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As technical difficulties with Florida's unemployment system persist, state seeks more money

Jesse Panuccio head of the DEO, requested $6.5 million to help fix CONNECT.
Jesse Panuccio head of the DEO, requested $6.5 million to help fix CONNECT.
Published May 19, 2015

TALLAHASSEE — Typically, when an agency chief cuts the number of employees, the state saves money.

Not so with Jesse Panuccio, whom Gov. Rick Scott appointed to head the state's Department of Economic Opportunity. He came to lawmakers this spring seeking an extra $6.5 million to reduce the number of employees manning call centers and processing unemployment claims.

"So increased funding is going to allow you to decrease staffing?" said Sen. Jack Latvala, R-Clearwater.

"Right," Panuccio replied during a March hearing.

Even after lawmakers asked Panuccio to clarify his remarks, senators were still puzzled. "The responses he gave don't make any sense," Sen. Audrey Gibson, D-Jacksonville, said recently.

When the legislative session ended abruptly last month, lawmakers had yet to give Panuccio the money he wanted. But the unspoken purpose for the $6.5 million remains: It's the latest attempt to fix CONNECT, a $77 million online filing system for unemployment benefits.

More than 19 months after CONNECT's troubled launch, the computerized network remains problematic, despite Panuccio's assurances of improvement.

It's costing the state more money to process far fewer claims as the economy has improved; technical defects persist; a key goal of automating more tasks hasn't been met; and Florida's ranking among states in meeting the needs of the jobless has actually gotten worse.

Only 65 percent of people applying for benefits last year met the federal standard for timely payment, ranking Florida 48th in the nation. In 2012, the year before CONNECT, 80 percent of applicants met that standard, ranking Florida 34th.

On the day it launched, jobless Floridians applying for claims reported widespread technical failures. But rather than show concern about the malfunctions, Panuccio and his team celebrated with congratulatory emails.

As problems persisted and thousands of claimants' benefits were delayed for weeks, Panuccio blamed the project vendor, Deloitte Consulting. Still, rather than ultimately holding Deloitte accountable, the state agreed to pay the firm more than $47 million, or 25 percent above the original contract price.

When the state's auditor general issued a report earlier year that found numerous problems with CONNECT, Panuccio responded by saying the new system was operating better than what it replaced.

That rosy assessment overlooks that CONNECT hasn't accomplished one of its main goals. According to a 2008 feasibility study, the new system — which was estimated to cost only $68 million — was intended to automate more tasks, allowing the agency to eliminate unnecessary jobs and save money.

"A new system could be developed to support automated activities such as no-touch Internet claims, which would free up staff," the study stated.

After CONNECT launched, however, Panuccio was forced to hire more staffers to cover for its technical shortcomings. In early 2014, the DEO hired 330 employees and a second contractor, CapGemini, which was paid $620,512.

CapGemini and most of the extra staffers are no longer employed by the DEO, proof that CONNECT is operating properly, agency officials say.

But 954 staffers remain in the re-employment assistance division as of this month, which is 59 more employees than in October 2012 — a year before CONNECT's rollout.

Back then, Florida's unemployment rate was 10.9 percent, nearly double the most recent rate of 5.7 percent that was reported in March. The number of claims that CONNECT handles now is about a third fewer than it was with the old system when it had fewer workers..

So why the $6.5 million?

Getting the money would allow for a gradual reduction in jobs, not a sudden one, Panuccio told senators.

"Without that, we'll have to take an immediate and sharp reduction," Panuccio told senators. "If they have to absorb that kind of change in staffing immediately, it will affect our service levels almost immediately."

The request is an admission that employees are still covering for a computer system that isn't meeting expectations.

More than a year and a half after CONNECT launched, there are still 111 technical glitches that need to be fixed, which DEO spokeswoman Jessica Sims said is "typical for a system of this size and age for ongoing service and maintenance."

Panuccio declined to be interviewed for this report. Sims didn't respond to a request for clarification about Panuccio's request for an additional $6.5 million for staffing.

At least so far, CONNECT's performance is worse than it was under the old system, despite Panuccio's recent claim to the contrary.

Not only has Florida slumped in timely unemployment payments, fewer jobless are even qualifying. In 2014, only 14 percent of unemployed Floridians received unemployment insurance. In the last year of the old system, it was 17 percent.

"Florida is a stunning example of the worst launches ever for an automated system," said George Wentworth, senior staff attorney for the National Employment Law Project. "I can tell you that the Florida unemployment insurance program continues to be among the least effective in terms of providing economic stability for jobless workers."

Contact Michael Van Sickler at Follow @mikevansickler.