In the next two to three weeks nearly half a million Arizonans are likely to stop receiving $300 a week in federal unemployment benefits.
It was an abrupt and startling revelation from the Director of Arizona's Department of Economic Security on Wednesday.
Two months ago, unemployed Arizonans were getting, at most, $840 a week. Currently, the 420,000 people in need are receiving a maximum of $540, before taxes.
Pretty soon that could drop to $240 a week, which is the maximum state benefit, unless Congress or state leaders step up.
When President Trump announced the Lost Wages Assistance (LWA) funds in August, many anticipated it would last for months. One of the provisions in place was that it would end no later than December 27, 2020.
But other stopgap conditions were met much quicker. Director Wisehart indicating Wednesday that due to increased demand, FEMA's Disaster Relief Fund has either expended $44 billion or reached a balance of $25 billion. (Note: It is unclear if the recent hurricanes played any role in the depletion of funds. ABC15 has asked for clarification and is waiting to hear back.)
"We will be working with FEMA, over the next day or two, to get authorization for next week, which will be the sixth week," said Michael Wisehart, the DES Director who touted the fact that Arizona was the first state in the country to quickly distribute the federal funds.
"By most calculations that have been done nationwide, it is likely that after the sixth week there will be some amount of jeopardy to these funds going forward. Unfortunately, we will not have a long lead time of notification."
"It’s just crushing to hear," said Randy Mayes, who lives in Gilbert and has been collecting unemployment benefits. "For them to say it’s going to end, almost eminently - it’s terrifying!"
Director Wisehart said he understands how many Arizonans this change in weekly benefits will impact and committed to providing an update as quickly as he hears more from The Department of Labor and FEMA.
"There will be some amount of jeopardy to these funds going forward," he said. "It’s likely that LWA will stop abruptly for individuals."
If Congress or state leaders do not step up and supplement Arizona's unemployment, more than 400,00 Arizonans, and their children, will be getting what equates to $12,000 a year.
"Everything’s going to crash at some point," fretted Mayes. "I’m starting to see people consolidate households."
Meanwhile, DES is trying to recoup some cash. "It’s likely we're in the hundreds of millions in fraudulent benefits that went out," said Wisehart.
Like many across the country, Arizona's unemployment benefits were targeted aggressively by criminals. The limited information needed, designed to make it easy for all ages to quickly apply, has made the assistance programs ripe for the exploiting.
Wisehart estimates the department has received upwards of 900,000 in fraud claims. He also says they have received 30,000 tips and complaints about fraud.
The department is trying to lock it up and save the taxpayer dollars.
Wisehart says they are using a new pilot program that pertains to identity verification. "So hopefully will be able to address the ongoing pervasiveness of the fraud," said Wisehart.
Right now, he believes the fraud is as rampant as ever - since desperate criminals are realizing the funds may soon be drying out.
This week alone, the department saw a significant increase in new, initial unemployment claims. "The fact that we got another 131,000 claims last week is troubling," said Wisehart.
"At this stage, while we’re opening up the economy. It’s something that causes us to pause...A number of them are likely to be fraud."
In an effort to stop fraud, tens of thousands of people have had weekly payments held up.
Director Wisehart says he understands Arizonan's frustration, but argues the process cannot be oversimplified.
People say "I am who I say I am, so pay me right now. That’s not how unemployment insurance works."
The department is currently hiring dozens more investigators, call takers, and adjudicators, according to Wisehart.
Many though are worried less about wait times these days and more about the 300 dollars that could disappear.
"So, to cut that off, is going to make things even harder to try and to make ends meet," said Mayes. "And watching Congress fail to act, and bicker about trillions that have nothing to do with helping people. But then to see our own governor fail to step up and help and put up some of Arizona's money is just devastating."
So far Governor Ducey has not indicated he is willing or considering an increase to the state unemployment benefits. When pressed at a press conference earlier this summer he repeatedly dodged the question and said, 'Congress needs to act,' despite Arizona having the second lowest weekly benefits, only ahead of Mississippi.