Audit Finds Issues With Colorado Unemployment Insurance

DENVER (AP) - An estimated $60 million in unemployment benefits last year went to people whose U.S. legal status was unverified because of lack of safeguards within the Colorado Department of Labor, an audit concluded Monday.

The findings from the Colorado auditor's office comes weeks after the department disclosed it had overpaid $169 million to people who were ineligible to receive unemployment benefits in 2010 and a total of $305 million over the past three years. Colorado is among seven states with the highest rates of overpayments since July 2008, the U.S. Department of Labor said in September.

The amount overpaid in 2010 represents 19 percent of all the unemployment benefits Colorado paid last year. That percentage is much higher than the national average of 11 percent and the U.S. Department of Labor has placed Colorado on a corrective action plan until that rate falls below 10 percent.

"We realize that there are some systemic problems and are intent to correct them," said Ellen Golombek, the director of Colorado's Department of Labor, talking to lawmakers during the presentation of the audit.

Almost half of the $169 million in overpayments last year, about $83 million, went to people who claimed they were searching for work but did not provide proof. Another $52 million in overpayments resulted partially or entirely from department staff errors.

The state paid $2.4 billion in unemployment benefits in 2010.

Colorado law bars public benefits from going to people illegally in the U.S. The state Labor Department is required to verify the legal status of unemployment benefit claimants but the audit said adequate controls don't exist to make sure only legal residents are receiving unemployment funds. The audit said that's partly because application language is ambiguous and does not require claimants to directly affirm that they're legally in the country.

The department agreed with the audit's recommendation to make the application language clearer and to require applicants to affirm their legal status before receiving benefits. Currently, claimants can receive unemployment benefits even if they don't return the signed affidavit that the department requires, the audit said.

In thousands of other cases, people were also given benefits even though they provided driver's license or identification numbers that were clearly wrong, in some instances entering all zeroes as their identification.

"We do realize that we have a problem with some invalid numbers or IDs. We will develop a process for flagging those clearly invalid numbers," Golombek said.

She said the department recently reorganized to move staff to where they're needed most, including in claim resolution and customer service. In February, auditors called the unemployment program's customer service line 50 times over nine days and got a busy signal 48 times.

Golombek said that since 2008, the department has faced "unprecedented increases and workload due to the economic downturn." The number of people receiving unemployment in Colorado more than tripled from July 2008 to now, going from 30,000 to 100,000.

Golombek said that the bad economy aside, she is committed "to making the changes needed to improve our system, so that we can create a top-performing program."

The disclosure last month of overpayments during the last three years prompted Colorado Gov. John Hickenlooper to issue an executive order for state officials to work with the U.S. Department of Labor to work on administrative errors, fraud detection and to try to recover improperly paid benefits.

Colorado has recovered 43 percent of the $305 million so far, Golombek said.

- By Ivan Moreno, AP Writer

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