FRANKFORT, Ky. (WDKY) – Tens of thousands of the state’s jobless claims in the early days of the coronavirus pandemic remained unprocessed until late October, and more than 400,000 emails to the state’s unemployment office had remained unread as recently as Nov. 9, 2020, State Auditor Mike Harmon said in a lengthy report just out Tuesday.
“High-risk decisions” and the override of important system controls were two of the several issues involving the Office of Unemployment Insurance and the Unemployment Insurance fund identified in the Statewide Single Audit of Kentucky for Fiscal Year 2020.
Harmon’s first volume of the report stated 25 issues were found, with more than half of them dealing with the OUI and UI.
The report cites the coronavirus pandemic as a reason for issues, with a reported 49,023 new unemployment claims filed during the week ending March 21, 2020, and an additional 113,149 new claims filed during the week ending on March 28, 2020.
The creation of new federal insurance programs including the federal Coronavirus Aid, Relief and Economic Security Act (CARES): Pandemic Unemployment Assistance (PUA), Pandemic Emergency Unemployment Compensation (PEUC) and Federal Pandemic Unemployment Compensation (FPUC) also created issues, according to Harmon’s office.
“When we issued a qualified opinion on the UI fund as part of the Comprehensive Annual Financial Report, or CAFR, audit in December 2020, it was based on the fact the Commonwealth did not know how much money is still owed to Kentuckians who filed for unemployment benefits and the numerous internal control issues within OUI,” Harmon said. “The SSWAK report details those and other issues within our unemployment insurance system, which should be deeply concerning to taxpayers and those who have filed for UI benefits.”
According to Harmon’s office, “As of Oct. 29, 2020, the claims backlog of unprocessed, initial jobless claims totaled approximately 80,000. Additionally, OUI had archived more than 400,000 emails the office received through its UI assistance email account that remained unread as of Nov. 9, 2020.”
The report states pressure from the pandemic “incentivized OUI management to override important system controls” which prevented auditors from tracking the amount of over or underpayments being made through auto-pay.
A sample of 37 state employees who applied for UI benefits was selected by auditors who found 16 were paid unemployment benefits for the loss of part-time jobs despite still being employed by the state, resulting in a $116,000 overpayment.
“The majority of the findings involving OUI come back to one common issue, which is the decision to remove controls that provided better oversight on verification and payment of UI benefits,” Harmon said. “It breaks my heart to think of those Kentuckians included in the 400,000 unopened emails who so desperately wanted their voices heard and yet were ignored. The systemic failure of leadership on all levels not only violated federal law, but also let down many who needed relief. It also leaves others facing the prospect of repaying the government for miscalculated payments they received in good faith.”
The report also states there were several issues with information security and data processing.
Read the full report below: