ATLANTA — Georgia's Labor Department failed to have adequate systems in place to detect and recover millions of dollars in unemployment benefits improperly paid over a three-year period despite a widely available system to cross-check new hires, according to a federal audit.
The Office of Inspector General with the U.S. Department of Labor found the state agency "missed opportunities" and did not implement a system to detect overpayments of unemployment benefits until December 2011, even though that system had been available since 2008. During that time, Georgia overpaid $58.7 million in unemployment benefits and recovered just $14.9 million, or 25 percent, the audit said.
State Labor Commissioner Mark Butler, who took office in January 2011, has taken steps to prevent overpayments and catch them when they do occur, according to agency spokesman Sam Hall.
"We feel that in the last couple of years we have made significant inroads with some of the issues that resulted in the overpayments," Hall said Friday. "When Commissioner Butler came into office, he was aware of the fact that some of our technology was outdated, and he made a commitment very early on to start upgrading that technology, both hardware and software, and updating the systems to bring the department more into a situation where our technology would allow us to do the job that we need to do."
Last month, Butler announced Georgia was among a group of states launching an electronic system designed to improve communication between the state and employers while preventing overpayments. The system allows for state officials to contact employers by email, rather than the U.S. Postal Service, when an employee has filed an unemployment claim. The employer can then respond quickly as to whether the person has a legitimate claim.
Unemployment benefits cover those who are let go through no fault of their own; those that are fired for cause are ineligible. To qualify, workers must meet minimum length of employment and wage requirements and must show they are looking for a job. The program is administered by the state using a mix of federal and state funds.
The federal audit dated March 15 said the Georgia Department of Labor had indicated an increased workload and computer programming requirements had delayed its implementation of the cross-matching system known as the National Director of New Hires, or NDNH.
"GDOL stated that ensuring claimants received benefits took precedence over NDNH programming for detecting overpayments and it allocated resources accordingly," the audit said.
The National Directory of New Hires includes reports from federal civilian and military employers across the country as well as private employers who participate in a state's database. The audit included a handful of recommendations, and an assistant secretary of the U.S. Department of Labor noted Georgia had made improvements and was now using the national cross-matching system.
From April to December 2012, Georgia detected more than $300,000 in overpayments using the national system, according to a response submitted by Jane Oates, assistant secretary for employment and training.
Problems with overpayments have posed a challenge for a number of states. According to the Government Accountability Office, the unemployment benefits program had the fourth-highest estimated improper payment amount of all federal programs for fiscal year 2011. Federal officials estimated the unemployment benefits program had $13.7 billion in improper payments with an error rate of 12 percent. Federal officials say the primary causes are those who continue to claim benefits after they return to work and ineligibility issues.
Georgia has also joined the Treasury Offset Program, which allows the state to recover overpayments from federal income tax refunds, and implemented a debit card to replace paper checks, which eliminates the risk of lost or stolen checks that can generate overpayments, Hall said. In addition, the department is working with a private company that specializes in overpayment detection and recovery to allow officials to better identify and investigate those who have returned to work but failed to report their earnings, Hall said.
"Unemployment benefits are tied to a social security number and so are paychecks," Hall said.
State officials acknowledged its unemployment benefits system is more than 30 years old, requiring that any programming be thoroughly tested to avoid a system failure. In terms of collecting overpayments, the state has seen a notable increase. In the first quarter of 2013, overpayment collections totaled $5.4 million, which is up from the $2.9 million collected during the same period in 2011.
"We have made progress, and we will continue to make progress," Hall said.