Virginia’s Unemployment Insurance program was plagued by understaffing, an outdated filing system, and leadership failures leading to major delays in residents receiving benefits over the last 18 months, a recent report has found.
The report, authored by the Virginia General Assembly’s oversight agency JLARC and published November 8, is very critical of the Virginia Employment Commission (VEC), which oversees the distribution of unemployment insurance (UI) in the Commonwealth.
When residents in mass started applying for unemployment benefits during the early part of the pandemic, the system collapsed under the weight of 1.3 million claims.
“Significant weaknesses in VEC’s operations—particularly its deficient staffing levels, antiquated UI IT system, performance monitoring, and oversight—were revealed during the COVID-19 pandemic,” notes the report.
These challenges resulted in months-long delay for some residents in getting benefits, at a time when Virginians needed it most. For a large chunk of the past 18 months, Virginia has been ranked last in the country in a number of metrics related to resolving unemployment insurance claims.
A huge problem was an outdated system that relied on manual processes and didn’t provide an online customer-facing portal or dashboard, which led to many residents clogging understaffed call centers with basic questions.
The modernizing of the system was eight years behind schedule, notes the report.
“This really exacerbated issues of inefficiency at the agency,” JLARC’s Associate Director Tracey Smith tells Northern Virginia magazine. “That really, really contributed to the significant delays that claimants experienced during the pandemic in terms of receiving their UI benefits.”
VEC leadership, both leading up to and during the pandemic, failed to address the known issues, says the report, which included increasing staffing levels and improving the call center experience. Only 4 percent of calls into the center seeking help were answered, notes the report.
“We found that the leadership really did not take significant or, frankly, meaningful actions to address the key root causes of the problems with unemployment insurance claims processing until pretty far into the pandemic,” Smith says.
The inability to deal with the flooding of claims also resulted in mistakes being made, often in the overpayment of claims. VEC may have incorrectly paid out nearly a billion dollars in unemployment benefits in 2020, the report estimates, with another $320 million in incorrect payouts during the first half of 2021. This includes an estimated $99 million in fraudulent claims between January 2020 and June 2021.
While some of this money may eventually become part of a federal program and be reclassified as legitimate, many of the mistakes were the result of the office being understaffed, minimally trained, and overworked.
What’s more, the VEC is required by the federal government to try to recover most overpayments (except in some cases where it is determined that the applicant isn’t at fault).
“The longer [VEC] waits, the harder it will be to collect those funds,” says Smith. “It certainly will be a major challenge, both in terms of staff time and administrative workload as well as, obviously, for the claimants, who were inaccurately paid.”
The good news is that work has already happened to fix the issues, including the launching of VEC’s new online unemployment insurance system which provides residents access to documents, filing claims, and other information. While there remains a backlog of claims, those are being sifted through at a higher rate than prior.
While Virginia wasn’t the only state to have major issues distributing unemployment insurance, this report shows that the Commonwealth’s challenges were more severe than other localities including nearby Maryland, says Smith.
“I would say that Virginia was not unusual in the challenges that were experienced,” she says. “But there were states that did perform much better.”
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