A new N.C. House task force will study fraudulent unemployment insurance claims and potentially make policy recommendations to the General Assembly.
House Speaker Thom Tillis, R-Mecklenburg, announced the launch of the task force Tuesday at a press conference. The goal, he said, is to find out how many people are cheating the system and ways to end the fraud.
“We have a safety net for those who need it, but we have zero tolerance for those who are taking advantage of the system,” Tillis said.
Jobless benefits are authorized by the federal government but administered by the states. North Carolina pays out an average of $292 per week for each qualified unemployed individual. The N.C. Division of Employment Security reported that 122,272 North Carolinians were receiving benefits in December 2011.
Anecdotal stories suggest that some residents are gaming the system. Wake County Republican Rep. Marilyn Avila, who will co-chair the task force with fellow Republican Rep. G.L. Pridgen of Robeson County, said she was surprised to learn that the Tar Heel State lost over $160 million to improper unemployment insurance compensation in 2011.
“A substantial number of those payments would be considered, by most of us, to be out and out fraud,” she said.
The picture is worsened by the fact that North Carolina owes $2.6 billion to the federal government after draining dry its own unemployment insurance trust fund.
Jerry Norton, owner of a staffing company in Laurinburg, stood alongside Republicans at the press conference to tell his experience with jobless benefits cheating. Using the company’s account with the DES, one of Norton’s former employees had bilked the system for over $100,000 in fraudulent compensation. It cost Norton $12,000 to clear up the problem.
“[The system] is not going to get fixed unless major steps are taken,” Norton said. “The checks and balances just are not in place.”
Avila said that fraud makes the whole program insecure for those who legitimately qualify for assistance. “The law is very vague and unclear on this type of fraud,” she said. “This makes it hard to root out, stop, and punish those who are abusing the system.”
Tillis said he launched the task force before the short session convenes May 17 so that lawmakers would have enough information and time to take action, if necessary.
“The more we talk to employers, the more examples we’re finding, so we’re trying to see how broad-based this is,” Tillis said.
Fergus Hodgson, director of fiscal policy studies for the John Locke Foundation (publisher of Carolina Journal), said there is room for improvement in terms of accuracy in false jobless benefits payments. But he warned that erasing fraud is not sufficient to shore up the state’s debt to the federal government.
“Even if state officials were to halt every single overpayment, that would come to just over $100 million and would not bridge the fiscal shortfall, let alone pay back the immense debt,” Hodgson said.
David N. Bass is an associate editor of Carolina Journal.