Oregon’s rickety, outdated system for processing jobless claims is failing thousands of workers when they most need help, delaying unemployment cash they could use to help pay rent and other bills during the state’s coronavirus shutdown.

The state processes unemployment filings with obsolete computers running systems that date back to the Reagan administration. The technology is rigid and difficult to adapt, frequently requiring manual changes to fix individual errors.

Oregon has known for years that the systems needed to be replaced and received $86 million in federal money to modernize its technology back in 2009. The overhaul didn’t get off the ground until the past few years, though, and won’t be complete until 2025.

The aging computers are causing enormous frustration for Oregon workers laid off during the coronavirus pandemic, spitting out erroneous information about their claim status and resisting the state’s efforts to adapt the technology to changes in the jobless benefits program.

The ancient technology also stands to cost Oregon a fortune in federal money earmarked for workers laid off by the coronavirus pandemic – workers who, in some cases, are younger than the computer systems themselves.

Laid-off workers typically have to wait a week before claiming benefits. The rescue package Congress passed last month waived the penalties for states that don’t have a waiting week, however, clearing the way for laid-off workers to start getting their money immediately.

Those funds now include $600 in additional weekly payments newly authorized by Congress but set to run out at the end of July.

Oregon, though, said it will not waive the waiting week because its aged computer system is not up to it. And since the $600 bonus payments have a limited life, that’s a week of payments Oregon workers will never get.

With 270,000 Oregonians having lost their jobs in the past few weeks, that means a week of lost $600 checks could cost Oregonians well over $100 million in aggregate – and possibly a great deal more.

Pressed on the issue by The Oregonian/OregonLive, the Oregon Employment Department indicated Tuesday it may reverse course and waive the waiting week after all.

However, the department said the waiver is among its last priorities and it gave no indication of whether the hundreds of thousands of workers who already filed claims might receive retroactive payments.

‘Pretty random’

Oregon’s employment department, like those in other states, has been overwhelmed by the record volume of jobless claims sparked by the pandemic. Oregon claims have surged twentyfold in the past few weeks.

Some claims can be handled automatically online and go through smoothly. The employment department says it processed 134,000 new claims in just the past three weeks, more than in the previous six months combined. Oregon paid nearly $94 million in benefits in the week beginning April 4 and says it has quadrupled the number of workers taking calls.

Still, more than 130,000 other claims hadn’t been processed by the end of last week.

The employment department has apologized for repeated problems with its computer systems, acknowledging that laid-off workers are frequently told their claims have been denied even though they are legally entitled to benefits.

The department is receiving more than 2,400 calls a day but fewer than half of those get through, according to state data. The average hold time is nearly two hours long.

After weeks of trying to file her claim, laid-off Portland bartender Charlotte Wannagat said she has no faith at all in a system that doesn’t seem to make any sense. She lost her job March 17, when Oregon shut down bars and restaurants to contain the coronavirus outbreak. Wannagat said she immediately filed for benefits but still hasn’t received a check.

A letter from the department indicated there’s a problem with her availability to seek new work, though the department’s website says workers like Wannagat don’t need to seek a new job if they’re on temporary layoff.

“It’s a busy signal every time. There are so many people trying to get on at the same time that you literally can’t even get to the phone recording,” said Wannagat, 27. “I have no way to fix what I know is a problem because the system is so overloaded.”

Because she lives with her boyfriend, Wannagat said he can help cover the rent. But she said she’s running out of savings to pay her own health insurance and many other bills.

“It all seems to be pretty random who gets their money and who doesn’t,” Wannagat said. “I’m feeling anxious and concerned for my almost immediate future.”

Oregon’s obsolete computers are at the heart of these problems.

Gig workers and the self-employed, who previously couldn’t claim jobless benefits, are now eligible because of changes in the CARES Act rescue package Congress passed last month. Oregon’s computer systems couldn’t accept that change, however. The department said it is working to adapt its computer systems and that self-employed workers will eventually get their money.

It may be a different story with the waiting week.

The CARES Act suspended penalties for states that waive that standard waiting period. Many states moved quickly to eliminate it and speed benefits to their unemployed workers.

Last week, though, Oregon Employment Department spokeswoman Gail Krumenauer said the state had opted not to do that. She said the state’s computer systems are too old to cope with the change.

“For the Oregon Employment Department to waive the waiting week, we would need to interrupt processing the record number of claims coming into our system to spend thousands of hours reprogramming it,” Krumenauer wrote in an email. “Interrupting claims processing would cause further delays in getting benefits to Oregonians in this great time of need than waiving the waiting week.”

It’s impossible to know just how much Oregon’s workers could lose if the state is unable to waive the waiting week. Simple math, though, suggests it would be an enormous sum.

The state fielded nearly 270,000 jobless claims in the first few weeks of the pandemic as layoffs hit 1 in every 8 Oregon workers. All laid-off workers are eligible for the new, $600 weekly federal bonus, on top of their regular jobless benefits.

But since Oregon is leaving the waiting period in place, its unemployed workers will miss a week’s $600 bonus payment. Multiply that $600 by 270,000 workers and the total comes to $162 million.

That is more than the state expects to spend on replacing the computer system: In January, the employment department estimated the upgrade cost between $80 million to $123 million.

It’s likely, though, the total lost benefits are a great deal higher. Jobless claims have run at record levels in each of the past three weeks – and probably understate the crisis, since many Oregon workers have been unable to reach the overwhelmed employment department to file claims. A surge of new claims is expected again this week and all those workers will also have to endure a waiting week, too.

Further, while workers now are eligible for 39 weeks of regular jobless benefits, many of them presumably will find new jobs before they’ve exhausted those benefits. Leaving the waiting period means they would miss a week of benefits they would never get back.

That would add up to tens of millions in additional dollars Oregon workers would have been entitled to but won’t receive.

Top leaders avoid questions

Employment department director Kay Erickson declined a request for an interview. Instead, Deputy Director Jeannine Beatrice defended the department’s performance.

“Because of this surge in staffing, Oregonians are already getting enhanced unemployment benefits under the CARES Act, which Congress passed two weeks ago,” Beatrice wrote in an email. “Where provisions of the CARES Act call for additional coding or computer work, the department is working to implement those changes in its system.”

Those changes now include “the coding necessary to eliminate the ‘waiting week,’” Beatrice wrote, apparently reversing the department’s earlier position it would not make an effort to waive the waiting period.

Pressed for further detail, the department said it will look into the feasibility of waiving the waiting week but won’t pursue that immediately because “there is a real risk of accidentally stopping or delaying benefits to people as we remove the waiting week.” The department gave no indication whether Oregon might retroactively pay workers for that missed week.

The governor’s office did not respond to repeated questions about whether she was involved in the decision to leave the waiting week in place or whether the state had estimated how much the decision would cost Oregon workers.

On Tuesday evening, though, her office said Gov. Kate Brown was aware of the original decision and is now open to waiving the week – provided the employment department can pull it off.

“Now that there’s potential federal money available to provide additional benefits to Oregonians who qualify, the governor is looking to the Oregon Employment Department to find a path forward,” interim press secretary Liz Merah wrote in an email. “The governor is committed to ensuring Oregonians receive the benefits to which they’re owed and entitled.”

Old tech plagues multiple states

Oregon is one of a number of states weathering the coronavirus outbreak with technology that is decades old. Oregon’s systems were built in the 1990s, with some components dating as far back as 1985.

As in other states, Oregon’s claims system is built on an antique programming language called COBOL, developed in the 1950s. In New Jersey, the state put out a call for volunteer COBOL programmers to help adapt its own unemployment claims system.

Oregon has been planning updates since 2009, when the state received $85.6 million in one-time modernization funds from the U.S. Department of Labor. The state still had nearly $82 million on hand this past October, according to a letter Erickson sent to the Legislature in January.

Planning for an upgrade has spanned three administrations of three Oregon governors.

“For a variety of reasons, including leadership changes within the agency, work on the initial phase of the modernization initiative did not begin until February 2016 and did not begin to pick up pace until the last quarter of 2016,” according to a legislative update issued in 2019.

The update did not explain which leadership changes interfered with the project, but a 2013 investigation by The Oregonian detailed management failures under former Gov. John Kitzhaber that delayed the mainframe computer replacement project and wasted tens of millions of dollars.

Three of the agency’s top leaders either left or were fired that year after the problems surfaced.

Inside state government the issues had been well-documented, as “audit after audit exposed leadership problems that festered as the agency wasted as much as $30 million on computer software programs that didn’t work,” The Oregonian reported.

Bill Fink, a former agency deputy director, said in 2013 that he’d been highly concerned about problems replacing the mainframe system during his 2006-2012 tenure. He hired a consultant who reported in March 2012 that the initiative “was veering off track.”

Another consultant delivered similar findings in early 2013, although his credibility was undermined when he was accused of drugging and assaulting several women in Portland. He ultimately pleaded no contest to sexually abusing one woman and unlawful possession of the drugs ecstasy and ketamine.

The department’s technology section also faced allegations of nepotism in 2013, when it emerged that the Legislature’s technology project analyst, Bob Cummings, came to the defense of his wife’s work managing employment department technology projects amid lawmakers’ questions. Bob Cummings still works for the Legislature and Leslie Cummings went on to be deputy secretary of state.

State auditors worked to keep the languishing computer project on leaders’ radars. Their 2015 audit found that the department’s staff had to identify and manually collect claims errors. In the wake of that audit, Brown made another change in leadership at the agency, replacing the director with Erickson.

“These computer programs are inflexible, poorly documented, and difficult to maintain,” the audit found. “Considering these factors, Employment should take steps to replace them with more robust and maintainable computer code.”

The report noted that prior audits by the Secretary of State’s office, in 2003 and 2012, identified problems introducing changes to the systems. Auditors found the systems were “largely unchanged” in 2015.

With seeming foresight about the current glitches, they warned that although the department came up with a workaround, it “may be difficult to execute in the event of an economic downturn, since (the department) may not have the additional staffing required to handle the increased volume and complexity of errors.”

The department’s technology “is not flexible enough to efficiently handle additional requirements, such as those that occurred during the latest economic downturn” during the Great Recession, the audit found.

Now, history is repeating itself with the coronavirus recession.

Sen. Betsy Johnson, a Scappoose Democrat who sits on the Legislature’s technology oversight committee, said the state’s approach to replacing huge technology systems can be opaque, but in this case, “I think we should have pushed more” for information.

Sen. Chuck Riley, a Hillsboro Democrat who co-chairs the technology committee, blamed some of the project delays on federal requirements tied to that funding. He said he did not know how long the project had been underway and also said state leaders are taking their time in order to get it right.

“My whole philosophy is that people will not remember that it took long if it works,” Riley said on Monday. “But they’ll remember that it didn’t work if we did it too fast.”

When asked if the enormous human impacts of this project’s delay had changed his mind about this, Riley did not directly answer.

“It’s really difficult to know what’s going to come down the pike,” he said.

Correction: This article has been corrected to indicate the state paid $94 million in benefits in the week beginning April 4, not the week ending April 4.

-- Mike Rogoway | mrogoway@oregonian.com | twitter: @rogoway |

-- Hillary Borrud; hborrud@oregonian.com; @hborrud

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