$3.8 billion misspent from Ohio unemployment system, audit finds

Ohio

COLUMBUS (WCMH) — An audit of the Ohio Department of Job and Family Services found it cost the state nearly $3.8 billion related to overpayments and fraudulent claims.  

A release from Ohio Auditor of State Keith Faber on Thursday said the audit found a lack of controls led to vulnerabilities in the unemployment system, combined with changes in federal requirements. Over $475 million were paid in fraudulent cases and another $3.3 billion in overpayments by ODJFS.

“This public interest audit was launched after ODJFS initially failed to disclose the risk and magnitude of ongoing fraud within the unemployment system. This increased risk and lack of controls resulted in the inability to obtain reasonable assurance about the accuracy and completeness of reported amounts within the State’s June 30, 2020 financial statements and led to the Auditor of State’s office (AOS) to issuing a modified state opinion in regard to Ohio’s financial outlook,” a news release said.

Other details of the audit:

  • 26% of all unemployment payments for the fiscal year that in ended in June were potentially paid as overpayments or to fraudulent accounts. Before 2020, fraud and overpayments were around 3.5% of total payouts.
  • Benefit payments were below $900 million for the three fiscal years before the pandemic; after the pandemic, benefits rose to $9.4 billion in 2020 and $14.2 billion in 2021.
  • With over $3.8 billion identified in fraud and overpayments, that equates to over $673 for every Ohioan in the labor force. Gov. Mike DeWine and the General Assembly used American Rescue Plan funds to reimburse the federal government for the cost of this program.
  • Investigators determined payments were made to dead and jailed people, to social security numbers associated with four or more bank accounts, to bank accounts associated with multiple individuals, and to addresses associated with five or more individuals.

ODJFS Director Matt Damschroder responded to the audit, saying, “The audit confirms the unprecedented surge in claims and accompanying fraud caused by the pandemic, and the recommendations align with the work already underway in addressing the issues we faced.”

Damschroder was appointed as interim director in March and made the permanent director in July.

To read a full copy of the audit, click follow this link.

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