$6.2B in unemployment aid overpayments, agency finds

The government made $6.2 billion in overpayments across two unemployment insurance programs during the first year of the pandemic, according to a watchdog report released Tuesday.

Millions of Americans lost their jobs as the coronavirus slammed the economy in spring 2020, forcing many to rely on jobless benefits and straining state unemployment systems. In March 2020, Congress passed legislation that expanded and supplemented regular unemployment benefits, including a new program called Pandemic Unemployment Assistance, which extended help

to workers left out of their state’s systems such as selfemployed and gig workers.

The report by the Government Accountability Office said the Labor Department reported that “states had identified more than $3.6 billion in PUA overpayments from March 2020 through February 2021.” In addition, states identified $2.6 billion in regular unemployment insurance overpayments in the last three quarters of 2020.

The report noted that “overpayments are not necessarily a result of fraud, though some may be.” States generally must require people to repay overpayments, but they can also waive that requirement if they find an individual was “without fault.”

For instance, in October the Colorado Department of Labor and Employment forgave $1.4 million in Pandemic Unemployment Assistance overpayments to 9,000 Coloradans after acknowledging that confusing forms for gig workers may have led some people to overestimate their incomes.

The numbers reported by the GAO represent a much higher overpayment amount than was previously known. When the GAO addressed the issue in a January report, it found that Labor Department data showed $1.1 billion in Pandemic Unemployment Assistance overpayments between March and December 2020, and it recommended that the agency collect the data from states.

The GAO’s January report also repeated and elaborated on concerns about fraud in an emergency relief program run by the Small Business Administration, called the Economic Injury Disaster Loan Program, which offers up to $10,000 to businesses and nonprofit organizations. By the end of December, the agency had approved 3.6 million low-interest loans worth $197 billion.

The GAO reported that the Small Business Administration’s independent auditor said in December that the agency “was unable to provide adequate documentation to support a significant number of transactions and account balances related to EIDL due to inadequate processes and controls.”

The auditor also found more than 6,000 loans worth more than $212 million “issued to potentially ineligible borrowers,” the Government Accountability Office found.

Between May 2020 and February, the Justice Department announced charges against more than 50 defendants in more than 30 fraud cases connected with Economic Injury Disaster Loans, the GAO said. As of February, at least five people had pleaded guilty to federal charges of defrauding the program.

The Small Business Administration told the watchdog that it was working to better document its processes and controls for future audits, and that it agreed with a GAO recommendation that it put in place an oversight plan for the disaster loans.