Auditor General Eugene DePasquale said Tuesday an audit has found major accounting and oversight problems in the state’s unemployment compensation system.
DePasquale slammed the Department of Labor & Industry for how it accounted for $178.4 million from SIIF — the department’s Service and Infrastructure Improvement Fund for the unemployment system.
“People have a right to be frustrated by what we found here,” DePasquale said in a news release. “If L&I had appropriately accounted for SIIF funding from the beginning, we may not be dealing with this chaos and looking at such high costs to address the problems going forward.”
DePasquale said the audit was about more than finding out what happened to the money.
“It is about providing the people of Pennsylvania with the level of service they deserve,” he said. “It’s about the 312,000 Pennsylvanians who tried to call the UC service centers in January and got a busy signal 99.3 percent of the time. The Department of Labor & Industry must do better.”
DePasquale launched an audit of SIIF in January, which was created in 2013 to temporarily supplement a decline in federal funding that L&I uses to administer the unemployment program.
When legislation to extend SIIF funding for 2017 failed, L&I cut $57.5 million from its budget, resulting in the closure of three of its eight UC centers and the furlough of 488 employees. That led to long delays and busy signals on most calls in January.
The audit examined how L&I used SIIF funding from 2013 through 2016, whether the expenditures conformed to state guidelines, and how much funding would be needed in the next four years to maintain efficient operation of the program.
The 61-page audit report reveals:
• L&I spent a total of $178.4 million in SIIF funding during calendar years 2013 through 2016, but did not use proper accounting methods to record SIIF expenditures.
• L&I made numerous improvements to the UC system between 2013 and 2016.
• L&I needs an estimated $159.5 million between 2017 and 2020 to maintain operation of five service centers ($95.7 million) and replace its ancient computer system ($63.8 million).
• L&I estimates an additional $38.5 million would be needed to recall furloughed employees for one year.
“The numbers are stunning,” DePasquale said. “L&I must immediately work to make administration of Pennsylvania’s unemployment compensation program operate more efficiently to serve residents who are forced to use the system when they lose their job through no fault of their own.”
To maintain the current operation of five UC centers, L&I anticipates annual operating deficits of:
• $12.1 million in 2017
• $20.2 million in 2018
• $27.6 million 2019
• $35.8 million in 2020
‘Insult to bubblegum’
This week, the governor signed legislation to provide $15 million in SIIF funding.
“The $15 million stopgap funding is a step in the right direction,” DePasquale said. “However, when $12.1 million is needed just to break even this calendar year, there will not be much money left to recall staff furloughed in December, and nothing to put toward replacing the ancient computer system behind the whole operation.”
DePasquale said average wait times for UC users went from approximately 13 minutes to almost one hour, with the longest wait time reported at nearly seven hours.
”This level of service is completely unacceptable, and a lot of people were left wondering why these three particular service centers were shut down,” DePasquale said. “To say that it is being held together with bubblegum would be an insult to bubblegum.”
Reach Bill O’Boyle at 570-991-6118 or on Twitter @TLBillOBoyle.