CHICAGO (CBS) -- It took more than a month-and-a-half to get Pandemic Unemployment Assistance (PUA) program benefit payments into the pockets of Illinoisans who desperately needed the money, making the state among the slowest in the nation.
A new U.S. Department of Labor Office of Inspector General audit found that in Illinois it took an average of 48 days to initially pay claimants.
That's well below the federal standard for paying regular unemployment benefits. That standard requires 87% of claimants be paid with 21 days when there is no waiting week, as is the case in Illinois.
Only six states took longer than Illinois to make those PUA payments in the spring of 2020. The PUA program was established by the federal CARES Act, signed into law on March 27, 2020. That law provided, for the first time, unemployment benefits for workers who did not qualify for regular unemployment compensation like gig workers and the self-employed.
The CARES Act also established two other federal programs. The OIG audit found Illinois met the timeliness standard for both the Federal Pandemic Unemployment Compensation (FPUC) program and the Pandemic Emergency Unemployment Compensation (PEUC) program. FPUC provided an additional $600 per week to all regular unemployment insurance and PUA claimants. PEUC provided an additional 13 weeks of compensation to people who had exhausted their regular unemployment benefits.
The audit found all states had trouble implementing at least one of the three programs. It took on average, 25 days to make the first FPUC payment, 38 days to make the first PUA payment and 50 days to make the first PEUC payment. In Illinois it took 48 days for PUA, 10 days for FPUC and 25 days for PEUC.
The audit cited media reports on the serious financial consequences that delays in payments caused, including the inability to pay bills, increased credit card debt, high interest rate borrowing, depleted savings, difficulty affording food and homelessness. CBS 2 has reported on several of these cases through the last year.
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The audit also reinforced earlier concerns about states not getting overpayments and fraud under control faster. The OIG found that 40% of states did not perform required Benefit Payment Control cross matches and 88% did not perform requested cross matches.
The audit estimates that as of January 2, 2021 nationwide at least $39 billion in CARES Act unemployment money will have been improperly paid and wasted. The OIG estimates fraud could account for much of that money but so far has found $5.4 billion potentially wound up in the hands of fraudsters.
Of that $5 billion, the majority ($3.5 billion) went to multi-state claimants. Another $2 billion went to phony claimants who used suspicious and disposable email accounts. The rest went to fraudsters who used the social security numbers of dead people and federal prisoners who gamed the system. The Illinois Department of Employment Security (IDES) has yet to say how much money has been paid out in fraudulent benefits.
As for reporting overpayments and fraudulent benefits, the OIG audit calls out many states for failing to do so as required. For PUA, 85% of states say they filed the proper forms with federal agencies, but 32% didn't report any overpayments and 60% reported no fraud. And, when states did report those numbers, they often did so inaccurately.
The OIG cites that accurate and prompt reporting is needed to identify and recover overpayment and fraudulent payments. It's also necessary to identify trends, weaknesses and vulnerabilities in CARES Act programs.
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The OIG faulted old systems, insufficient staffing and unclear guidance from the Employment and Training Administration (ETA) which oversees state workforce agencies like IDES for the failures to implement CARES Act programs and report on overpayment and fraud activity.
The OIG recommended ETA study the technological needs of unemployment insurance programs to determine what needs to be upgraded or replaced to deliver timely payments, implement new programs when unemployment is high and to reduce fraudulent activity. It also recommended ETA help states with reporting accurate information and use that data to help states detect fraud.
The ETA replied that it intends to use money from the American Rescue Plan of 2021 (ARPA) to invest in systemwide infrastructure and development, including improvements to states' unemployment insurance IT systems. In terms of accurate reporting of program data, ETA has already issued advisories has conducted webinars detailing the reporting requirements for the PUA, FPUC and PEUC programs. ETA says it will host another webinar this year.
As for fraud detection, ETA has provided states with $200 million to implement new tools to combat fraud and to hire additional staff to prevent and investigate fraudulent claims.
In a statement emailed to CBS 2, an IDES spokeswoman said:
"This report is confirmation of the unrealistic expectations put on states at the onset of the pandemic and the difficulties all states faced implementing brand new federal programs in an extremely difficult timeframe. We're happy that USDOL OIG conducted this audit and recognizes the difficulty states had rolling out these programs, which have served as a vital economic response to the Covid-19 pandemic. This also highlights, as IDES has repeatedly stated, that this has never been a problem unique to Illinois and we are not alone in this. We're also happy to see in this report that Illinois performed very well with regard to timely payments within the PEUC and FPUC programs. IDES looks forward to further recommendations from DOL and will of course work with them to ensure unemployment systems nationwide continue to improve.
IDES is one of many states still quantifying a dollar amount attributable to identity theft-related fraud. This number is reportable to DOL and will be made available when that number has been identified."
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