Tennessee overpays $73 million of jobless benefits

Tennessee overpays $73 million of jobless benefits

March 29th, 2013 by Andy Sher in Business Around the Region

Tennessee Gov. Bill Haslam

Photo by Associated Press/Times Free Press.

NASHVILLE - Tennessee made more than $73 million in unemployment overpayments because of fraud and errors over the past six years, according to state auditors.

The state comptroller's review of various agencies' compliance with federal requirements also found that people legitimately entitled to benefits didn't get them on a timely basis because of backlogs in the Department of Labor and Workforce Development.

Earlier this month, the department's commissioner, Karla Davis, abruptly resigned with Gov. Bill Haslam's office insisting it was due to "family" considerations and not pressure. Two of Davis' top staffers also abruptly left as well.

The $1.2 billion unemployment insurance program is administered by Labor and Workforce Development officials. The Times Free Press reported in 2011 the U.S. Labor Department found Tennessee had one of the highest "improper payments" in the entire country.

State auditors said they found the department's internal controls for the program were ineffective or non-existent, resulting in overpayments of claims due to fraud or error.

Departmental efforts to review fraudulent claims and claims paid in error and to collect overpayments were "also strained," auditors said. The department has been able, on average, to collect just 23 percent of the overpayments.

"The state's unemployed citizens must be able to rely on the Department of Labor and Workforce Development officials to properly administer the unemployment insurance program and provide critical benefits to those who are dependent on them," Comptroller Justin Wilson said in a statement.

He said the "new acting commissioner of the department has responded and initiated a corrective action plan to strengthen controls and establish program oversight. We appreciate the new commissioner's prompt action as well as the former commissioner's request for a review of specific allegations when she identified fraud risks within the department."

In all, the Single Audit Report contains 48 findings with recommendations for improvement at 11 different state agencies and universities. Twelve of them dealt with the Department of Labor and Workforce Development

State auditors concluded that management's failure to properly administer this state/federal program "jeopardizes the integrity and future viability of the program."