Data Places Louisiana First in Nation for Overpayment of Unemployment Benefits
Director of state’s workforce commission warns against state-by-state comparisons
NEW ORLEANS – According to data released by the US Department of Labor, Louisiana is by far the leading culprit for overpayments of unemployment insurance. However, Louisiana’s Workforce Commission Director, Curt Eysink, strongly disputes any interpretation that places the state’s UI program at the bottom of the pack.
In July the Labor Department estimated that in 2009 $7.1 billion of the nation’s UI payments were overpaid – 9.3 percent of the $77 billion total. From the start of September the department also made state-by-state data available, and Louisiana came out with the highest rate, with overpayments comprising 42 percent of the total. The state with the next highest overpayment rate, Indiana, had 33 percent, and New Mexico was third with 29 percent. The top three states in terms of accurate payments – New Hampshire, Kentucky, and Massachusetts – all had overpayment rates of less than 3 percent. Additionally, the 5.7 percent rate of fraudulence places Louisiana third highest in the nation – just behind Arizona and Arkansas, on 6.0 and 5.9 percent respectively.
To comply with the federal “Benefit Accuracy Program,” Louisiana’s Workforce Commission randomly surveyed 483 of its payments. However, the commission found that 42 percent of the dollar total did not fit under current legislation. 5.7 percent of all payments were identifiably fraudulent, from the recipients’ willful misrepresentation or concealment of facts, and the remaining overpayments were categorized as “non-fraud” – on account of administrative or computing errors.
However, Eysink, who oversees Louisiana’s UI, contends that these numbers do not reflect the health of the program, nor, in his view, do they provide a ranking tool between states.
“These numbers are an oversimplified characterization of what is going on… The system is incredibly more complex than an unaccustomed person would perceive it to be… Each individual state has its own policies and rules and so forth. So to compare one state from another is impossible.”
Jim Patterson, Employee Relations Council Director for the Louisiana Association of Business and Industry, says that his organization is “always concerned about the presence of overpayments, and there are clearly some points where the [commission] could do better.” However, be believes that the commission is trying to address the overpayments “in good faith,” and that Eysink is characterizing the survey reasonably.
“I don’t want to denigrate the report, but I am always hesitant about surveys like these. While 42 percent of payments sampled may have been overpaid, you can’t necessarily extrapolate that to all of them… Louisiana tends to have more stringent eligibility requirements, and that would naturally lead to more overpayments… Also some of these overpayments may be associated with former Louisiana residents, and in that case the department in the other state would hold responsibility.”
Eysink acknowledges that the data “does have value to it,” but he believes that it is only “one more means to track what we do.” And even if “not all of the overpayments can be collected right away,” that to him reflects that many of the recipients genuinely are very poor.
Eysink also asserts that the commission has responded to the notable results, which can be “a tool for improvement,” particularly in terms of book-keeping. He points to heightened verification processes that inadvertently enable greater employment retraining strategies.
The federal government administers the UI program and taxes employers 0.8 percent on the first $7,000 of paid out income. Each state then collects an additional tax from employers to pay for UI claims, and that revenue is held in trust with the federal government. According to Eysink, historical data and the health of the state’s trust fund are evidence of the state’s diligence.
Louisiana’s UI payments for 2009 were $472 million. So a 42 percent overpayment rate would mean the Louisiana Workforce Commission gave out an unnecessary $196 million in 2009. However, the Commission’s own estimate is only $18 million, and Eysink hopes they will still be able to reclaim much of it.
“More than 30 states’ trust funds have gone below zero… In fact they have had to borrow money from the federal government. Louisiana’s trust fund still has $970 million available, second only to Washington State… If we were wasting money as this data implies, while having a lower tax base than other states, our trust fund wouldn’t be solvent.”
Fergus Hodgson is the capitol bureau reporter with the Pelican Institute for Public Policy. He can be contacted at firstname.lastname@example.org, and one can follow him on twitter.