PROVIDENCE, R.I. (WPRI) – Layoffs don’t typically signal an improving economy, but that appears to be happening at the R.I. Department of Labor and Training.
The department this week gave notice to three employees – known as “referees” – as part of a larger reorganization. The changes are a result of a decline in federal funding for unemployment insurance that’s tied to the unemployment rate. DLT expects to save $750,000 in the process.
“As the unemployment rate dropped, so did the funding. As a result, DLT may continue to receive less in federal funding over time,” said Brenna McCabe, spokesperson of the R.I. Department of Administration, which oversees human resources.
The federal funds – which help support unemployment insurance-related operations – declined about 20% to $15 million this year compared to about $19 million four years ago, according to DOA. Additionally, the department stopped receiving federal grants for unemployment insurance from the U.S. Department of Labor.
The decline in funding is arguably a good sign for Rhode Island.
In March 2009, the unemployment rate spiked to 10.3%, as the state and country tumbled into the Great Recession. State officials were forced to apply for a $75 million line of credit from the federal government just to keep up with unemployment benefits, which totaled $38 million the month prior.
“Rhode Island’s unemployment insurance system is experiencing unprecedented demand,” DLT said at the time.
Fast forward to 2019 and the state’s economic picture looks much different. The unemployment rate totaled 3.6% in June, and jobs have reached a record high. DLT is looking to adapt to the trend.
“Because we’re seeing an improved economy and less funding, DLT must take measures to right-size its operations,” McCabe said.
The department has decided to layoff three of its seven referees, whose jobs are to oversee “claims appeals” – a right to appeal given to employees and employers when benefits are declined or approved, respectively.
The referee makes a decision that can then be appealed by a full Board of Review. Since 2011, the number of claims appeals heard by referees and the Board of Review have been cut in half.
In addition to job cuts, DLT also plans to remodel the Board of Review to mirror the R.I. Parole Board, meaning the department would change two of the board’s three full-time members to part-time positions
The change will result in a major pay cut for two people, as the three board members make between $99,790 and $109,574. The chair position would continue to earn a full-time salary, while the two other members would earn an annual stipend of $28,281, according to DOA.
The state must hold a public hearing on the proposed changes before DOA Administrator Michael DiBiase makes a recommendation to Democratic Gov. Gina Raimondo.
The department does not expect the job to affect its ability to respond to unemployment insurance claims, as DLT has grappled with backlogs in the past – especially during times of seasonal layoffs in construction and tourism.
“This will not have an impact on claim filing,” DLT spokesperson Angelika Pellegrino wrote in an email. “DLT is not laying off staff in [unemployment insurance] operations.”