Illinois has paid down some of the billions of dollars in unemployment debt it accrued during COVID-19 lockdowns but still carries a balance. How much of that debt was from fraud is still not known nearly 27 months after the start of the pandemic.
Unemployment spiked at the beginning of the pandemic because of government actions limiting economic activity.
“The [Unemployment Insurance] system has faced long-standing challenges with effective service delivery and program integrity,” a report released this week by the U.S. Government Accountability Office said. “The historic levels of job loss during the COVID-19 pandemic worsened existing challenges.”
Following Gov. J.B. Pritzker’s orders in the spring of 2020 in Illinois, businesses stopped in-person service. There were unemployment backlogs and countless reports of people not applying for unemployment but still receiving benefits. In-person visits at Illinois Department of Employment Security offices were prohibited for more than a year.
Nationwide, the GAO reported nearly 1 in 5 claims may have been paid improperly.
“Prior to the pandemic, [the U.S. Department of Labor] regularly reported billions of dollars in annual estimated improper payments in UI, and it reported an increase from $8.0 billion (9.2 percent improper payment rate) for fiscal year 2020 to $78.1 billion (18.9 percent improper payment rate) for fiscal year 2021,” said the GAO report.
The Ohio Department of Jobs and Family Services reported this week it has recovered nearly $398 million in unemployment benefits to date.
“Criminals hit Ohio and the rest of the nation hard with fraudulent claims, taking taxpayer dollars and slowing efforts to get money to those in need,” ODJFS Director Matt Damschroder said. “The recovery of these funds is proof that Ohio continues to collect taxpayer dollars and pursue every avenue to give victims of identity theft justice.”
Messages to the Illinois Department of Employment Security about how much fraud Illinois experienced were not returned. State lawmakers on committees that oversee the state agency didn’t return messages.
Wirepoints President Ted Dabrowski said now nearly 27 months after the start of the pandemic, the lack of a dollar figure of fraud is unacceptable.
“There should really be transparency on that … we should know about that,” Dabrowski said. “If that’s losses of taxpayer money, it should be very clear about what happened.”
The GAO said states faced challenges in reporting reliable improper payments and thus, “the full extent of improper payments for the UI system is not presently known.”
Illinois was one of a few states that borrowed to pay unemployment claims during the pandemic. The state paid down some of the $4.5 billion using federal COVID-19 relief dollars, but still carries a $1.8 billion balance with taxpayers covering the interest too.
Dabrowski said not knowing how much fraud there’s been with taxpayers paying down unemployment debt is irresponsible.
“The fact we’re not being transparent about having to borrow billions and then having to pay it back with taxpayer money and we don’t know anything about it is horrible governance,” Dabrowski said.
The GAO said the outlook for estimated improper payments is not expected to significantly improve for fiscal year 2022 with the DOL setting the rate target at no higher than 17%.
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June 12, 2022 at 11:26AM