Legislative audit finds South Carolina unemployment agency doesn't do enough to stop fraud



COLUMBIA — The second independent audit of South Carolina’s unemployment agency in the past two years has found its system for checking whether people getting jobless benefits also received wages at a job didn’t work properly for six years.

The Legislative Audit Council’s latest report, released Tuesday, also found the Department of Employment and Workforce does not consistently verify that people receiving jobless benefits are looking for work. It said unemployment offices are sometimes impossible to reach on the phone and some employers are making the agency’s job tougher by not following the law and reporting the identities of new hires.

The report did praise some actions taken since the last audit in 2010, including work to make sure that the trust fund that pays benefits is brought back in balance by 2015.

As of October 2011, the audit said the state owed the federal government $850 million in loans used to cover the costs for the sharp increase in people looking for unemployment benefits during the Great Recession. The agency said that amount is now down to $780 million, and the audit said changes in taxes and benefits mean the state should be able to pay all that money back.

In its response to the audit, Department of Employment and Workforce Director Abraham Turner promised to look at most of the report’s recommendations.

The agency pushed back on the audit report’s recommendation that lawmakers clarify some oversight rules concerning the panel that hears appeals of the department’s decisions on whether people are eligible for unemployment benefits. The agency said the board exceeds federal standards for its work and has become more efficient over the past nine months.

“While the report does offer recommendations for improvements, it also identifies many of the positive initiatives the department has taken over the past two years. These measures have transformed our agency into a more effective, progressive organization,” Turner wrote the Audit Council.

The state agency said the problem with checking wage information against people earning benefits should be fixed by a new software system put in place in December.

The audit said that from 2005 to 2011, the agency’s system for checking that information didn’t work. The report cited a worker who collected $13,000 in benefits over 12 months while he had a job at a technical college.

The audit criticized the amount of information the agency collects on where people receiving benefits look for jobs. People on regular benefits need to only list the name of the employer, making it much harder to verify if they actually applied there. And while people on extended benefits must also list names, addresses, phone numbers and the person contacted, agency employees often didn’t check because employers complained about being bothered.

The agency said it is combining its database of jobs available with the forms that jobless individuals fill out verifying they are looking for a job and requiring at least one of the jobs applied for is listed in the agency’s computers.

Auditors also found outdated information in videos and packets given to workers who just lost their jobs. They called all 56 local unemployment centers in the state, and couldn’t get a person in 14 of them. Eight of those calls went to voice mail, which was full in six cases.

The agency said it is revamping its phone system and getting rid of the outdated material.

Lawmakers critical of the Department of Employment and Workforce didn’t think the audit went far enough.

“What DEW is good at doing is taking taxes from employers and giving it away,” said Sen. Kevin Bryant, R-Anderson. “They’re focused on collecting money from employers and paying people not to work.”

Bryant has been highly critical of the $50 million DEW paid out in unemployment benefits last fiscal year to fired workers. Their benefits are now reduced depending on the type of misconduct and severity, up to complete disqualification. But Bryant says the agency has abused that latitude.

He is backing Sen. Lee Bright’s bill to automatically disqualify people fired for misconduct from receiving unemployment benefits. Under state law, gross misconduct already completely disqualifies people. The definition includes theft, alcohol use, property damage, assault and insubordination.

But senators say the agency isn’t abiding by that law. They have heard testimony about cases in which a fired worker received several weeks of pay despite multiple examples of gross misconduct.

Bright, R-Roebuck, said senators need to carefully consider the reappointment of the three officers that hear appeals. Bryant complained they’re rubber-stamping agency staff’s decisions and giving people benefits when they shouldn’t.