State Auditor Mike Harmon detailed numerous issues within the Kentucky’s Office of Unemployment Insurance, with problems ranging from hundreds of thousands of unread emails to poor security.
Harmon’s office on Tuesday published a report — the first volume of the Statewide Single Audit of Kentucky (SSWAK) for Fiscal Year 2020 that ended June 30 — containing 25 findings, half of them dealing with problems identified within the Office of Unemployment Insurance (OUI) and the Unemployment Insurance (UI) fund.
“The majority of the findings involving OUI come back to one common issue, which is the decision to remove controls that provided better oversight on verification and payment of UI benefits,” Harmon said in a release. “It breaks my heart to think of those Kentuckians included in the 400,000 unopened emails who so desperately wanted their voices heard and yet were ignored. The systemic failure of leadership on all levels not only violated federal law, but also let down many who needed relief. It also leaves others facing the prospect of repaying the government for miscalculated payments they received in good faith.”
The state’s unemployment office was hit hard at the onset of COVID-19 pandemic. According to the report, there were 49,023 new unemployment claims filed during the week ending March 21, 2020, and an additional 113,149 new claims filed during the week ending March 28, 2020.
According to Tuesday’s release, among the issues auditors identified within OUI and the UI fund aare:
- “Although OUI officials made high-risk decisions in an attempt to pay benefits more quickly, many claims still were not timely processed.”
As of October 29, 2020, the claims backlog of unprocessed, initial jobless claims totaled approximately 80,000. Additionally, OUI had archived more than 400,000 emails the office received through its UI assistance email account that remained unread as of November 9, 2020.
“These emails from claimants could include indications or problems for OUI to address, not to mention general questions from unemployed Kentuckians,” Harmon said in the release.
Harmon said a security breach involving user confidentiality earlier in the year was only discovered because of an email from a claimant. - “Due to the volume of claims and new federal programs related to the COVID-19 pandemic, OUI leadership made decisions that violated federal law and sacrificed program integrity in an attempt to more quickly get payments to unemployed individuals.”
One of these changes, referred to as “Auto-Pay,” allowed UI benefits to be automatically paid without requiring claimants to report the weekly wage information needed to determine whether they were actually eligible for benefits.
Harmon said Auto-Pay was in effect two weeks for traditional UI and eight weeks for PUA, and it contributed to causing many of the issues identified in the auditor’s findings. - “OUI did not develop a reasonable and reliable estimate of unpaid claims for the accounts payable balance of the UI fund. Initially, OUI was unaware of the need to produce an estimate.”
According to the report, OUI was unaware of the need to produce an estimate. After further inquiries the estimates changed multiple times by wide margins.
“OUI had multiple issues related to information security and data processing.”
According to the report, “the UI system contains the private, personal taxpayer information for every employed Kentuckian, and the audit revealed that federally mandated and state required monthly system security checks were not performed.” - “OUI failed to inform the Auditor of Public Accounts, along with other state agencies, of three data breaches that occurred in April and May 2020.”
State law requires agencies to notify APA and others within 72 hours of the occurrence. According to the report, the auditor was not notified in that timeframe.
During his Tuesday news briefing, Gov. Andy Beshear said 400,000 unread emails is “unacceptable” but noted that doesn’t mean there are that many people who didn’t get through.
Amy Cubbage, current general counsel for the governor’s office, said the state had “limited staff, so we had to make sure we were working the claims in the most efficient way possible.” She said they placed a priority on the date people filed for unemployment rather than by when emails were sent.
Beshear said the other issues in the audit were things his administration has publicly responded to previously.
He also said some of the problems stemmed from budget and staffing cuts from previous administrations.
Still, Beshear acknowledged there were things his administration would have done better.
“People have needed our help,” he said. “We’ve been able to help the vast majority of them, but anybody out there who still needs help that we haven’t gotten to, that’s our failure.”
