Labor Dept. appears afflicted with 'Long COVID,' state auditor says

LINCOLN — Flaws in the way the Nebraska Department of Labor handled unemployment insurance benefits put as much as nearly $13 million potentially at risk the past fiscal year, according to a recent state audit.

State Auditor Mike Foley said the department likely is still adjusting from the deluge of work and unemployment claims it handled during the height of the pandemic.

And while labor officials have attended to some deficiencies pointed out in the recent audit, Foley said the threat to public funds remains "concerning" and warrants quicker attention.

"The Labor Department still has Long COVID," he said. "The symptoms have not been fully resolved."

Foley commented in the wake of an annual "statewide single audit" that examined numerous federal programs administered by various Nebraska agencies during the fiscal year ending in June 2023.

The wide-ranging, 271page report was released publicly in late March. Foley's office previously issued news releases that focused on problems auditors found in the Nebraska Department of Health and Human Services, including what Foley described as "longstanding fraud and abuse" in its Medicaid-funded "personal assistance services" program.

DHHS CEO Steve Corsi, in response, said he was working with the state auditor to correct internal safeguards.

Foley said that while DHHS got his early focus because of its large budget, he said questionable spending uncovered in the Labor Department's unemployment insurance program is also significant. As part of the audit process, state labor officials in the report responded to the findings. The department, led by Labor Commissioner John Albin, said it was working with their vendor to resolve some issues cited. The department also has increased staffing in its "benefit integrity unit" to more quickly address other issues.

At least one of the claimants that auditors zeroed in on has been "referred for prosecution," the department said.

According to the audit report, the state Labor Department during the fiscal year ending in June 2023 paid $62.5 million in unemployment insurance benefits to nearly 16,000 claimants.

The state auditing team tested a random sample of those payments. Based on that sampling, the team estimated "potential dollars at risk" for that year to be $12.67 million. It said similar findings have been noted since the fiscal year 2020 audit.

Costs deemed questionable were due largely to "inadequate" support documentation.

Sometimes, for example, the department either did not follow up with an employer to get necessary information about the termination or did not document follow-up attempts. Such follow-up is important because if the cause of termination was misconduct, auditors noted, the claimant might have been ineligible for benefits.