TheLabor Department said that the Virginia Employment Commission, which ran out of money needed to pay unemployment benefits, improperly paid $166 million in 2009 to residents who didn’t meet eligibility requirements. Most of the overpayments went to people who failed to adequately look for work each week, as the state requires of those who continue receiving unemployment benefits, said Auditor of Public Accounts Walter Kucharski, an independent auditor who serves the state. The news comes on the heels of the states’ borrowing nearly $350 million to shore up its Unemployment Trust fund.
The Labor Department figures may be exaggerated, the auditor conceded, because the criteria used to constitute a legitimate search for work is ill-defined.
For example, the employment commission does not consider telephone contact an adequate job search, and so workers who only search via telephone would automatically be classified as an overpayment.
Also, if a prospective employer can’t remember if someone came in looking for a job, that case is counted as an overpayment, Kucharski said.
The Department of Labor’s sample size for 2009 was 368 cases, from which it extrapolated a total overpayment amount.
There were about $7 million of overpayments recovered out of an established $26 million in overpayments in 2009. Over the last two years, the employment commission has recovered about 35 percent of established overpayments.
Reducing the improper payments would require a combination of new systems and new personnel, however, soaking up resources the state may not have. When Virginia experienced low levels of unemployment before 2009, the employment commission cut back staff, but a subsequent increase in funding has still lagged the workload, a state audit said.
The Virginia Employment Commission could increase staffing in its Benefit Payment Control Unit if they want to better track overpayments, the audit said.
The commission is reviewing the audit’s recommendations and is looking to see which ones they can implement and any process improvements they can make, said VEC spokeswoman Joyce Fogg.
But on top of the overpayment issues, the state has had to borrow $347 million from the federal government to shore up its Unemployment Trust fund, which comes from employer taxes and ran out of money in October 2009. The commission expects to borrow an additional $613 million from January 2011 to April 2013.
