New York audit indicates over $11 billion in unemployment insurance was stolen during the coronavirus pandemic

The New York Division of State Government Accountability (DSGA) released the results of an audit of the state’s unemployment insurance system on November 15 that indicated over $11 billion were lost to fraud between April 2020 and March 2021.

During that time, the audit said the state paid about $76.3 billion in total unemployment insurance payments. The DSGA also noted the federal government’s estimate of New York’s unemployment insurance fraud rate rose to 14.48% from the previous financial year’s 4.51% estimate. If the federal government’s fraud rate estimate is accurate, about $11 billion were lost to fraud between April 2020 to March 2021.

The DSGA report also said Department of Labor officials ignored reports in 2010 and 2015 that warned of outdated unemployment insurance digital infrastructure. New York Comptroller Thomas DiNapoli said in a statement that the labor department’s outdated software left the state unprepared for the volume of unemployment insurance claims during the pandemic, so “[t]he agency resorted to stop-gap measures to paper over problems, and this proved to be costly to the state, businesses, and New Yorkers.”

Unemployment insurance refers to a joint federal and state program that provides temporary monetary benefits to eligible laid-off workers who are actively seeking new employment. Qualifying individuals receive unemployment compensation as a percentage of their lost wages in the form of weekly cash benefits while they search for new employment.

The federal government oversees the general administration of state unemployment insurance programs. The states control the specific features of their unemployment insurance programs, such as eligibility requirements and length of benefits.

For more information on unemployment insurance fraud in New York, click here. For information about unemployment insurance fraud across the country, click here.

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