Arkansas's unemployment reform is working, but there's more to be done
2 min read

Arkansas's unemployment reform is working, but there's more to be done

21st Cent. Workforce
Nov 16
2 min read

In 2021, the Arkansas Legislature passed Act 667, spearheaded by Representative Robin Lundstrum, to shore-up the state's unemployment insurance (UI) system. And frankly, this bill was much needed. It was absolutely essential to help Arkansas small businesses who were coming out of the COVID-19 pandemic. 

Indeed, Arkansas's unemployment trust fund had fallen by roughly $50 million from January 2020 to January 2021, when Lundstrum's bill was introduced. Her legislation sought to protect the state's UI fund from being depleted any further by introducing a number of program integrity procedures.

Specifically, the new law requires the state to:

  • Recover fraudulent unemployment overpayments;
  • Allowed employers to easily report individuals who refused an offer of work; and
  • Implement a variety of cross-checks between the state's unemployment system and other databases that hold records of incarcerated individuals, new hires, and fraudsters.

Enhancing the state’s UI trust fund through greater program integrity measures was critical, because in the absence of these measures, policymakers often look to raise taxes on employers to make up the shortfall. And it was clear anti-fraud work needed to be done, as even Gov. Asa Hutchinson was the victim of a UI scam during COVID.

Now, by all accounts, it is obvious Lundstrum's initiative is working: Since January 2022 (when the bulk of the legislation went into effect), Arkansas has replenished $50 million in its unemployment trust fund, according to the Treasury.

The anti-fraud provisions are working as well. Between January and June of this year alone, the state also detected more than $140,000 in overpayments through its new hires cross-checks, and recovered more than $3 million in overpayments in total (according to the Employment and Training Administration).

Act 667 has taken Arkansas’s unemployment system from the laughing stock of the country to a relatively stable program.

But going into the upcoming legislative session, there are even more steps Arkansas policymakers can take to continue to rebuild the unemployment system post-pandemic.

Arkansas desperately needs additional unemployment reforms to help move Arkansans back to work and end the cycle of dependency—reforms which will have the added bonus of bolstering the UI trust fund and reducing taxes on job creators as well.

One simple policy change would be strengthening the state's work search requirements for individuals who want to continue receiving unemployment benefits.

Currently, the state only requires two to three work search efforts per week, such as making contact with an employer. And it only verifies those work search efforts with random audits.

This process could be vastly improved: Arkansas can increase its work search requirements to one work search effort per business day and verify these efforts on a regular basis as part of individuals' eligibility reviews.

While this might seem like a small policy change, it will help Arkansans who have fallen on hard times find work more quickly and ensure the sustainability of the program over the long-term.

Arkansas has been a leader in unemployment reform, but that doesn't mean the work should stop.

Instead, Arkansas legislators should build on their previous effort to further expand unemployment reform this coming legislative session.

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Image of the story authorHayden Dublois
Visiting Economist

Hayden Dublois is the Visiting Economist at Opportunity Arkansas. His primary research areas are welfare, health care, workforce, unemployment, and tax policy.

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