On March 26, 2024,the Government Accountability Office (GAO) released its improper payment report with an estimate of $44 billion in improper payments in the Unemployment Insurance program for 2023.
The US Department of Labor reported a combined improper and unknown payment rate of 22.2 percent for the Unemployment Insurance program in fiscal year 2022, which exceeded the 10 percent threshold established by PIIA. As a result, the US DOL IG recommended that Labor maintain its current focus on increasing technical assistance and funding to states to improve the improper payment reduction strategies and thereby reduce the improper payments estimate rate.
We agree that there should be a continued focus on strategies to reduce improper payments. In addition to technical assistance in reducing the number of improper payments there should be a change in the methodology used to estimate the improper payment percentage. The Benefit Accuracy Measurement (BAM) sample does not provide an accurate basis upon which to determine the improper payment rate. The claims sample is not statistically valid for this purpose. The methodology identifies improper payments based on information that was not available to the state agency at the time that the decision to make a payment was made. UI claims payments are paid under state UI law and are not federal benefit payments that should be subject to the analysis of federal benefit payments to begin with.
We recommend that the Office of Management and Budget, the US Department of Labor, and the congressional committees with jurisdiction develop a new methodology that recognizes state administration and the unique due process requirement of the UI program. The current methodology results in overstated improper payment rates and discourages states from prioritizing the quality of determinations and the identification of issues at the front end of the claims process. This is inconsistent with the purpose of benefit payment control and improving integrity.
