Reynolds’ response to lawsuit: Feds don’t ‘get to run the state of Iowa’

Responding to a lawsuit over her decision to deny federally funded unemployment benefits to tens of thousands of Iowans, Gov. Kim Reynolds issued a statement Friday saying “the federal government doesn’t get to run the state of Iowa.”

Reynolds comments follow the filing of a potential class-action lawsuit over her 2021 decision to terminate pandemic-related jobless benefits for unemployed Iowans months before the federal funding for those benefits was scheduled to be shut off.

Although Iowa was one of at least 25 states, all led by Republican governors, to take that step, the lawsuit claims Reynolds violated an Iowa statute that requires the state to pay out all available federal unemployment assistance to eligible Iowans.

On Friday, Reynolds released a brief written statement that didn’t address that specific allegation but reasserted her right to terminate jobless benefits for Iowans.

“The federal government doesn’t get to run the state of Iowa or impose policies that damage our economy,” the statement said. “Paying people to stay home at a time when there are more jobs available than people to fill them defies common sense. Iowans know there is dignity in work.”

In March 2020, at the outset of the COVID-19 pandemic, Congress passed the Coronavirus Aid, Relief and Economic Security Act — better known as the CARES Act — to address mass layoffs, business closures and soaring unemployment.

The act provided enhanced unemployment benefits, provided for cash payments to be made to qualified recipients, extended the period of eligibility for benefits, and allowed for benefits to be paid to people who wouldn’t otherwise have been eligible.

Iowa then entered into an agreement with the U.S. Department of Labor to provide the state’s residents with Pandemic Emergency Unemployment Compensation (PEUC), Federal Pandemic Unemployment Compensation (FPUC) and Pandemic Unemployment Assistance (PUA) benefits, effective March 29, 2020.

Iowans later received letters from Iowa Workforce Development stating they would be eligible for the benefits through Sept. 4, 2021. However, in a May 10, 2021, memorandum, Iowa Workforce Development Director Beth Townsend recommended that Reynolds terminate Iowa’s participation in the federal programs effective June 12, 2021.

The next day, Reynolds officially adopted the recommendation and announced that IWD, which administers many elements of Iowa’s unemployment programs, would be withdrawing from participation in the federal, pandemic-related unemployment programs, despite the fact that they were entirely funded by the federal government.

Lawyers for Karla Smith of Pleasantville and Holly Bladel of Clinton allege the two women, along with 30,000 to 55,000 other Iowans, were illegally denied unemployment benefits due to the actions of Reynolds and Townsend.

The lawsuit alleges Iowa’s Employment Security law requires the state to “cooperate with the United States Department of Labor to the fullest extent” and make available to Iowans “all advantages available under the provisions of the Social Security Act that relate to unemployment compensation.”

Lawyers for Smith and Bladel are seeking class-action status in the case in an effort to recover damages for thousands of Iowans who may have been harmed by Reynolds’ decision.

The state has yet to file a response to the lawsuit.