AUGUSTA — Democrats pushed a LePage administration official Friday to explain why the Department of Labor is proposing changes to the unemployment insurance system, even though Maine’s system is solvent and there are few instances of fraud.

Laura Boyett, director of the Bureau of Unemployment Compensation, told lawmakers that L.D. 1725 is designed to get workers off benefits faster and punish those who abuse the system.

“The vast majority of people receiving unemployment benefits do so honestly and would like nothing better than to find new work and regain financial independence,” she said. “But with the increased claim volumes and durations, we’re also seeing an increase in overpayments and, unfortunately, unemployment fraud.”

Democrats pointed out that Maine’s percentage of fraud is 0.54 percent, which ranks it fifth-least in the country. The national average is 2.69 percent.

Also, they pressed Boyett for details about the solvency of Maine’s system. She said Maine is one of only 10 states where the unemployment insurance fund has remained solvent throughout the recession.

Maine’s unemployment rate was 7 percent in December, according to Maine Department of Labor statistics released last week. An estimated 48,700 Mainers are out of work.

L.D. 1725, which is being considered by the Legislature’s Labor, Commerce, Research and Economic Development Committee, would require people collecting unemployment to broaden their search for a new job after six weeks, instead of the current requirement of 12 weeks.

That means that unemployed workers would have to consider taking jobs that pay less, are farther from home or are substantially different from their current work after six weeks of collecting benefits, Boyett said.

Rep. Rob Hunt, D-Buxton, said that change seems extreme.

“Twelve weeks to six weeks seems like quite a jump for a system that’s solvent,” he said.

Boyett said the longer someone is out of work, the harder it is for them to find a job.

“We have concern about how long people remain unemployed,” she said.

The bill also would give the state the power to consider vacation pay when deciding on benefits. If an employee got two weeks of vacation pay when they were laid off, their unemployment benefits would start two weeks later than they would under current law, she said.

The bill also would increase penalties for people who commit three instances of fraud, allowing the Department of Labor to impose a lifetime ban. Before the recession, there were only four instances of someone committing a third offense, Boyett said, but in 2011 there were 14 instances.

While acknowledging that the number is an “extremely small percentage of total claimants in 2011,” she said the 1,103 total fraud cases cost the system $2.2 million.

The Maine State Chamber of Commerce, Associated General Contractors of Maine and Associated Builders and Contractors of Maine all testified in support of the bill. A work session on the bill will be held in the coming weeks.

Peter Gore of the chamber said employers had to contribute an additional $70 million in the last few years to ensure that the fund stayed solvent. He said the reforms called for in the bill are worth considering to make sure “tax dollars are being spent properly.”

Opponents include the Maine AFL-CIO, the Maine Women’s Lobby and the Roman Catholic Diocese of Portland.

At a news conference before Friday’s public hearing, Zachary Keenan, 30, of Portland, said he’s a recent college graduate who is saddled with debt and has had trouble finding a job. He said he’s concerned that the bill would punish people who are out of work through no fault of their own.

“It’s a recession when your neighbor’s out of work,” he said. “It’s a depression when you’re out of work.”

Susan Cover — 620-7015

scover@mainetoday.com