RALEIGH, NC (AP) — The North Carolina Unemployment Agency failed to timely allocate $438 million in initial payments to laid-off workers in 2020 and early 2021, state auditors said Monday as they reviewed the agency’s work studied during the pandemic. The audit partially blamed the claims process and poor oversight for the delays.
The Employment Security Department is known to have struggled to get payments out the door in 2020. The department saw a record number of applicants for traditional unemployment programs and those created by the federal and state governments during lockdowns and subsequent downturns in business. The state unemployment rate reached 13.5% in April and May 2020.
The performance audit quantifies the delays in initial benefits spanning all of 2020 and the first quarter of 2021 that were not issued within 14 or 21 days of an individual’s first application. Funding for benefits comes from state and federal sources, depending on the program.
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The Office of State Examiner Beth Wood found that only 60% of the 3.67 million initial payments in eight $1.2 billion programs were sent within federal government timeliness standards. And only 32% of first payments were issued within 30 days, the report said.
The delays came amid news reports of “unemployed people exhausting their savings, falling into debt and unable to pay their daily living expenses,” according to the audit. Early delays amid the onslaught of claims contributed to Gov. Roy Cooper replacing the department’s head with former state congressman Pryor Gibson. Program complaints have generally declined as benefit lockdowns have been eased, time-limited programs have expired and applicants have fallen as the economy recovers.
A total of $11.6 billion in unemployment benefits was awarded during the 15-month period studied. The coronavirus lockdowns began in March 2020. Despite the “unprecedented” surge in benefit claims during the pandemic, the department was “unprepared for economic downturns that will inevitably occur,” the auditors wrote.
According to the audit, the division had neither a plan nor a risk assessment that assesses and addresses what a sudden economic downturn would require. While the agency secured $261 million worth of contracts to handle the expanded surge — almost all of it to build a third-party call center to handle claims issues — oversight and oversight of contractors’ work has been limited and needs improvement on future contracts , CPA wrote.
To meet the federal punctuality standard, at least 87% of the first benefit payments must be made within 14 or 21 days. The longer period is given to states like North Carolina, where claimants must wait a week before receiving their initial weekly benefit. But this waiting week was waived in April 2020.
North Carolina struggled to meet that standard prior to the pandemic and has not been able to achieve it annually under both Democratic and Republican governments since 2012. And North Carolina’s percentage has consistently fallen below the national average during that stretch. During the audit period, only two of the eight performance programs operated by the division met the standard. Both programs started during the pandemic.
In a formal response accompanying the audit, Secretary of Commerce Machelle Sanders, whose department oversees the Department of Employment Security, agreed with the findings of the audit and that the agency was trying to implement recommendations.
The response said several external factors contributed to the delays beyond the surge in claims. These included the need for additional measures to prevent benefit fraud, longer wait times to receive data from entities such as the Social Security Administration to process claims, and required training, system changes, and guidance from the US Department of Labor for new benefit programs.
The department “will improve the timeliness of benefit payments by using technology and other solutions to better monitor the claims process and assess where delays may occur,” the response said.
The audit also mentioned what happens when a jobless claim in North Carolina isn’t approved through an automated processing system the state shares with Georgia and South Carolina. That claim must then be manually verified by the department, whose allotted timeframe for completing the verification is typically 40 days and can reach up to 110 days, the audit said.
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