Audit: State overpays $73M in unemployment

Associated Press • Mar 28, 2013 at 9:17 PM

NASHVILLE, Tenn. (AP) — Tennessee's Department of Labor and Workforce Development mismanaged the unemployment program, causing overpayments that exceed $73 million, according to a state audit.

The report issued Thursday by the state comptroller's office said the problems have "threatened the integrity" of Tennessee's unemployment program.

Three top officials at the department resigned last week — Commissioner Karla Davis, Deputy Commissioner Alisa Malone and the assistant commissioner overseeing the unemployment program, Turner Nashe. At the time, the state said Davis, who was appointed by Gov. Bill Haslam in 2011, was leaving for personal reasons. The Tennessean (http://tnne.ws/14zAt4Y) reported that there had been disputes internal departmental disputes over management of the unemployment benefits program.

The audit report found $73.4 million in unemployment benefits went to people who weren't entitled to them because of fraud and the department's errors over the past three years. It also said overpayments were up significantly over the past three years.

Unemployment benefits are an insurance program funded by employer payments into a trust. Payments go to people who have lost their jobs because of business downsizing or closure.

For the fiscal year that ended June 30, Tennessee's overpayment rate was just under 15 percent, ranking it 12 among the the 16 states that made the highest number of improper unemployment benefits payments, the audit report said.

Nearly every function of the office managing the program suffered from a significant backlog, including processing new claims.

"The department was unable to handle the volume of incoming telephone calls to process new claims, resolve issues with pending claims, provide additional support to existing claims and process the volume of employer requests to protest unemployment benefit charges," the report said.

According to the department's website, it handles some 400,000 initial and partial unemployment claims.

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