DeKalb Times

State Rep. Jeff Keicher (R-Sycamore) has expressed dismay over the fraud within the unemployment system during the Covid crisis, which resulted in over $5 billion in overpayments.

In a press release, Keicher lamented the lack of response from the governor's administration to address the issue. 

“Amid the Covid crisis, residents across Illinois were receiving notices from former and current employers, or from unfamiliar names, asserting they had been dismissed from their jobs and were now eligible for unemployment benefits,” Keicher said. “The signs were rampant that we had fraud galore within the unemployment system, yet we had zero response from the Governor’s Administration to address this fraud.” 

“We in the legislature sought initial numbers from the Administration and IDES to address the spiraling fraud. However, we were rejected at every turn and now we know why. The Auditor General report released yesterday clearly shows that more than $5 billion in overpayments, rife with fraud, were paid through the unemployment system because of a complete failure to operate the system appropriately. The net result of that has abeen additional taxation on every single job in Illinois to close both the deficit created and to pay into a new pool of unemployment insurance.”

Keicher underscored the significance of unemployment insurance as one of the financial supports for the Illinoisan workforce.

“Unemployment insurance is one of the most important safety nets that we establish for workers," he said. "To have such a callous disregard for protecting the resources that protect our workers when they are laid off is beyond the pale. I have mentioned multiple times over the past three years to both the Governor and other members of his Administration that this needs to be addressed. To date, we are still waiting for a response and a plan to improve the situation going forward.” 

The state representative for District 70 voiced out his disappointment on the matter.

“I am utterly dismayed by this ongoing level of negligence," Keicher said. "Going forward, I will continue to call for change and seek reform to ensure the responsible use of resources to minimize the burden that failures like this place on taxpayers and families in Illinois.”

IDES spokeswoman Rebecca Cisco called out the administration of former President Donald Trump, whom, she said, required the state to use “a poorly designed and brand new unemployment insurance program on their own in record time with continuously changing federal guidance," the Chicago Tribune reported. 

The audit places the responsibility on IDES. 

“IDES was not prepared to respond to the needs created by the pandemic,” the report from Auditor General Frank Mautino’s office stated. “IDES did not have a plan for responding to recessions and potential surges in claims.”

The performance audit conducted by the Office of the Auditor General highlights some key findings related to the unemployment programs administered by the Illinois Department of Employment Security from March 1, 2020, to Sept. 6, 2021. The audit reveals issues with overpayments, including fraud and identity theft, totaling $5.24 billion in the Pandemic Unemployment Assistance (PUA) and regular Unemployment Insurance (UI) programs. The report also identifies challenges IDES faced during the pandemic, such as delays in processing claims and susceptibility to fraud due to suspended defenses. The audit report contains seven recommendations for IDES to improve its operations and prevent future issues with unemployment benefits distribution. 

The report’s key findings detail the fraud undertaken.

“Overpayments (which include fraud, non-fraud, and identity theft) were an issue in both the regular UI and PUA programs. IDES reported overpayments for FY20 to FY22 that totaled $5.24 billion; regular UI accounted for $2.04 billion and PUA accounted for $3.20 billion,” the performance audit reads. “Considering gross benefits associated with regular UI claims were 2.5 times higher than gross benefits associated with PUA claims, it shows the magnitude of fraud experienced in the PUA program. IDES noted stopped or recovered payments of $150.36 million and $361.34 million for the regular UI and PUA programs respectively.”

The audit found IDES failed to maintain accurate and complete accounting records and supporting documents for the Trust Fund, raising concerns about the internal controls safeguarding Trust Fund assets. As a result, auditors were not able to determine the opening net position and activity for the year ended June 30, 2022, impacting the statements of revenues, expenses, and changes in net position and cash flows. The audit also highlighted the Department's mishandling of Pandemic Unemployment Assistance (PUA) claimant data, leading to challenges in assessing claimants' eligibility. Additionally, improper recording of receivables and mismanagement of overpayment receivables were noted, prompting the need for better financial reporting controls, according to the summary report digest from the Office of the Auditor General. 

Read the Auditor General’s audit, report, and findings here.