DWD gets a slush fund for “program integrity”

At the December 17th Advisory Council meeting, the Department presented two new proposals for providing additional funds for program integrity — aka charging claimants with concealment.

D15-14 allows the Department to use leftover special assessment funds for program integrity purposes instead of transferring those leftover monies to the balancing account. At present, this leftover amount is approximately $9.3 million (for comparison, the federal funds DWD currently receives this fiscal year for administering the state’s entire unemployment program is around $56 million).

D15-15 will allow the Department to siphon off 0.01% (i.e., 0.0001) of employers’ UI taxes for program integrity purposes. Employers’ accounts are still credited for these amounts, so employers see no increase in the UI taxes they pay. The balancing account, however, receives less because the funds are being diverted to cover program integrity costs. As a result, this assessment will only occur when there is no danger of the fund turning red (which is extremely unlikely given the low amount of benefits currently being paid out).

How much will this assessment be? As of December 12th, UI tax receipts in 2015 amount to $1.04 billion. Now, a portion of these tax receipts go into a general solvency account to cover benefit payments that are not chargeable to any employer (such as when a claimant is forced to quit a job because of a child care emergency). But, assuming $650 million of these tax receipts are going towards employers’ UI accounts, then a 0.01% assessment will allow $65,000 annually for funding a staffer dedicated to “program integrity.” Add the $9 million plus available under D15-14, then the Department will essentially have for the next several decades its own slush fund for hiring program integrity staffers.

The Department explained that the savings from these increased program integrity efforts will be “multiple times greater” than any expenses incurred from paying out UI benefits to claimants. The Advisory Council subsequently approved both proposals.