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Five Questions for Jesse Panuccio

March 31, 2014 - 6:00pm

Jesse Panuccio joined the Florida Department of Economic Opportunity as executive director in January 2013. He had been the general counsel to Gov. Rick Scott, managing the legal affairs of Scotts office and coordinating litigation and legal policy across state agencies. He was also Scotts chief ethics officer.

Since October, when the Department of Economic Opportunity launched its new unemployment compensation website, Panuccio has endured a barrage of complaints and bad press about the time it's taken for jobless Floridians to collect their benefits. However, Panuccio's confirmation hearings in the Florida Senate have thus far gone smoothly.

Before joining the Scott administration, Panuccio practiced law with the Washington, D.C.-based law firm of Cooper & Kirk PLLC. He received his J.D. from Harvard Law School and his bachelors degree from Duke University.

The News Service of Florida has five questions for Jesse Panuccio:

Q: Your agency announced the unemployment numbers for February (Friday) morning. The jobless rate is the same as January, but private-sector jobs are up -- talk about that.

PANUCCIO: The long term is the important to focus on, because in labor market statistics, we want to look at long-term trends. And the continuing trend is an improving economy in Florida -- that's been steadily happening for three years now.

The numbers today (Friday), more than 32,000 private-sector jobs added in our economy in the last month. Also, January was revised up -- 5,800 private-sector jobs added. In fact, February was the largest increase since the governor took office, which is really good news. The unemployment rate is at 6.2 percent -- that held steady from January. But the labor force increased, and when the labor force increases and the rate holds steady, that actually means we're adding jobs.

And we also have record high job demand, 278,000 unique online job openings. So, I think you're really seeing this long-term trend of a turnaround story for our economy. It's good news for Floridians, especially those who struggled during the recession.

Q: You've been criticized for your oversight of CONNECT, Florida's new $63 million jobless website, and your agency has maintained that the newspapers got much of their criticism wrong. Hit the high points of those errors.

PANUCCIO: Well, let me just give you an update of where CONNECT is and where we see it. Just to go back, 2006 through 2008, there were several studies done of our unemployment compensation computer system, which was designed in the 1970s and was reliant on 1970s computer language. So you can imagine, between what existed in the 1970s and today, how obsolete and old our system was.

And those consultants said we were at serious risk of failure, as were many systems around the country. So Florida, like many states, engaged in a modernization project. We launched in October 2013, and that was after two to three years of design and build and testing. It launched; many things worked on the day we launched, and several things didn't. There were several major defects that, unfortunately, were not caught by testing. And so over the months of October, November, December, we worked through those defects.

In the meantime, we did a lot of things as a department to make sure claimants were getting served, so we had put several workarounds in place, we dramatically increased our staff, we increased working hours, overtime hours -- to make sure that while those bugs were being worked out, we were still able to serve claimants. And today, performance in the re-employment assistance system is actually, from a claimant-facing perspective, is actually far better than we were, say, in August of last year before we launched the system.

Two examples: our contact center, where all the calls come in. We have call volumes that are lower, much lower than they were prior to going live with the new system, and we're able to answer every unique call that comes in in a week. If you look at the unique numbers dialing the system, we're answering more than the number of unique calls.

Our adjudication unit, which is for some claims -- maybe a quarter to a third of the claims -- will have a flag on them for a factual dispute or something that needs to be investigated. When we went live, we had 48,000 claimants having at least one (claim) a week held for adjudication. Today that number is at 3,000, which is a level we haven't really seen in years. In recent memory, I can't find anyone in the department who can remember having a level of adjudication that low.

Yes, the first few months were rocky, but as I look at where we are today, I think its a good story for the department. And what glitches remain in the system are really smaller, and they're warranty items that you would expect from any systems launch, and we're working through those. I think that's the important thing for people to know, which is yes, there were a couple of months of difficulty, but we've really come through it quite well as a department, and those who need to rely on the system are getting served at this point.

Q: The department put out a "Setting the Record Straight" that hit some specific issues in media reports, the letter from the U.S. Department of Labor and especially the charge that you're not taking seriously enough the idea that there are desperate people waiting for their payments.

PANUCCIO: We took that, and always take that, very seriously, and that is why we did so many things as a department. First of all, it's one of the reason you modernize the system is to get a system that is state-of-the-art, that will provide better service. But we knew any launch is going to be difficult even if every single line of code works perfectly, just for the staff and users of the system to acclimate will cause delays and take time. So we did a lot of outreach before we launched, both in terms of claimants, media, to make sure people knew what was happening.

And then after we launched and we saw some problems, it wasn't just the issue you were referencing about paying continuing claimants and was something we came to with the Department of Labor, but the huge increases in staff. Before we launched, we added 200 people. Between launch and the end of December, we added another 200 people. And then in January we added another 300 people. We increased overtime. We opened up seven days a week, so that our contact center was working seven days a week for those claimants who couldn't get through during weekdays. We had evening hours, we had weekend hours, we had Sunday hours. We put a bunch of workarounds in place. When something wasn't working in the system, we came up with some kind of workaround so we could still serve claimants.

So we take very seriously the plight of folks who were hit hard by the recession, who were unemployed. And this administration, the governor -- he understands that jobs are critical to people's lives. That's why we're always talking about it. So being that bridge from unemployment back to employment is something people in this agency are passionate about, and we took it very seriously.

Some of the articles you referenced talked about our relationship with the U.S. Department of Labor. That is something I think it's important for people to understand. Unemployment insurance is a federal-state program, like many programs. And so it is typical for us, standard, to have ongoing conversations and meetings with USDOL about all aspects of the unemployment system, not just the computer system, but everything: policy, reporting. And not only with USDOL, but states often get together and have workshops about what's working, what's not working.

Modernization is a good example. We're not the only state to have done it. There have been workshops around the country, talking about how do we modernize, what are our various approaches to modernization? And so we actually had meetings with USDOL before we launched. In September, I had an in-person meeting with the lead administrator at USDOL in Washington. Right after launch we updated them, and then we've continued to update them. And so ultimately when we sat down and had a conversation about whether there was room to pay continuing claims before we adjudicated, that was very much in keeping with the standard relationship we have.

(How would you describe that relationship now?) Good. It's always been good, and of course it's stressful for everybody when you're going through a system launch, whether you have problems or not, and so everybody operates in that environment, and you're dedicated to getting it done. But the relationship -- we continue to update them on the system, and they have, in phone calls and letters, congratulated us on where the system has gotten and said they were pleased with the progress we were able to make in the few months that we made it. And indeed, at one point in February, they actually asked us to have a meeting with California and advise them on some of the issues they were having.

But that's to be expected. That kind of cooperative relationship between the federal government and many states is exactly how you'd want a program like this to work.

Q: Some of the reports suggested that Sen. Bill Nelson intervened with the U.S. Department of Labor to get those jobless Floridians paid. Fair or unfair?

PANUCCIO: Well, let me say we certainly appreciate Sen. Nelson's concern. And what I'll say is this: We were working with the Department of Labor before launch, during launch, and we'll continue to work with them. It is, by the very nature of the program, something we have to do.

He wrote letters expressing his concern, but those concerns were no different from the ones we had. We were already pursuing thinking about implementing all of the various options. And the one thing that has been focused on in reports was this paying continuing claims before adjudication. That actually only ended up clearing 5,000 claims out of that caseload of 60,000 that I was telling you about. So the truth is that many of the other things we did -- the most important was technical fixes to the system and increasing staff. That's actually what brought productivity up so high in December and January and February, and enabled us to not only clear the cases that increased because of the launch of CONNECT, but clear the cases we had been carrying historically in the old system.

And so that's what's important. You have to take a holistic view of what we've done and how the system works. It's never one thing, it's never one action; it's all of these things working together to increase productivity.

Q: So you had to bring in extra help to get this challenge met. But is $165,000 a week really sustainable? Or does that defeat the purpose of upgrading the system?

PANUCCIO: Well, again, let's just step back, and I gave you a little bit of the history, the reports that said the system was obsolete, and so the most important thing we needed to do -- three consulting reports said, "You are at serious risk of failure for total shutdown of the old system," which would of course be catastrophic to everybody who relies on it: employers, claimants, our staff.

The most important thing Project CONNECT did was replace a 1970s computer system with a modern computer system written in modern code that is fully integrated. The old system was actually a whole bunch of smaller subsystems that were kind of patched together over the years. CONNECT is one single system with one single code base that is much easier to use and has all the modern features you'd expect. For example, a claimant can now go on and see every piece of paper associated with their claim. It's all there. They have an electronic in-box. These were all things that the old system, being as old as it was, did not have. That's what's important to recognize about where we were. Remind me the rest of your question. (the question was asking whether it defeats the purpose ) Oh, yes, the staffing.

So that's the baseline, and now we have that modernized system. In terms of staffing, when you launch a system that is this big and this complex, you have to staff up because of pure acclimation-period time. That's why we did staff up. The other thing to note is that the re-employment assistance system is dynamic. As the economy fluctuates up and down and the number of claimants come in and out of the system, or policy changes, we need more or less staff, and sometimes it can flow from month to month, how much staff we need.

So for example, when a hurricane hits the state, we know there's going to be stresses on the system, and we staff up. When there's a major policy change -- say, the federal extension of unemployment benefits -- that can cause increased stress on the system, and so we'll need to staff up. And then budgets can change from the federal government, and we can staff up or down. So that's natural.

We did staff up even more when some of the problems came through with CONNECT, which is exactly what I think you'd want us to do to help serve claimants. And now we're going to take a nice, conservative, slow approach as we acclimate to the system over what was expected to be the warranty year. And we'll see.

Do we want to have increased staff for the rest of time? No. But we also want to calibrate right. So I think it's perfectly appropriate to pay some extra staffing costs as you acclimate to a new system. And then as you see the benefits from it, you staff down over time and you match your budget, and you match the needs of the system.

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