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Lt. Gov. Ron Ramsey

NASHVILLE -- The number of Tennesseans receiving jobless benefits remains near historic highs, but only about 10 percent of the beneficiaries have to prove they actively are seeking work.

Lt. Gov. Ron Ramsey, the Republican Senate speaker, and business leaders say that's not good enough. They want state law changed to strengthen work-search rules.

There's more trouble afoot: A U.S. Department of Labor report questions how well the state is looking after taxpayer and business dollars supporting unemployment payments to an estimated 120,000 people.

The report shows Tennessee has one of the highest "improper payment" rates among all 50 states.

Tennessee's rate was pegged at 14.47 percent, meaning it overpaid an estimated $310.7 million over a three-year period. Tennessee tied with Mississippi for 11th-worst in the nation.

State Employment Security Administrator Don Ingram said some aspects of the report are "misleading."

He blamed most problems on a "huge influx" of jobless Tennesseans during the Great Recession and its aftermath that overwhelmed the state's 40-year-old mainframe computer.

Tennessee unemployment soared from 4.6 percent in March 2007 to a high of 10.8 percent in July 2009. The October rate of 9.6 percent is above the national rate of 9 percent. Last year, 418,000 Tennesseans filed claims for unemployment benefits.

"It's not necessarily fraud, and it's not necessarily an overpayment," Ingram said. "We did not meet all of the requirements that the U.S. Department of Labor expects so far as processing of claims."

Thirteen straight years of flat funding for the department's jobs services program haven't helped either, he said.

Gaming The System?

Of the estimated 120,000 people now getting unemployment aid, just 12,000 to 13,000 must show they are looking for a job by submitting weekly forms identifying at least two employers they have contacted.

They are on the federally funded extended benefits program. The program adds 20 weeks of benefits to workers who have exhausted their 26 weeks of state benefits and 53 weeks of regular federal emergency benefits.

The federal government requires the job-search data for workers on the extended benefits program, which will end in January unless Congress acts to extend it.

About 90 percent of Tennesseans collecting their first 79 weeks of jobless benefits also must certify weekly they are looking for work. But they don't have to provide contact information for specific employers.

Ramsey told reporters recently the state's work requirements need an overhaul.

"Right now it's been too easy just to click a mouse and say you're looking for a job," Ramsey said. "Used to, you actually had to have some verification that that is the case."

Ramsey said he has been "inundated" by employers who tell him they try to hire unemployed workers.

"And they'll say, 'Well, my benefits don't run out for six more weeks, eight more weeks and I don't want to be hired until then.' I know it is tough times. I'm not downplaying that at all. But I also know that in some cases there are jobs available if people would be willing to do it," he said.

Gov. Bill Haslam recently told reporters he, too, is hearing employer complaints.

But, he said, "until I do my homework, you're going on anecdotal evidence" that people are gaming the system.

Computer Upgrade

Ingram said that if Congress doesn't extend jobless benefits and other federal emergency provisions, official unemployment would fall to the 40,000 to 50,000 range.

Of course, state Democratic lawmakers argue, that would have a major impact on those losing their benefits and still not having jobs.

And even if Congress extends benefits, Ramsey doesn't want the state to go along.

Ingram said that in the 1980s and early 1990s, the state required jobless workers to demonstrate weekly they really were looking for work. But the paperwork riled employers, he said.

"We want to make sure individuals are actively seeking employment, and we're looking diligently to find ways to document it and do it in a manner we can, based on the resources we have available," Ingram said.

It could be done by cross-matching unemployment insurance rolls with the jobs clearinghouse -- if the state's antique mainframe could handle the job, he said.

Help is on the way. Tennessee -- with the aid of $50 million in federal stimulus funding -- is leading a consortium with Georgia and North and South Carolina to create a new Web-based unemployment insurance benefits system. It should make changes far easier, Ingram said.

Improper Payment Rates

According to the U.S. Labor Department report, 55 percent of improper payments are because there's no documentation that claimants are registered with an employment service or job bank as required by state law.

Ingram said it's a computer problem.

"There was a problem with the transfer of our file from our claims center over to our jobs clearinghouse," he said.

Experts have been trying to address it since 2010. Two weeks ago, some files were having to be transferred manually, Ingram said.

Another major problem was that about 23 percent of workers continued to claim and receive benefits after returning to work.

That appears to be largely because of ignorance, not fraud, Ingram said. Most people don't realize benefits end when they land a job, rather than when the first paycheck comes in.

The state needs to do a better job of educating claimants, Ingram said. Meanwhile, the state plans to move to fresher databases on job hires instead of relying on the previous quarter, he said.