Friday, September 28, 2012

Audit Report on Maryland Unemployment Overpayments Should Prompt Cost-Saving Reforms

A article spotlights a just-issued Maryland Office of Legislative Audits' report on state overpayment of unemployment claims. As the article points out, the Department of Labor, Licensing and Regulation's Division of Unemployment insurance's (DUI) overpayment receivables for last year totaled nearly $150 million. About $25 million in overpayments were recovered.
The Audit report made a handful of findings regarding the shortcomings of DUI's administrative processes for administering unemployment benefits. Among those findings that bear on the overpayment of benefits:

  • DUI didn’t use available quarterly wage information for existing and new employees for purposes of detecting unemployment claimants receiving payments that they were ineligible for.
  • "DUI did not perform certain targeted automated matches to identify claimant payments with a higher likelihood of being improper, such as claimants who were paid benefits after their date of death, while incarcerated in a State correctional facility, or while employed by a State agency."
  • DUI had no process in place to ensure current and accurate unemployment claimant address. In particular, DUI didn't have a process for making sure that changes processed by the bank's debit cardholder account records were communicated to DUI.
  • A system programming error for online tax credit applications resulted in employers being improperly certified to receive tax credits.

Fortunately, as indicated in the Audit report's appendix – and pointed out by – the Department of Labor, Licensing and Regulation appears willing to take these findings seriously. Hopefully, the acknowledged problems regarding improper, erroneous payments will be remedied quickly. This is important for an unemployment insurance program that has been growing rapidly in any event. Expenditures increased from approximately $460 million in 2007 to "approximately $1.61 billion, of which approximately $768 million was funded by the federal government" – that is, $842 million – in 2011.