Problems persist with Kentucky’s unemployment system

This comes after an audit of compliance with federal requirements
This comes after an audit of compliance with federal requirements
Published: Apr. 21, 2021 at 3:19 PM EDT
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FRANKFORT, Ky. (WSAZ) - A recent audit of Kentucky’s unemployment system has found that problems are still occurring.

According to Kentucky Auditor Mike Harmon that audit, completed on Wednesday, covered compliance with federal requirements for federal awards.

The audit showed that for the Fiscal Year 2020, Kentucky spent over $17.5 billion in cash and noncash awards received from the federal government, an increase of $4.7 billion compared to funds spent in the Fiscal Year 2019.

However, the 2020 audit identified nearly $670.7 million in questioned costs, including $665 million in unemployment insurance benefits paid out to the Commonwealth.

“The $665 million in questioned costs stems from the Office of Unemployment Insurance’s decision to implement an auto-pay system, which failed to ask key eligibility questions before issuing UI payments,” said Auditor Harmon. “The amount represents the total paid in traditional UI, and two federal pandemic UI programs, during the time auto-pay was in effect. We aren’t saying the entire $665 million was wrongly paid, only that there were no controls in place to properly determine and certify claimants’ eligibility, which is a violation of federal law.  At this point, auditors could not precisely determine the exact amount that was either overpaid or still owed to claimants.”

The audit also identified an additional twenty-one findings, five of which deal with issues identified in Kentucky’s UI system and the Office of Unemployment Insurance.

“Based on the issues we found with the UI system, my office is issuing an adverse opinion on Kentucky’s compliance with federal unemployment insurance program requirements,” said Auditor Harmon. “In common terms, an adverse opinion is the worst opinion that can be issued for an audit. It is extremely rare for an adverse opinion to be issued on an audit. As our previous report detailed, there was a systemic failure of leadership that sacrificed program integrity in the early weeks of the pandemic in an effort to pay claims more quickly.  It is a case of good intentions leading to very bad results.”

Other findings are from the Department of Military Affairs, Cabinet for Health and Family Services, Department of Workforce Investment, Kentucky Department of Education, Kentucky Transportation Cabinet, and the Office of the State Budget Director.

One finding in question, will be referred to the Office of the Attorney General.

To view the full Volume I of the SSWAK report, click here.

To view the full Volume II of the SSWAK report, click here.

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