McNamara took over the unemployment office when it had been depleted and left unprepared for the crush of claims to come.

House Bill 468 would allow the Labor Cabinet to waive overpayment debt if the debt wasn’t the fault of the recipient or if collecting the debt would be “contrary to equity and good conscience.”

The state auditor said his findings “should be deeply concerning to taxpayers and those who have filed for UI benefits.”

The most recent federal coronavirus relief package finally grants states that option, but it will have no effect in Kentucky. That’s because debt forgiveness still isn’t allowed under state law.

KyCIR has documented the unemployment office’s hurried steps to make payments quickly as the pandemic shut down businesses in the spring.

The federal government set aside $7 billion in 2009 to modernize the nation’s unemployment systems. Kentucky left its portion on the table.

Education professionals can’t claim unemployment during the summer break that started in Louisville on May 31, a caveat the state doesn’t appear to have made clear when it extended benefits to substitute teachers. Subs who continued to file for unemployment after summer break began are now expected to repay anything the state paid in error.

“These people don’t have that money. They paid for groceries, they used the money,” Sen. Nemes said. “That's what unemployment is for. When you are unemployed you get your unemployment insurance and you pay your bills so you can get back to work.”

Gov. Andy Beshear acknowledged that Kentucky mistakenly overpaid people who requested unemployment benefits — and advised recipients to save that money.

It’s unclear if state officials ever communicated the change to out-of-work Kentuckians after the state received new guidance in April.