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JLARC: Improvements made to VEC backlog | Need plan for $1.2 billion incorrectly paid out

Virginia Employment Commissio.
Virginia Employment Commissio.
Published: Nov. 8, 2021 at 6:20 AM EST|Updated: Nov. 8, 2021 at 5:37 PM EST
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RICHMOND, Va. (WWBT) - If you’re one of the thousands of Virginians dealing with issues involving your unemployment benefits, your lives could be a bit easier by this time next week!

As of 5 p.m. on Monday, the Virginia Employment Commission’s (VEC) current claims system shutdown as the agency works to partially launch a brand-new system.

This comes as the General Assembly’s watchdog agency receives an update on the work the VEC has made this fall.

To simplify, the Joint Legislative Audit and Review Commission (JLARC) said the VEC has made some strides in dealing with outstanding claims. However, at the same time, there are still several ongoing issues that need immediate attention.

When it comes to the backlog of outstanding state unemployment claims, those numbers have decreased significantly to about 437,000.

“We reported 2-million in September,” said Lauren Axselle, Project Leader for JLARC’s review on the VEC. “This is where VEC staff have to manually review claims issues that were flagged but not reviewed during COVID-19 to see if claims require adjudication. Not all will, but this number does indicate more adjudications may be identified.”

Meanwhile, data presented Monday shows the number of claims needing adjudication dropped by 38% since September.

While the decrease is a welcoming sight, JLARC found there has been an increase in the number of fraud claims and appeals.

Per the commission’s drafted report, the VEC has paid out an estimated $70 million in fraudulent state unemployment insurance (UI) benefits in 2020, and an additional estimated $29 million in the first quarter of 2021.

“VEC did not begin using some critical fraud prevention and detection best practices until 2021, which likely would have reduced fraudulent payments made during the pandemic,” the report stated. “VEC’s confirmed fraud rates are much lower than its estimates because at least 164,456 potentially fraudulent claims were backlogged and awaiting VEC investigation as of October 2021.”

However, the VEC is also facing the task of trying to recoup money that was incorrectly sent to some Virginians.

It is estimated more than $1.2 billion was incorrectly paid out through the state UI program. The findings show almost all of the incorrect payments are overpayments and can occur because of mistakes made by the VEC, the claimant, the employer, or a result of fraud.

“VEC may eventually determine a portion of these overpayments are eligible for the federal Pandemic Unemployment Assistance program, which could declassify them as overpayments or transfer the financial liability from the state to the federal government,” the report stated.

However, Axselle added one of the key reasons may be the delayed filing of employer separation reports.

“These are the documents that employers submit to VEC staff so they can verify claimants’ UI eligibility and determine why they left their job,” she said.

There is a free tool provided by the U.S. Department of Labor called SIDES where employers can file those documents electronically. However, JLARC’s findings show less than 10% of employers in Virginia use it, instead, opting to send everything via the mail leaving VEC staff to input information manually.

Now JLARC is recommending the VEC start sending out collection notifications to recoup the confirmed $87 million, thus far, incorrectly paid out.

Overall, the General Assembly’s watchdog agency is advocating for a more streamlined electronic effort by the VEC.

This would fall in line with the new Virginia Unemployment Insurance System (VUIS) scheduled to launch early next week.

However, until then, Virginians will not be able to file initial/continued claims or make calls to the customer service call center.

The changeover was supposed to happen in October, the VEC delayed that transition due to possible risks. Some of those risks have now been mitigated due to the delay.

“For example, almost all of the data has been converted and tested; the accuracy of the converted data is now above 90%,” Axselle said. “VEC also made progress training more staff to use the new system and the agency is assessing ways to enable automatic text notifications to inform claimants about changes to their claims.”

The new system is expected to be more user-friendly and allow Virginians to see what exactly is wrong with their claim - if there is an issue. That in turn would also help reduce the number of phone calls to the call center.

“When the claimant portal goes live the call center should be receiving fewer calls because people will be able to proactively check the status of their claim and some of the functions of the UI process will be automated,” Axselle said.

According to JLARC’s report, in June 2020, the VEC received roughly 3.3 million calls and only answered about 6%. Over the course of the last year, a contractor was hired allowing the VEC to bring on approximately 440 new agents through Oct. 2021 with plans to add up to 200 more staffers by the end of Nov. 2021.

As of Sept. 2021, JLARC said of the roughly 1.4 million calls, 12% are being answered, with wait times less than 20 minutes.

Overall, JLARC issued 40 different recommendations to ensure more efficient operations within the VEC. The staff has also recommended legislative changes moving forward.

A written report by JLARC staff is expected to be released to commission members in December providing an update on where the VEC is at that point given the current recommendations.

To watch the presentation by JLARC staff on the VEC findings, click here. The 40 recommendations by JLARC staff for changes at the VEC can be found starting on page 13 here.

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