2
3.3
3.7
4.8
3.3
3.1
4.9
2018
Dec
3.3
3.3
3.7
4.7
3.2
3.2
4.9
2019
Jan
3.3
3.3
3.7
4.7
3.2
3.2
5.0
2019
Feb
3.3
3.3
3.6
4.6
3.1
3.2
5.0
2019
Mar
3.2
3.2
3.5
4.5
3.0
3.2
5.0
2019
Apr
3.2
3.2
3.5
4.5
2.9
3.2
5.0
2019
May
3.2
3.1
3.4
4.5
2.8
3.1
4.9
2019
Jun
3.2
3.1
3.4
4.6
2.7
3.1
4.9
2019
Jul
3.3
3.1
3.5
4.7
2.7
3.2
4.8
2019
Aug
3.3
3.1
3.5
4.9
2.6
3.2
4.8
2019
Sep
3.3
3.1
3.5
5.1
2.6
3.3
4.8
2019
Oct
3.4
3.1
3.5
5.2
2.5
3.4
4.8
2019
Nov
3.4
3.1
3.5
5.2
2.5
3.4
4.8
2019
Dec
3.4
3.1
3.5
5.2
2.5
3.4
4.8
2020
Jan
3.3
3.1
3.5
5.3
2.5
3.5
4.8
2020
Feb
3.2
3.1
3.5
5.2
2.5
3.5
4.8
2020
Mar
2.9
2.8
5.1
6.7
5.2
3.9
6.3
2020
Apr
14.7
11.9
13.5
15.1
12.2
10.2
11.9
2020
May
12.6
10.0
13.0
14.2
10.2
10.1
9.1
2020
Jun
6.4
7.5
8.4
9.5
10.6
7.8
8.4
2020
Jul
7.1
7.2
8.0
9.4
7.4
6.9
12.7
2020
Aug
5.7
6.9
6.8
7.7
6.7
7.0
11.4
2020
Sep
5.3
5.9
8.3
8.1
6.4
4.9
9.4

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
31
Appendix C: The United States Secret Service bulletin

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
32
Appendix D: Rate tables

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
33

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
34
Appendix E: Strategic change initiatives pursued by OESC
Finding 2 discusses the areas of the BT-40 plan that have been utilized to address Oklahoma’s
current demands. However, OESC’s BT-40 also addresses the long-term, holistic strategies that
the new Executive Leadership aims to implement in the coming years. Finding 3 goes into depth
regarding the ongoing work products that aim to provide lasting results and instruments
utilized in mitigating Unemployment demands pending future pandemics/states of emergency.
The objective to achieve “lasting results,” is seen throughout some of the “planned” and
“implemented” work products. “Phase 1,” of the BT-40 plan, included performing internal
analysis on data management/retention along with claimant, employer, and previous user
experiences.  Some examples of these include:
• Business Data Glossary: “centralized repository of information about business data
attributes such as business definition, format, meaning, relationships and usage”
• Future State Personas & Journeys: “An inventory for future state personas, journeys and
service blue prints that describe the future state Unemployment + Re-employment
experience”
• OESC Transformation Priority Use Cases: “Detailed descriptions from an experience and
tech perspective of the 9 priority use cases identified out of the Phase 1 Assessment”
• OESC Transformation Requirements Backlog: “Inventory of requirements across all core
OESC processes to build out the initial backlog for the transformation”
Phase 1 also included taking steps in identifying the tools, processes, and technology required
to address future influx of claims while allowing for flexibility in adapting to the needs of
claimants. A few examples include:
• Ways of Working & Governance: “Summary of the ways of working, methods and proposed
operating model and governance structures to deliver the OESC Transformation.”
• Data Objects: “Collection and segmentation of illustrative business data objects and entities
to support use cases specific data needs. Identification of master, transactional and
reference data groups to facilitate development of business workflows”
• OESC Research & Solutions Summary: “Executive level summary of OESC phase 1 research
and priority solutions identified for initial prioritization within the transformation”
• Current State Cyber Assessment: “A current state assessment of the cyber landscape at
OESC and OMES.”

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
35
Phase 2 of the BT-40 plan went further into the application of solutions/initiatives derived from
the Phase 1 findings. In addition, theses “work products,” aimed to capitalize on OESC’s
extensive service history by enhancing data/experience management so that it can be easily
referenced when concerns arise regarding user experience, fraudulent claims, audit processes,
etc. The following are a few examples of the above-mentioned work products:
Process Maps by Initiative: “Detailed process maps for Automated Intake, RESEA, Claims & Fact
Finding, and Appeals & Tracking Management to support the documentation of the future state
process and development of requirements and user stories”
Functional Requirements & User Stories: “Backlog of functional requirements, user stories, and
acceptance criteria to support the capability build out of the core initiatives contained within
Milestone 1.  These work products are drafted and managed in OESC’s instance of Azure
DevOps”
Unified Claim Design Information Architecture & Content: “Information Architecture and
content updates to claim submission questions to support the build out of a unified claim
submission experience in 2021”
OESC Fraud Framework: “Provides an overview of the fraud program level design. It also covers
the priorities for the work items to be completed by 12/31 and the initial risk areas for each
taxonomy (i.e. first-party, third-party, insider threat)”
With the completion of the BT-40 project, OESC aims to provide adaptive and flexible service to
the constituents of Oklahoma through the streamlining of claim submission/management,
fraud detection, and claimant payments.

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
36
Agency Responses

LOFT’s comments on the response from the Oklahoma Employment Security
Commission
As part of LOFT’s protocol, agencies are granted the opportunity to respond
to the evaluation report and findings. For this rapid response evaluation, which is limited in scope,
LOFT reviewed the status of the Unemployment Insurance Fund and conducted a historical analysis
of the impact of the Coronavirus Pandemic. To complete this work, LOFT engaged the Oklahoma
Employment Security Commission (OESC), the agency that manages the fund dedicated to payment
of unemployment benefits. Portions of the agency’s response warrant further clarification and
correction, which will be addressed. With this response, LOFT seeks to address questions of fact,
and not differences of opinion.
Limited Scope of Project
OESC’s response suggests that LOFT’s report should have included additional context regarding
the historical application of tax rates, other duties performed by the agency, and detailed internal
workflow challenges. While LOFT recognizes there may be many factors contributing to the
challenging environment that OESC is operating within, the scope of LOFT’s evaluation was not to
conduct a comprehensive review of the agency’s operations. Rather, LOFT’s evaluation sought to
assess the readiness of OESC and the Unemployment Insurance system to withstand another
economic recession, as well as analyze the factors that led to the long wait times of constituents.
LOFT appropriately acknowledges OESC’s programs within the scope of the report noting in the
introduction:
“Several additional unemployment programs were established in this Act (Coronavirus Relief
Act), and OESC acted as a disbursement entity for individuals to receive federal dollars. Although
the dollars were federal, the work of processing applications for these programs fell on OESC
staff, explaining some of increasing unemployment application processing times explored in
Finding 2. LOFT has focused this report exclusively on the state unemployment process since it is
most under the State’s control.”
Last, OESC presents within its response a new recommendation for improved workforce
outcomes for the state. LOFT did not evaluate this proposal, nor does it fall under the scope of
this evaluation.
LOFT’s response to claims of inaccuracy within report:
In response to Finding 1: “There was little opportunity to prepare for the unprecedented
demand, new federal guidance, and high-risk environment created by the pandemic,” OESC
questioned the source and accuracy of the fund balance figures for the Unemployment
Insurance Trust Fund.
The fund balance data included in the original draft of LOFT’s report was sourced from the U.S.
Treasury. After the exit conference, LOFT was provided data from OESC clarifying that not all
funds within the account are dedicated to Unemployment Insurance (UI). Specifically, within
the UI fund are three funding categories: Unemployment Insurance, the Unemployment
Insurance Modernization Incentive, and Emergency Unemployment Compensation Relief. The
inclusion of these additional categories within the UI fund created the appearance that the

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
37
balance was higher than those funds specifically designated for UI. LOFT has updated the report
to reflect the additional balance information.
LOFT sought the input of U.S. Department of Labor experts to understand how to interpret
Treasury reports, including transaction description codes, representing five years of monthly
financial statements. These instructions included codes indicating administrative expenses and
modernization expenditures, which LOFT excluded from its analysis. However,
these transactions affected the projected balance of the fund. In response to OESC’s
comments, LOFT has updated the figures to accurately reflect the total balance of the fund.
While not a challenge of accuracy, OESC also requested that LOFT include state data alongside
national Bureau of Labor Statistics data presented in the report’s introduction. The data used is
aggregated and Oklahoma-specific data is not available for inclusion.

LOFT: Oklahoma Employment Security Commission Rapid Response Evaluation
38
OESC Response to LOFT, February 1, 2021

February 3, 2021

State Capitol Building, Room 107 | Oklahoma City, OK 73105 | www.OKLoft.gov
LOFT’s comments on the response from the Oklahoma Employment Security
Commission
As part of LOFT’s protocol, agencies are granted the opportunity to respond to the evaluation report and
findings. For this rapid response evaluation, which is limited in scope, LOFT reviewed the status of the
Unemployment Insurance Fund and conducted a historical analysis of the impact of the Coronavirus
Pandemic. To complete this work, LOFT engaged the Oklahoma Employment Security Commission (OESC),
the agency that manages the fund dedicated to payment of unemployment benefits. Portions of the
agency’s response warrant further clarification and correction, which will be addressed. With this response,
LOFT seeks to address questions of fact, and not differences of opinion.
Limited Scope of Project
OESC’s response suggests that LOFT’s report should have included additional context regarding the
historical application of tax rates, other duties performed by the agency, and detailed internal workflow
challenges. While LOFT recognizes there may be many factors contributing to the challenging environment
that OESC is operating within, the scope of LOFT’s evaluation was not to conduct a comprehensive review
of the agency’s operations. Rather, LOFT’s evaluation sought to assess the readiness of OESC and the
Unemployment Insurance system to withstand another economic recession, as well as analyze the factors
that led to the long wait times of constituents.
LOFT appropriately acknowledges OESC’s programs within the scope of the report noting in the
introduction:
“Several additional unemployment programs were established in this Act (Coronavirus Relief Act), and
OESC acted as a disbursement entity for individuals to receive federal dollars. Although the dollars were
federal, the work of processing applications for these programs fell on OESC staff, explaining some of
increasing unemployment application processing times explored in Finding 2. LOFT has focused this
report exclusively on the state unemployment process since it is most under the State’s control.”
Last, OESC presents within its response a new recommendation for improved workforce outcomes for
the state. LOFT did not evaluate this proposal, nor does it fall under the scope of this evaluation.
LOFT’s response to claims of inaccuracy within report:
In response to Finding 1: “There was little opportunity to prepare for the unprecedented demand, new
federal guidance, and high-risk environment created by the pandemic,” OESC questioned the source
and accuracy of the fund balance figures for the Unemployment Insurance Trust Fund.
The fund balance data included in the original draft of LOFT’s report was sourced from the U.S.
Treasury. After the exit conference, LOFT was provided data from OESC clarifying that not all funds
within the account are dedicated to Unemployment Insurance (UI). Specifically, within the UI fund are
three funding categories: Unemployment Insurance, the Unemployment Insurance Modernization
Incentive, and Emergency Unemployment Compensation Relief. The inclusion of these additional

February 3, 2021

State Capitol Building, Room 107 | Oklahoma City, OK 73105 | www.OKLoft.gov
categories within the UI fund created the appearance that the balance was higher than those funds
specifically designated for UI. LOFT has updated the report to reflect the additional balance
information.
LOFT sought the input of U.S. Department of Labor experts to understand how to interpret Treasury
reports, including transaction description codes, representing five years of monthly financial
statements. These instructions included codes indicating administrative expenses and modernization
expenditures, which LOFT excluded from its analysis. However, these transactions affected the
projected balance of the fund. In response to OESC’s comments, LOFT has updated the figures to
accurately reflect the total balance of the fund.
While not a challenge of accuracy, OESC also requested that LOFT include state data alongside national
Bureau of Labor Statistics data presented in the report’s introduction. The data used is aggregated and
Oklahoma-specific data is not available for inclusion.

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