Nearly 100K Arizonans who got federal jobless benefits cut off early won’t get lost funds

About 100,000 Arizonans who got their extra federal unemployment benefits cut off early during the Covid pandemic by then-Gov. Doug Ducey because he instead wanted to get them to go to work at restaurants and hotels are not going to get the funds they lost.

Without comment, the Arizona Supreme Court has refused to overturn lower court rulings that Ducey broke state laws when he unilaterally halted the extra $300 a week that unemployed were getting in 2021. That ruling ends any chance of those affected ever recovering the money they would have gotten had the governor not ended the federal program 58 days early.

The new order rests on the decision of the state Court of Appeals that the governor acted within his authority. It does not, however, address a key argument made by the attorney for the workers that Ducey admitted he cut the program short — and denied those unemployed the extra federal dollars that came with state participation — not to save money but to instead help certain Arizona employers find the workers that they needed.

At the heart of the issue is the Federal Pandemic Unemployment Compensation program. It was approved by Congress in March 2020, at the beginning of the Covid outbreak and the rapid rise in unemployment, to provide an extra $600 week, on top of what each state offers.

That was particularly important in Arizona where the maximum benefit at the time was $240 a week, the second lowest in the nation.

Ducey initially directed the state Department of Economic Security to accept the extra funds, which were later cut to $300 a week.

Only thing is, Ducey halted the extra payments on July 10, 2021, 58 days before the federal program actually ended. And the governor, in making the announcement, made no secret he believed that dropping the benefits back to $240 a week would help address what he saw as a labor shortage among some of the lower-wage sectors of the Arizona economy.

Ducey press aide C.J. Karamargin said at the time there were plenty of jobs out there — and little reason for people to be collecting benefits.

“The hospitality industry in Arizona, a critical part of our economy, was perhaps the hardest hit sector,” he said.

“They cannot find enough workers for the jobs they have to fill,” Karamargin said. “And this plan is aimed at helping them fill those positions.”

Inherent in all that was the governor’s belief that there were those for whom the total benefits — the $240 a week maximum paid by the state plus the extra $300 — provided a disincentive to go out and find a job. That total came out to $13.50 an hour before taxes; the state’s minimum wage at the time was $12.15.

All that proved irrelevant to the state Court of Appeals.

In a ruling last year, Judge David Weinzweig said the governor was entitled to withdraw from the program early, even if it did leave what challengers of the move said were about 100,000 workers who had their benefits cut back to $240 a week.

Attorney Paul Gattone said that extra eight weeks would have come out to about $2,400 per individual, money he said the state should have been required to go back to the feds to secure.

But Weinzweig, writing for the unanimous three-judge panel, rejected arguments that state law required Ducey to pursue the maximum benefits available. He said that’s not how the statutes are worded.

While Ducey said his move was designed to get people back to work, he did offer a carrot of sorts.
He said anyone who was collecting benefits would get a one-time $2,000 bonus if they took a job by Sept. 6, 2001. DES said slightly more than 27,200 individuals took advantage of that offer.

The state also offered some child-care assistance and even a semester of community college tuition for those who went back to work.

“In Arizona, we’re going to use federal money to encourage people to work … instead of paying people not to work,” Ducey said then in a video announcement of his decision.

The state’s minimum wage, which is required by law to be adjusted annually to keep pace with inflation, is now $13.85 an hour.

Maximum jobless benefits, which are supposed to equal one-half of what people were earning before losing their jobs through no fault of their own, also have been boosted to $320 a week. But lawmakers lowered the time someone can collect to 24 weeks from 26 weeks.

The state Senate voted earlier this year to trim that by even more — to as little as 12 weeks when unemployment has been below 5% for the prior quarter, as it is now. But SB 1167 is currently stalled in the House.