Illinois paid unemployment debt without knowing scope of $5.2 billion overpayment

[July 31, 2023]  By Andrew Hensel | The Center Square

(The Center Square) – After an Illinois Auditor General report shows more than $5.2 billion was overpaid during the peak of the COVID-19 pandemic, Gov. J.B. Pritzker suggests the state was unprepared.

The report released Wednesday examines the Illinois Department of Employment Security from 2020 through 2022 and highlights the agency's handling of the state's unemployment funds. The report shows the state made around $5.2 billion in improper payments, including $46 million worth of payments to those incarcerated or dead.

Unemployment spiked at the beginning of the COVID-19 pandemic in the spring of 2020 after Pritzker issued stay-at-home orders impacting the economy in an effort to slow the spread of the virus.

Pritzker addressed the unemployment fraud on Friday and put part of the blame on the federal systems the state implemented.

"As you saw in the Auditor General report, a majority of the fraud that was committed was under the federal program that we didn't have systems for. That didn't exist. That program was stood up in very short order when the pandemic took hold," Pritzker said.

The state may have been unprepared to handle the flood of claims, the governor suggested.

"The staff at IDES had been reduced before I came into office. The amount of attention to that software system had been almost nil," Pritzker said. "Nobody thought there would be a problem, and so nobody paid any attention to it."

The auditor said IDES delayed implementing fraud prevention tools the U.S. Department of Labor suggested.

"IDES chose not to utilize the Integrity Data Hub tools because other IT-related projects were deemed to be of greater urgency during the pandemic," the auditor said. "IDES began utilizing the Integrity Data Hub tools in September 2021."

In November of 2022, Pritzker announced plans to use $1.8 billion in taxpayer funds to cover the state's unemployment trust fund debt. At that time, there was no indication of how much fraud the state was facing.

"The General Assembly was forced approve a deal between business and labor to both decrease the amount of unemployment benefits for someone who gets laid off, but also to increase the taxes that employers pay into the trust fund," said state Sen. Chapin Rose, R-Mahomet.

Rose said due to the agency's mishandling of the funds, Illinois taxpayers took a double hit.

"So at the end of the day, the taxpayers of Illinois, whether it was an employee or an employer, got to pay twice for this administration and Governor Pritzker's complete incompetence," Rose said.

Pritzker was asked what lesson could be learned from such a significant oversight of taxpayer funds.

"Don't underfund those programs and make sure they are staffed properly, and we have worked on that ever since," Pritzker said.

The agency said they would "apply the audit recommendations, particularly those related to enhancing internal controls and oversight to existing processes and programs," to create a "foundation of best practices" for future programs.