Unemployment Insurance Integrity: States Have the Tools to Protect and Improve the UI System

Filed in Secretary Solis, Unemployment by on September 14, 2011 6 Comments

Throughout the recession and recent recovery, unemployment insurance benefits have been a crucial lifeline for the millions of Americans who found themselves without a job through no fault of their own.

These benefits have helped continue our economic recovery, but more demand has also strained the system and led to a significant increase in states’ improper payments which now make up an unacceptable 11.2%, or $17.5 billion.

The Unemployment Insurance system is a unique benefits program. The federal government provides funding and support, but states bear the responsibility of operating an efficient and effective benefits program. The federal government must help them do so, and hold them accountable when they don’t. 

Claims taken online or by telephone have sped up the process, but have also depersonalized it, making it easier to make a mistake or provide false information. State agencies that oversee the program have faced higher workloads and many have pulled staff and funding away from important integrity projects to focus on processing claims. For some states, these actions have resulted in higher rates of improper payments.

Reducing states’ rates of improper unemployment insurance benefits and maintaining the integrity of the system remains a top priority for me because I know how much it matters to those who need it.

Many states have — and more states should — increase efforts to reduce improper payments by addressing the most common causes. People continuing to make claims even after returning to work make up close to 30% of all improper payments. Failing to register with the state employment service or meet state work search requirements makes up nearly another 30%. And untimely or inaccurate separation information from employers or third party administrators adds up to nearly 20%.

In many cases, states can address these issues through better information sharing and the Labor Department is providing targeted assistance to those who need it most. To cut down on inaccurate or untimely job separation information, we worked with Utah, Georgia, Colorado, New Jersey and Ohio to implement the State Information Data Exchange System (SIDES). This allows the state agencies which oversee unemployment insurance and the employers or third party administrators who hold crucial employment data to share — and correct – this information online.

We are also encouraging states to use the National Directory of New Hires to reduce claims made after employees return to work and improve messaging to claimants to make them aware of their responsibilities.With the help of the Vice-President and the Office of Management and Budget, we will be starting a new pilot project which will use financial monitoring services to identify unusual payroll deposits.

Through targeted work with the states with the highest Employment Service registration error rates, we have seen a 23 percent reduction in improper payments to people who did not register with employment services agencies, including a more than 35 percent drop in eight states.

So today, we are launching a new online effort to bring attention to this problem and the strategies that states can – and should – be using to lower their rates. Visitors to http://www.dol.gov/dol/maps/map-ipia.htm will now find an interactive map that clearly identifies each state’s improper payment rate and the total dollar amount lost over a 3-year period.

Clicking on a state allows you to see the specific causes of their improper payments, as well as a “progress report” highlighting their progress towards each of the nine core strategies we know can work.

Moving forward, each year the Labor Department will identify high priority states – those with persistently high improper payment rates – and provide targeted and customized technical assistance to improve their performance.  These states will be subject to additional monitoring and technical assistance until they achieve an improper payment rate under 10% and sustain that performance for at least six months.

Today we are also announcing $192 million in funding to implement waste-cutting initiatives, and improve the Unemployment Insurance program.  These funds build on what we know already works, and provide states with common sense incentives to get the job done.  

I was pleased to join the Vice President in announcing efforts across the federal government to reduce waste, fraud and abuse. We owe it to the American people to be responsible stewards and the tools announced today will help states better serve their taxpayers.

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Comments (6)

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  1. margaret tyrrell says:

    After being unemployed since June I have found time and time again unemployment always turns me down because of their “qualifications” . all I know and care about is that I am unemployed. What a joke this department is! Accountability needs to start at the people who have changed or created the system.

  2. Didar says:

    It is certainly a life saving to many unemployed. However, I fee that in long run, government needs to put more emphasis on facilitating small and medium investors. Government needs to encourage financial education more and more. It would help more to people to get rid of recessions and there by improve their life standard.


  3. Many people who are on unemployment benefits will also be seeking health insurance benefits that may be more cost effective than COBRA. This needs to be taken into consideration as well.

  4. Great news about the UI System . i appreciate the mind behind this article. Govt need to think about the unemployment status of today’s generation.

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