States are wasting billions of taxpayer dollars by overpaying people in unemployment benefits, but the Obama administration is only asking states to recover half that money.
Many states are failing to detect their mistakes in the first place, let alone recuperate the lost cash, according to multiple recent reports from the Department of Labor Office of Inspector General.
The DOL’s Employment and Training Administration, for example, set a 50 percent recovery goal for every dollar states overpay in unemployment benefits, but the feds aren’t penalizing states that fail to hit the target.
States have historically funded unemployment benefits through payroll taxes, with the feds picking up the administrative costs. But the federal government temporarily funded 100 percent of any extended benefits past 26 weeks in states with high unemployment rates as a part of President Obama’s $800 billion stimulus package in 2009.
The DOL IG is auditing every state’s unemployment benefit overpayments from 2009 to 2013 to see if states met their 50 percent recovery target during the stimulus program’s lifespan. But the IG couldn’t report how much of those wasted funds were federal or state resources, since the feds never asked states to track funding sources or programs independently.
Indiana, which has the highest three-year improper payment rate in the country at nearly 20 percent, only recovered 43 percent of the more than $660 million it overpaid in unemployment benefits from 2009 to 2013, according to one DOL IG report.
“We found Indiana did not meet established targets for detecting and reducing improper payments, and reported data could not be validated,” the IG said.
New York has also only detected about 40 percent of its overpayments, or roughly $804 million of the roughly $2 billion it has overpaid since 2009.
North Carolina has recovered only between 36 and 43 of its overpaid benefits since 2010, according to another IG report.