Administrative errors, lack of communication caused UC funding losses

Harrisburg – Administrative errors and poor decision-making within the Department of Labor and Industry have caused Pennsylvania’s unemployment compensation system to lose out on past federal funding, a recent internal investigation by the Wolf administration revealed.

Though Auditor General Eugene DePasquale announced last month that his office would be conducting an audit of the UC system under the department and the associated Service Improvement Infrastructure Fund (SIIF) at the heart of a dispute between the Wolf administration and Senate Republicans, the Wolf administration had already decided to conduct a parallel internal review, according to a letter sent by Budget Secretary Randy Albright to the auditor general on Friday.

Starting with the loss of funding, according to the letter obtained by The PLS Reporter Friday night, the internal investigation found that errors committed within the department starting in the administration of Wolf’s Republican predecessor, Gov. Tom Corbett, and continuing through the current administration, resulted in the system losing out on federal funding that sources told The PLS Reporter could total upwards of $20 million.

“[T]his week, the administration has learned that since 2013, under the previous administration, the Department of Labor and Industry incorrectly reported expenditures associated with Act 34 funds, reducing the federal unemployment compensation funding allocation for the commonwealth,” the letter states. “We are working with the federal government to recover the federal funding that was not drawn.”

Additionally, the administration learned from its internal review that $15 million requested for benefit modernization in House Bill 2375 – the one-year spending authorization legislation from last session that would have provided $57.5 million to keep the UC centers open and provide for benefit enhancement – was requested with an undue sense of urgency due to an uncommunicated extension for vendors to submit request-for-proposal applications to perform those efforts.

The letter notes that the person responsible for the lack of communication and the under-billing of the federal government for UC costs has resigned.

Meanwhile, Albright noted that these errors alone are not justification for the lack of extended funding through the transfer of the money from the UC Trust Fund to the SIIF, particularly as it relates to benefit modernization funds, which bear no relation to staff costs.

“Despite these errors, one of which dates back several years, neither of these situations erases the underlying problem the unemployment compensation system is currently facing,” he said. “To adequately provide services to Pennsylvanians, we still need an authorized transfer from the Service Improvement and Infrastructure Fund.”

The failure of the funding reauthorization to become enacted prior to the end of the 2015-2016 legislative term resulted in the laying off of nearly 600 employees manning UC call centers and for three UC call centers, as well as the Harrisburg overflow center, to be shut down.

Senate Republicans said Saturday the news provided some vindication for them in their dispute with the governor’s office about the need to pass legislation to authorize the transfer from the UC trust fund to the SIIF to keep the call centers open and furloughed employees on the commonwealth’s rolls.

“It just illustrates that our members were right to ask questions, including requesting the external audit by the auditor general questioning the program and spending, and asking about technology,” said caucus spokesperson Jenn Kocher.

The Legislature was set to start the vetting process of looking at the UC system and the SIIF, but a joint hearing with the House and Senate Labor and Industry Committees scheduled for Monday morning was abruptly canceled early Friday evening at the request of the governor’s office due to the issues discovered with the ongoing investigation.

The administration hopes to reschedule the hearing for a future date.

DePasquale said in January he hopes his office will complete the audit of the UC system and SIIF by April.

Jason Gottesman is the Harrisburg bureau chief for The PLS Reporter, a non-partisan, online news site devoted to covering Pennsylvania government.