Even before the pandemic, the Virginia Employment Commission handled unemployment claims inefficiently and without much urgency.
In fact, when it came to performing unemployment insurance (UI) functions, the state was barely outside the bottom 10 in the country in the five years preceding the pandemic.
So anyone when disaster struck, the state wasn’t ready.
Hence, the seventh of 40 new recommendations coming from an audit of the agency: Come up with a resiliency plan for when disaster hits.
Virginia doesn’t have one, and that’s why as many as 100,000 unemployment claims still needed to be adjudicated over the summer.
The report from Virginia’s Joint Legislative Audit and Review Commission, while scathing, isn’t devoid of good news. In the last two months, that number has been drawn down to about 62,000, said Lauren Axselle, the JLARC’s principal legislative analyst.
The number of calls that get answered has also gone up — to about 12% of the 1.3 million calls it got. That’s actually an improvement. In June, it was only 4%, she noted in an update to lawmakers back in September.
“You may remember from September the VEC was estimated to have issued $930 million in incorrect payments for the state UI program for 2020,” she told lawmakers at a hearing Monday. “The total estimated amount of incorrect payments is larger when you factor in the first half of 2021. Virginia may now be looking at a total estimate of over $1 billion in incorrect payments for the state UI program.”
She made clear it was an estimate, and said a variety of factors play into that number, including mistakes made by employers, VEC staff and those making a claim. It can also be caused by fraud, though in most cases, she said, it’s not. In addition, federal reimbursement may end up lowering that number again.
However, Axselle urged the state to start collecting on those overpayments again, something that’s been put on hold while the agency tries to catch up to the massive increase in work that’s fallen on it since the pandemic started.
“This would help VEC comply with federal requirements,” she reminded lawmakers.
Her report continuously points out the understaffed agency too often relies on antiquated systems for doing day-to-day tasks. For instance, there’s lots of work that can often be done electronically but all too often isn’t, including the processing of separation reports that can help determine if someone is eligible for benefits.
“VEC has largely relied on employers to mail the report, which has resulted in frequently delayed or incomplete report submissions,” Axselle said. Another recommendation in her audit was to require employers to file those reports electronically.
Further IT upgrades and improvements are also recommended, as is more oversight from lawmakers in Richmond.
“It’s clear that additional oversight and assistance is needed,” Axselle said.
When it comes to the payment of unemployment taxes, she said, Virginia employers aren’t audited often enough, and that the audits that are conducted should sometimes be more targeted and less randomized. Of the 1% of companies reviewed, she said, at least half of those audits should be focused on the companies most “at risk” of tax avoidance.
Most unemployment funding in the commonwealth comes from federal funding, which doesn’t help. And in Virginia, it often fails to provide the help many residents will need, Axselle said. Another suggestion, which would have to be taken up by state lawmakers, is to increase the amount of unemployment benefits available to residents who lose their jobs.
In all, her suggestion was that the state hire an outside consulting firm to find ways to make the agency more efficient.
Nobody from the VEC, or Gov. Ralph Northam’s administration, has responded yet to the audit.
