Wasteful & Indifferent: This Is How Little The Government Cares About Your Cash

By Charles Susswein | Tuesday, 14 June 2022 03:45 PM
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Wasteful & Indifferent: This Is How Little The Government Cares About Your Cash

At least 20 percent of federal dollars paid out through pandemic-related unemployment programs went to fraudulent and ineligible claims, according to a new report from the Government Accountability Office (GAO). The federal watchdog reported that at least $78 billion, and potentially more, of benefits paid out in the fiscal year 2021 were misspent.

According to the report, the rate of improper payments made through unemployment insurance (UI) claims increased from 9.2 percent, amounting to $8 billion in fiscal year 2020 before the COVID-19 pandemic, to 18.9 percent, amounting to $78.1 billion in the fiscal year 2021.

The report states that the federal Department of Labor (DOL) discovered that the main cause of improper payments, historically related to determining an individual’s eligibility, changed throughout the pandemic when identity theft became the main cause.

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“Total UI improper payments are not known partly because DOL has not yet reported estimates for certain pandemic UI programs. States have also struggled with incomplete reporting of billions of dollars in identified overpayments,” the GAO report stressed.

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The report states that enhanced unemployment insurance, a part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March 2020, not just increased existing fraud risks but formed new ones.

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Between March 2020 and January 2022, 146 individuals have pled guilty to federal charges of UI fraud, and charges were pending against 249 individuals, according to the report.

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Different challenges with the UI system relate to program design and variations in the way states administer the program. The GAO, DOL, and the DOL’s Office of the Inspector General have further announced there is a need to modernize the IT systems states use to administer UI.

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“In the pandemic, challenges emerged relating to providing customer service, timely processing of claims, and implementing new programs,” the report states.

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“These extensive challenges pose a significant risk to UI service delivery and expose the UI system to significant financial losses. Based on GAO’s findings—including many open recommendations in this area—GAO has determined that the UI system should be added to GAO’s High-Risk List,” the agency declared.

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The GAO’s High-Risk List catalogs programs and operations vulnerable to waste, fraud, abuse, and mismanagement or which need to be transformed. It is updated at the beginning of each Congress. The UI system was added on June 7, with the agency stating that the current program's design and variations in how states administer UI “have contributed to declining worker access and disparities in benefit distribution.”

Gene Dodaro, head of the GAO and Comptroller General of the United States, called the problems with UI “widespread” and announced they are “extremely troubling.”

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