The Oregon Employment Department wants to divert $45 million from the state fund that pays jobless benefits over the next few years to shore up the agency’s funding and boost its flagging customer service.

The department, plagued by operational failures throughout the pandemic, is struggling again to answer its phones and promptly pay unemployment benefits. But its nearly $6 billion trust fund is in historically strong shape, the state agency said, so the withdrawals wouldn’t risk a shortfall later on.

The share of Oregon jobless claims paid within three weeks has dropped sharply since the summer, from more than 90% to less than 75%. Some people wait much longer than three weeks, and hold times have soared for those calling the agency for help.

The department’s performance fell steeply last year even though relatively few people were filing unemployment claims.

Oregon’s jobless rate was 3.6% in November and has been near that historically low level for more than two years.

The employment department blames its deteriorating metrics on two separate issues: lower funding levels and cyberthieves.

The number of people working in the state’s unemployment insurance program plunged from around 1,200 in the summer of 2021 to fewer than 400 last June as pandemic-era federal funding dried up.

At the same time, the employment department said it was dealing with a sharp uptick in fraudulent jobless claims.

“It has a direct impact on customer service,” agency Director David Gerstenfeld told a legislative committee last week.

“If we get a flood of thousands of claims that are fraudulent, being filed with stolen identities, those claims still have to be addressed in some way, and it can bog down our ability to get to legitimate claims,” Gerstenfeld said. He has indicated in the past that the department does not believe it is losing large amounts of money to fraud, though he said personnel are spending far more time guarding against it.

The employment department hopes the additional state money will enable it to replace staff laid off when its federal funding dropped and help it overcome the added workload that comes from dealing with attempted fraud. The proposed funds would boost administrative funding for the unemployment insurance program by 15% during the current two-year budget cycle and 21% during the next.

Oregon pays unemployment benefits out of a trust fund underwritten by employer payroll taxes. Despite record jobless claims during the pandemic, the trust fund is at an all-time high of nearly $6 billion. That’s because COVID-19 job losses were usually brief and because the federal government picked up the tab for many benefits paid in 2020 and 2021.

So Gerstenfeld said that diverting $17 million during the current two-year state budget and another $28 million in the next won’t endanger the trust fund or force Oregon to raise employers’ taxes.

“The trust fund is solvent, and it has money in it ready to pay benefits for the next recession,” Gerstenfeld said.

The Legislature considered a similar diversion of trust funds last year, but Gerstenfeld said procedural issues prevented its passage during a session marred by partisan fights over other issues. A last-minute question emerged over whether the funding proposal would trigger a requirement that tax matters receive a three-fifths legislative majority approval to pass.

Analysts eventually concluded the funding diversion didn’t require that three-fifths approval, according to the department, but there was no time left for a vote last spring.

So the employment department is trying again during the short legislative session that begins next month.

“We are neutral on this proposal but remain diligent in watching how the agency spends UI trust funds,” said Erik Lukens, communications director for Oregon Business & Industry, the state’s largest business organization.

The employment department is hopeful a long-delayed technology upgrade, replacing systems from the 1990s, will also improve performance when the new computers come online this spring.

Lawmakers at last week’s committee hearing sounded generally supportive of the employment department’s plan. But Gerstenfeld stopped short of promising that the additional funding and new computers will resolve the department’s renewed issues.

“I cannot say with absolute certainty that this is everything we will ever need,” Gerstenfeld told legislators.