Illinois Is Spending Millions To Fix And Expand A Troubled Unemployment Benefits System

Under hastily signed contracts, the state of Illinois agreed to pay tens of millions of dollars to a private contractor.

A man drives past a closed unemployment office
With half-a-million people bounced out of jobs in the past month because of the COVID-19 pandemic, Illinois' unemployment safety net has been stretched to the limit. Nam Y. Huh / Associated Press
A man drives past a closed unemployment office
With half-a-million people bounced out of jobs in the past month because of the COVID-19 pandemic, Illinois' unemployment safety net has been stretched to the limit. Nam Y. Huh / Associated Press

Illinois Is Spending Millions To Fix And Expand A Troubled Unemployment Benefits System

Under hastily signed contracts, the state of Illinois agreed to pay tens of millions of dollars to a private contractor.

Struggling to deal with the record-breaking number of unemployment benefits applications caused by the COVID-19 pandemic, the administration of Illinois Gov. JB Pritzker has agreed to pay more than $22 million for immediate help under two contracts with a private company.

Documents obtained by WBEZ show the Illinois Department of Employment Security entered into a no-bid contract worth nearly $9.5 million with Deloitte Consulting LLC on April 24.

Under that deal, the company is setting up a new system for gig workers and independent contractors to file unemployment claims.

Illinois officials said Thursday the new system will go into effect Monday. It will allow newly jobless gig workers in Illinois to get their share of the federal funding allocated for them in stimulus legislation signed by President Donald Trump on March 27.

Then, on April 28, the state unemployment agency’s acting director signed a second, more lucrative, no-bid deal with Deloitte Consulting.

In that deal, the company stands to get more than $12.7 million from the state to oversee the hiring of telephone agents who will field applications for jobless benefits, according to documents released to WBEZ in response to an open-records request.

The “rate card” in that contract between the financially troubled state government and Deloitte Consulting shows the company can charge $55 an hour for the services of agents at the new, remote call center and as much as $315 an hour for managers working on the project for the state.

For nearly two months, unemployed people across Illinois have complained about the difficulty of getting through to workers at IDES. The agency’s offices have been closed to the public since March, and benefits seekers have reported widespread problems with both the IDES website and the toll-free number for filing claims.

The frustrating situation has prompted some people to show up at state offices where workers are laboring behind closed doors and demand information, with the state notifying police to protect frightened public employees, WBEZ has reported.

The governor repeatedly has promised to fix the problems with the unemployment system, but the criticism has persisted.

Record applications

On Thursday, Pritzker focused on the issue of unemployment claims during his daily briefing on the state’s response to the pandemic. He said IDES had processed more than 1 million claims for jobless benefits from the start of March to May 2.

Although he acknowledged problems with the system, Pritzker said, “We’re ramping it up as much and as fast as possible.”

And the first-term Democratic governor also suggested that he inherited some of the problems at the unemployment agency, saying IDES has suffered from a lack of funding and now has 500 fewer employees than it did during the Great Recession a decade ago.

“IDES’ systems were unfit to handle the surge, causing tens of thousands of Illinoisans to wait,” Pritzker said.

He praised the agency’s employees for their “deep commitment.”

“IDES has used every avenue available to build up capacity,” the governor said, noting that the state had brought on outside partners.

200 new telephone agents

But getting private help for the state’s problem is not coming cheap. Illinois officials said they will use U.S. Labor Department funds to cover the cost of creating the new system for gig workers and the call center.

Under one of the recently signed deals, Deloitte Consulting is responsible for the hiring and training of 200 call-takers. Records show the company will pay between $2.4 million and $4.5 million to a subcontractor, Harte Hanks of Austin, Texas, for the first 50 agents.

Harte Hanks has reported to federal regulators that it recently faced being delisted by the New York Stock Exchange for failing to meet its standards. And records show Harte Hanks has received $10 million in federal stimulus loan funds under Washington’s new Payroll Protection Program.

Deloitte Consulting is also sub-contracting with a Chicago firm, PCG International Inc., to “supply 100 Illinois residents” to work as telephone agents on the project for the state. That subcontractor will be paid between $4.75 million and $9.5 million, according to state records.

On Thursday, Pritzker said 100 of the new telephone agents will be ready to get to work on Monday and another 100 will start later. He said everyone hired at the call center will be from Illinois.

Executives at Deloitte Consulting, Harte Hanks and PCG International did not return calls and emails seeking comment for this story.

IDES spokeswoman Rebecca Cisco said it was necessary to pay $55 an hour for the new call-takers “to ensure Illinoisans can receive their benefits in a timely manner.”

“This is a higher rate than would be paid during a normal time, but as you know, this is not a normal time,” she said.

The agency negotiated that rate down with Deloitte, she said.

Both deals with Deloitte Consulting were done without seeking other bids, with the state citing the governor’s March 9 disaster proclamation to suspend contracting rules “for purchases necessary for response to COVID-19.”

Cisco said the state chose Deloitte Consulting over two other firms it considered hiring and has been satisfied with the contractor’s work on the two projects.

“Deloitte was able to offer technical support that other vendors did not,” she said. “Deloitte would furnish individuals who had experience and skills from working at call centers for other businesses [and] who had been furloughed from their regular jobs.”

The state comptroller’s website lists expenditures worth $238 million for expenses related to COVID-19 through Wednesday. But the two deals between Deloitte Consulting and IDES are not listed among those coronavirus-related expenses.

Under both deals with Deloitte Consulting, the employees of the private company can work remotely, even as many IDES workers are still having to report to offices that are closed to the public.

Long wait for gig workers

Pritzker has said the state was forced to create a new system for gig workers who have become unemployed during the pandemic to seek payments for lost income.

Until the passage of the $2 trillion federal coronavirus stimulus bill, gig workers were not eligible to receive unemployment benefits. But it’s turned into a long wait for those workers in Illinois.

Officials here have told unemployed gig workers that they first have to file using the old system, get denied and then apply a second time after the new process that’s being specifically created for them goes online next week.

Pritzker said Thursday he did not know how many gig workers would apply for unemployment benefits. But he expressed confidence that the new system’s launch would go smoothly.

“We hired outside contractors,” the governor said. “They built an entirely new system. That system has a much higher capability than the existing system.”

Dan Mihalopoulos is a reporter on WBEZ’s Government & Politics Team.