Kentucky unemployment insurance office violated law in midst of pandemic, report from state auditor says

Closeup of the top of a tax Form 1099G Certain Government Payments - Taxable Unemployment Compensation Payments on top of cash with some coins scattered on top.

As the COVID-19 pandemic hit and Kentucky’s unemployment insurance claims skyrocketed, decisions were made to get payments to as many individuals in need as quickly as possible. But in that process, Kentucky Auditor of Public Accounts Mike Harmon says the state’s Office of Unemployment Insurance (OUI) broke the law in many ways.

The issues were noted in the release of the Statewide Single Audit of Kentucky (SSWAK) for Fiscal Year 2020. Half of the 25 total findings in the audit are problems directly dealing with the Office of Unemployment Insurance and the Unemployment Insurance fund.

Many of the issues noted in the report deal with decisions made in order to get claims paid faster which ”violated federal law and sacrificed program integrity” including an “auto-pay” feature to allow UI benefits to be automatically paid without the claimant reporting weekly wage information, overriding important system controls, information security and data processing issues and data breaches, and more.

The report also points to the backlog of claims the state is still dealing with in terms of unpaid unemployment insurance claims.

“The majority of the findings involving OUI come back to one common issue, which is the decision to remove controls that provided better oversight on verification and payment of UI benefits,” said Auditor Harmon. “It breaks my heart to think of those Kentuckians included in the 400,000 unopened emails who so desperately wanted their voices heard and yet were ignored. The systemic failure of leadership on all levels not only violated federal law, but also let down many who needed relief. It also leaves others facing the prospect of repaying the government for miscalculated payments they received in good faith.”

Read the auditor’s full report here. If you have an unemployment insurance fraud issue, the auditor’s office encourages Kentuckians to call the 1-800-KY-FRAUD hotline.

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Jacqueline Pitts
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