New York lost at least $11 billion in overpaid unemployment during pandemic, DiNapoli says

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An office of the New York State Comptroller report on the state unemployment insurance system during the COVID-19 pandemic finds that the system was unfortunately unprepared to handle the volume of claims in the spring of 2020, when it all came to a halt, and paid out at least $11 billion in overpayments.


In an interview, Controller Tom DiNapoli said the system had a history of issues. He said his office discovered in 2015 that the state computer system that checked IDs and distributed unemployment benefits was outdated. He also said the department, then part of former Governor Andrew Cuomo’s administration, was “very slow to implement upgrades.”

And during the pandemic, the system broke down, he said.

At the time, many New Yorkers complained that they could not reach the department to even apply for benefits, either online or by phone.

The audit found that when the money came out, there was poor accountability and even outright fraud committed against the department, resulting in a loss of at least $11 billion.

DiNapoli said it was difficult to determine the exact amount because, he said, ministry officials were slow to give his auditors the information they needed and, in some cases, did not. not provided at all.

“They dragged their feet to respond,” DiNapoli said. “And very often they wouldn’t respond.”

While some New Yorkers were overpaid through no fault of their own, others engaged in fraudulent activities that DiNapoli said were easy to accomplish under the department’s outdated system for verifying identity.

“The vulnerability of the system to fraud is really very concerning,” he said.

DiNapoli said the state is now working with the federal government to try to recover some of the money.

“Obviously a lot of work needs to be done there,” DiNapoli said.

New York also had to take out an $8 billion loan from the federal government to meet legitimate unemployment insurance payments. State employers must repay this loan, by increasing unemployment insurance contributions.

Problems with the state unemployment insurance system existed under the Cuomo administration, but Cuomo resigned in disgrace in 2021. Governor Kathy Hochul was elected to a full term last week, and DiNapoli said that It was now up to Hochul to clean up the mess.

In a written response, the state Department of Labor faulted the comptroller for failing to take into account the efforts of individual workers whom it called “unsung heroes”, working 10 to 12 hour days, seven days out of seven, at the height of the pandemic.

“The COVID-19 pandemic has placed unprecedented pressure on unemployment insurance systems nationwide. Despite this challenge, our system has acted as an essential lifeline for nearly five million New Yorkers,” says the letter, signed by Susan Filburn, Deputy Commissioner of Employment Security.

The letter also blamed the federal government, which Filburn said had “underfunded the modernization of unemployment insurance programs across the country, leaving outdated systems in place to deliver unemployment benefits and fight unemployment benefits.” against fraud”.

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