IM PRO PER UPGRADE
The American Rescue Plan included $2 billion to support grants to prevent identity theft, deploy “Tiger Teams” to work with state UI officials, upgrade outdated IT systems, and more. Since the President took office, the Biden Administration has taken crucial steps to help states modernize their UI systems, fight fraud, and improve oversight. For example, the PRAC notes that Ohio’s unemployment audit found that it “did not establish sufficient procedures or controls to ensure that pandemic unemployment benefits were paid to only eligible claimants,” which led to the failure “to detect, recover or report overpayments and ineligible payments.” The PRAC also found that, “States’ response times to process claims were not the only area of UI impacted by the pandemic-related claims surge.” Controls meant to stop fraud and reduce improper payments “were often reduced to handle the influx or were simply not effective enough,” and some states misinterpreted guidance from the previous Administration. As the PRAC notes, a National Association of State Workforce Agencies report found that more than half of states were still relying on outdated unemployment computer systems as of February 2021. In Ohio, for example, by October 2020 it took more than 70 days to process many new claims, whereas before the pandemic the vast majority were completed in under two weeks.Ī report from the Pandemic Response Accountability Committee (PRAC) that looked at 16 states across the country found that many lacked the capacity to respond to the crush of new claims and relied on outdated IT systems, and that limited statutory fraud and eligibility controls made them more susceptible to improper payments. This surge in claims caused massive delays for State agencies. For example, more claims were filed in nine months in Florida than in the previous eight years-combined. In March 2020, initial claims rose from 211,000 a week to 6.6 million a week. What accounts for this elevated rate, particularly in the UI system? As the pandemic took hold in 2020, it triggered a massive surge in UI claims that overwhelmed state-run agencies responsible for administering unemployment insurance. And, we know that problems accumulated from early in the pandemic are still being discovered and will take a long time to clean up. Data was not collected during the middle of 2020 as a result of the chaotic challenges state-run UI systems faced, so this is our first full-year look at UI errors during the pandemic. This increase was largely driven by growth in the improper payment rate in the Federal-State Unemployment Insurance (UI) program, which totaled 18.71% from July 2020 to June 2021-roughly 5-8 percentage points higher than during a normal, non-pandemic 12-month period. Overall, the analysis estimates that between fiscal year 2020 and fiscal year 2021, the Government-wide improper payment rate rose from 5.6% to 7.2%. The data released today underscores the depth of the problems facing states that were in many cases overwhelmed by the unique and compounding challenges caused by the COVID-19 pandemic-and a general legacy of neglected oversight under the previous Administration. In other words, not all improper payments represent a loss to taxpayers. And even in cases where improper payments are subsequently recovered, they are still counted as improper. If an agency can’t confirm whether a particular payment is made improperly at the time that it’s reviewed, the entire payment counts toward the improper payment rate-even if only a fraction of the payment is ultimately found to have been made improperly. That includes overpayments, underpayments, or even payments made to the right recipient in the right amount but not in strict adherence to the relevant statute or regulation.
Before getting into the numbers, it’s important to understand exactly what this data tells us-and what it doesn’t.Īn improper payment is a payment that should not have been made or that was made in the wrong amount.
Today, the Office of Management and Budget is releasing annual Government-wide data on improper payments.
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