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State takes aim at reducing jobless overpayments

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Indiana, one of the first states to automate the jobless-claims process, will soon require beneficiaries to appear in-person at WorkOne centers.

The Department of Workforce Development hopes the counseling that people receive will reduce their job-search time by two weeks and, because they’ll have to show identification, take a big bite out of fraud.

It's the first time DWD has required anyone drawing state benefits to verify their eligibility in person.

“We see this as a huge fraud killer right here,” DWD spokesman Joe Frank said.

Several other states have required in-person reviews for years, and the federal government, which kicks in benefits after 26 weeks, began a similar requirement early this year. Starting in mid-October, people drawing Indiana benefits will have to report to a WorkOne center after their fourth week.

The Indiana Chamber of Commerce supported legislation that easily passed in the 2013 session, allowing DWD to implement the new rule.

"In some respects we may have gone too far [previously] in making it easy for people to sign up for [unemployment benefits],” chamber President Kevin Brinegar said. “In the process, it facilitated a lot of fraud.”

Indiana overpaid recipients $34 million—or 4.1 percent of the total unemployment insurance payout—in the fiscal year ended June 30, Frank said. DWD estimates that $7.7 million of that was the result of fraud, which the state defines as “knowingly and intentionally” claiming benefits while working, or some other scheme. The remainder of the overpayments are considered mistakes.

Many people continue claiming benefits after they’ve started a new job before receiving their first paychecks, but it’s because they don’t understand the rules, Frank said. DWD chalks those overpayments up to claimant error.

Frank said Indiana has the sixth lowest overpayment rate in the country.

In the past, the U.S. Department of Labor has flagged Indiana for a high rate of improper payments, which is a measure of internal record-keeping. Based on a survey of improper payments from state and federal unemployment insurance funds, the DOL said Indiana’s three-year rate in 2012 was 49 percent. Frank said the high rate stems from errors people make when reporting their work searches online and doesn't necessarily mean they're ineligible.

Overpayments ultimately hit the state’s employers, who pay into the system based on the number of claims against their accounts. Indiana employers have seen their average tax rate rise from 2.61 percent in 2009 to 3.14 percent this year. They're also paying $63 per employee because of the state's $2 billion debt to the federal government for covering the state's underfunded unemployment insurance trust account. 

There are about 40,500 Hoosiers drawing state-funded benefits and nearly 20,000 drawing federal benefits, according to DWD. The number drawing long-term federal benefits has dropped by half since January, Frank said.

DWD Commissioner Scott Sanders testified to Congress on Sept. 11 about various fraud-reduction efforts, including a partnership with the Marion County Prosecutor. Other states cut down on improper payments and reduced their overall costs by requiring in-person assistance as long ago as 2009, Sanders noted.

Indiana does require beneficiaries to apply for three jobs a week, but they only have to document their work search in a voucher that’s submitted online. Insincere applications are bogging down legitimate hiring efforts to the point that people will openly decline interviews, Brinegar said.

“The UI system is supposed to be a stopgap,” he said. “They should have to show that they’re willing to work at the jobs they apply for.”

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  • Proper Move
    In early 2009 with economy cratering I was out of work for a few months from previous high paying work. The economy had literally shut down. I was on unemployment for the first time. I eventually found work and worked hard in finding it. I was astounded how easy it was to apply and potentially game the system. You merely had to input 2-3 names of companies you had applied for each week online. I seriously doubt there was any behind the scenes accountability. Very easy to game the system then once you do work. Why in today's technology they cannot at least match up SSN's to tax withholding reporting? I also agree there are true unemployed that need help. I also agree the help for those unemployed is terrible. I did not need the help to find work but many do. It was very shortsighted to change to this online approach to probably save money when it opened the floodgates to gaming the system. Those that are unemployed need help but they true help they need is finding work and standing on their own two feet. Yes they need short term financial assistance but unemployment benefits are way too long right now and way too easy to manipulate. This was a good move correcting a very poor decision from the past
  • I'm with you Joanne!
    Ditto Joanne!!
  • Phil is Right!! etc...
    Ditto Phil. I know many that game the system because it makes more sense to collect unemployment instead of going to work and paying for overpriced day care, transportation costs, to name a few downsides of most minimum wage "opportunities" and the like. Consider this a reality. With this being said nothing absolutely nothing compares to the white collar crime which far exceeds anything a recipient of unemployment benefits could "steal" I had a "job" offer that entailed me hustling my friends and family to buy products that only benefited my potential employee, a BIG crook!!! I also agree that if someone finds a minimum wage job, allow them to collect a partial benefit for awhile based on earnings. Most people want to do the right thing but make desperate and bad choices to survive.
  • The System is Broken
    Years ago, a person out of work could walk into the Human Resources Department at any company, fill out an application, drop off a resume, and perhaps gain an interview for one or more positions. Today, those unemployed workers must cull through online job announcements, spend hours filling out online applications, and then receive zero responses from the companies they have applied to, often through an online search firm. Work One requires that everyone receiving unemployment benefits apply for (and prove) that they are out there looking for work. Many of the unemployed recipients of state aid make more from the state than they would at a minimum wage job. These facts can be verified with Work One. The most sensible approach would be to require those on unemployment to accept a job that pays a minimum wage, and then use a portion of the funds allotted for unemployment compensation to boost the weekly funds if the worker is placed in a part-time position. There are thousands of jobs out there, and I would like to see IBJ commit more time to verifying what is actually happening to those unemployed folks who feel like they are pushing a rope uphill. While it is true that many people cannot pass a drug test, or they have felony convictions that exclude them from many available jobs, I would like to know the percentage of applicants turned away because they could not pass a drug screen test, and then I would like to know if the employers actually filled those positions.
  • Mark is Right
    Come on, give me a break. People have been "gaming" unemployment for years. And when that runs out, guess what? They apply for social security disability. It's rampant and it's an epidemic. My neighbor made it work for as long as he could. He wouldn't be working now if he could have gotten away with it forever, but his wife wouldn't stand for it. That three prospective employer requirement? Crap. He just looked in the paper and emailed them three names. As a small business person, I am okay with paying into the system to help those who are down on their luck, but it sickens me that I have to pay for people who just want free stuff.
    • Good Points
      JC, you make some good points regarding the efficacy of the IDWD. It's intolerable and the staff is beyond incompetent. However, the thrust of the article was fraud prevention and reducing excess payments to individuals that are not unemployed. If someone has to get counseling that is a farce to help accomplish this goal, so be it.
    • EmployIndy and the system
      Actually most of the problems with the state’s unemployment system are the organization responsible for the WorkOnes and the individuals employed to “assist” the law abiding tax payers now having to collect unemployment. Having been part of the service provider management of the state’s largest unemployment office, the apathy, incompetence and poorly trained state employees is one of the true critical issues. And now, with the new regulations, we are going to force individuals after four weeks of unemployment to endure this. Another issue is the counseling that they receive to help reduce their unemployment time is almost as big a farce. Due to the inept management and leadership of Brook Huntington and EmployIndy, the assistance is structured and developed by bureaucrats that do not have a clue about private industry, employment assistance or how to obtain a job in non-government entities. The true fraud is with the system and the individuals in charge of it.
    • Delusional
      The previous two posts show the delusion of many in our state. Anyone familiar with the state's UI system knows that there is rampant fraud and abuse, most of which is perpetrated by those who are actually employed, but continue to steal from taxpayers by collecting benefits. Make no mistake, these people are criminals, just as much as any white collar criminal, and any attempt to stop this madness should be lauded, not condemned. Joanne, you're correct, the unemployed are not the problem. The problem is that many of the people collecting UI benefits are not unemployed.
    • Back to the future
      They always look at the unemployed as the source of all UI problems. Truth be told, the system was changed under the previous Administration making it more and more difficult for workers w/out access to online services to collect rightfully earned UI. Now they think going back to the way it was will prevent fraud. The real fraud is their system.
      • hey I got an idea...
        ...maybe they could spend equal/ greater time and resources going after the white collar criminals who stole TRILLIONS of $$$ and actually CAUSED the economic collapse resulting in MILLIONS of people being unemployed unemployed for years? Naw that would be the 'right' thing to do, better to go after the small % of poor unemployed folks 'workin' the system than go after the REAL criminals!

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