$161 Million In Misspent Unemployment Benefits Revealed (updated)

by Talk Business ([email protected]) 112 views 

New data from the U.S. Department of Labor indicate that Arkansas apparently made $161 million in erroneous unemployment payments during a time when the state’s trust fund for benefits ran a deficit.

The Arkansas Project blog first reported the news in state.

The $161 million misspent funds in Arkansas were part of a reported $19 billion in overpayments made among all 50 states during the last 3 years. In the last fiscal year, Arkansas’ overpayments of unemployment benefits totaled about $50.3 million, more than 12% of total benefits paid out in the past 12 months.

Some reasons for the unemployment overpayments include:

  • Recipients receiving benefits after returning to work
  • Employers not submitting timely or accurate information about worker separations
  • Recipients not correctly registering with state workforce organizations

Arkansas’ unemployment trust fund went as deep as $360 million in debt to the federal government as the state borrowed money from the feds to pay for jobless benefits. Arkansas legislators and business leaders changed a number of provisions in the past two sessions to repair the trust fund’s solvency and projected that the state could be debt-free by 2015.

Randy Zook, President of the Arkansas State Chamber of Commerce and Associated Industries of Arkansas, was a leader in those efforts. He tells Talk Business he’s concerned about the new data that has become available.

"If the numbers prove to be accurate, it creates a great deal of concern about the efficacy of enforcement efforts," Zook said. "I hope this doesn’t prove to be accurate."

State Senator Jonathan Dismang (R-Beebe) carried legislation to correct the trust fund debt in the last session. He said, "I’m very concerned about this. If these numbers are accurate, it could have greatly changed the debate," he said. "I plan to talk to my colleagues and look at the possibility of a legislative audit of this issue."

You can access more Arkansas information here. You can read The Arkansas Project report at this link.

UPDATE: Kimberly Friedman, spokesperson for the Arkansas Department of Workforce Services, responded to a Talk Business inquiry on the report of overpaid unemployment claims.  Her response:

We have reviewed the Wall Street Journal article and U.S. Department of Labor report regarding the amount of unemployment insurance funds that were improperly paid. Here are a couple of things to note:

1. During that timeframe, Arkansas was in the midst of a recession and experienced a high volume of unemployment insurance claims.
2. The U.S. Department of Labor requires Arkansas to pay a UI claim within seven days once we have a valid claim.
3. There is a difference between the $161 million reported by the Wall Street Journal and the $138,609,602 reported by DOL. After looking at these figures, it is our understanding that the Wall Street Journal’s figure is for a three-year period that ends June 30, 2011. DOL’s figure is for a time period that ends June 30, 2010.
4. The $138 million amount posted on the DOL website is based on statistical analysis that uses a sample of claims. The 9.88 error percentage is based on that statistical analysis. With that said, apparently, the sample is driving the newspaper’s and DOL’s figures.
Also, we do have a look-back review process with an automated system that identifies claims that may have been processed with some error. If we determine that an error was made for whatever reason, we implement overpayment and repayment procedures to seek restitution from the claimant.

Talk Business has sent the following questions for response:

1. Does DWS dispute the accuracy of these DOL and WSJ numbers?
2. Does DWS dispute the methodology of how these figures were calculated?
3. What does DWS think may have been overpaid in UI benefits?