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State Auditor: Maine Labor Department Erroneously Gave $100,000,000 in Jobless Benefits

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AUGUSTA – Due to “inadequate internal control procedures,” the Maine Department of Labor gave more than $100,000,000 in jobless benefits to Mainers who might not have been actively searching for a job, according to the 2012 report of the Maine State Auditor.

State Auditor Pola A. Buckley, a Democratic political appointee, delivered her bombshell report to Senate President Justin L. Alfond (D-Cumberland), House Speaker Mark W. Eves (D-North Berwick) and Republican Governor Paul R. LePage on March 28.

Maine State Auditor Pola Buckley

Maine State Auditor Pola Buckley

Buckley wrote in the audit, “Approximately $42 million in federally funded unemployment claims and $61 million in claims funded by Maine’s employers were paid to persons who might not have been actively searching for a job.”

The State Auditor’s report covers the fiscal year ended June 30, 2012 and is an annual requirement for Maine to receive roughly $3.2 billion in federal assistance.

If Maine is found to be out of compliance with federal law regarding unemployment benefits, taxpayers could be forced to reimburse the federal government for $42 million in inappropriately spent federal money.

“The potential effect would be to improperly reduce Maine’s Unemployment Fund held by the U.S. Treasury, and to cause an unemployment tax rate increase,” according to the audit.

Submitting a work search log is a legal condition of receiving unemployment benefits, but according to the State Auditor’s survey of cases, one-third of Maine’s benefit recipients did not submit work search records over a one year period. Although it is widely known in Maine that work search logs are frequently forged and often go unverified, these individuals did not even bother to pretend to search for work—yet still received benefits.

[RELATED: Maine DOL’s $6.5 Million Welfare Lottery Yields Few Winners…]

The audit lists this type of finding as “Material weakness / Material noncompliance / Questioned costs.”

The report defines a material weakness as follows: “A material weakness is a deficiency or combination of deficiencies such that there is a reasonable possibility that a material misstatement of the State’s financial statements would not be prevented, or detected and corrected on a timely basis.”

According to the audit, MDOL agrees with the finding. (Recommended: Hatchetgate: The Anatomy of a Hit Piece…)

The unemployment compensation program gave out $319 million in benefits for fiscal year 2012, including $183 million in employer funded payments and $136 million in federally funded benefit payments.

Calls placed to the Maine Attorney General’s office seeking comment were not immediately returned.

Julie D. Rabinowitz, director of communications for MDOL, said the State Auditor’s dollar figures are estimates based on a small sample of unemployment claims. She said the real amount of claims paid to individuals who did not submit work search reports is probably much lower, although MDOL could not immediately say how much lower.

“This data is based on a small sample and therefore this figure is an annualized extrapolation and not a real dollar figure,” said Rabinowitz.

Rabinowitz said that, prior to 2012, MDOL could not legally deny prospective claims based on a claimant’s failure to submit a work search report; however, recent statutory changes have given hearing officers the authority to do so.

S.E. Robinson
Maine Wire Reporter
srobinson@mainepolicy.org

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About Steve Robinson

Steve Robinson is the former editor of The Maine Wire and currently the executive producer of the Kirk Minihane Show. Follow him on Twitter @BigSteve207.

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