Report estimates Dept. of Workforce Solutions overpaid unemployment benefits by $250M

Unemployment

ALBUQUERQUE, N.M. (KRQE) – A new report says the Department of Workforce Solutions may have overpaid millions of dollars in unemployment benefits during the pandemic. According to a Legislative Finance Committee report, the Department of Workforce Solutions misinterpreted local and federal laws, causing incorrect calculations of taxes and benefits resulting in potentially $250 million in overpayments.

State lawmakers shocked to learn how much the Workforce Solutions Department may have overpaid in benefits since the pandemic began. “So we were trying to find that balance, that sweet spot if you will, between program integrity and timely payments to New Mexicans,” said the Acting Secretary of the Workforce Solutions Department, Ricky Serna. “Our goal was to get New Mexicans the resources they needed quickly.”

But the LFC report said workers weren’t prepared for the job, made errors in payments and couldn’t keep up with fraud investigations. “Additionally there is widespread fraud and we learned today there is an alarming rate of identity theft and they don’t expect to be address these concerns for New Mexicans in the immediate future,” said Sen. Crystal Diamond (R- Elephant Butte).

The report estimates about $133 million of that amount is related to fraudulent claims. Workforce Solutions said they’ve been working to recover whatever they can. “If you consider our fraud detection efforts of being a net, right, and really capturing stuff flowing down that river, some of the new programs rolled out just didn’t- they essentially created a hole in that net where the fraud detection measures just did not allow us to capture right,” said Serna.

Lawmakers question how this even happened. “Ultimately the responsibility fell on the Secretary of Workforce Solutions to communicate these concerns with the legislature but ultimately this falls on the executive who should’ve brought this to the legislature much earlier than today,” said Sen. Diamond.

The person in charge, Secretary Bill McCamley, abruptly left the Department last month. State lawmakers worry rebuilding the unemployment fund won’t be easy.

Unemployment reached 12.5% in July with 197,000 New Mexicans seeking benefits. The state borrowed 278 million from the federal government after New Mexico’s unemployment fund was almost wiped clean by the huge spike in unemployment last year.

“If we have another surge, not of COVID, but another recession comes along, that fund is going to be very critical in what happens,” said Sen. George Munoz (D- Gallup).

“Unfortunately I think where its going to head is I think the burden is going to fall on New Mexico businesses,” said Sen. Diamond. “A reminder that most of our businesses, small businesses, are going to have to carry the weight to increase this fund. Its going to be passed onto our small businesses.”

The committee found the state contributed to the disincentive for claimants to look for work.

The LFC also found fraud rates have doubled since 2018 and identity theft related to government benefits increased by more than 500%. Legislators say their job is to make sure this fund is replenished. They say if New Mexicans do not return to work, higher taxes for businesses might be the only option.

The LFC report said the backlog of uninvestigated potentially fraudulent claims is so large, it could take more than a year to sort through. The LFC report also said a lack of guidance from the U.S. Department of Labor on the Pandemic Unemployment Assistance program (PUA) may have led to overpayments all across the country.

Report:

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