COLUMBUS, Ohio — Ohio’s unemployment system uses too much state revenue to operate, was late to adopt basic anti-fraud measures and needs to be more transparent in communicating why unemployment claims are not being paid.
Those are among the findings of a new performance audit released Thursday by Ohio Auditor Keith Faber. The 138-page audit was required by the Ohio General Assembly in response to complaints about customer service, fraud and overpayments by the Ohio Department of Job and Family Services.
“Ohioans deserve systems that work – systems that provide the services they pay for in every pay check – and it is unacceptable that when the process is stressed, they are the ones that suffer,” Auditor Faber said in a press release. “It’s time to fix this mess and provide Ohioans with an unemployment system that is responsive to their needs and secure against the crooks that exploit its weaknesses.”
Among the major recommendations is to make information more readily available when an unemployment claim is held up for suspected fraud or verification of employment information.
“The current system does not allow an applicant to easily see the status of a claim,” said the report. “Allowing the applicant to see date estimates for application approval and issues generated during adjudication will reduce the amount of calls to the contact center, a large number of which are simply checking their status or making updates to their applications that could be done in a self-service model.”
The report also criticizes the amount of money Ohio spends on administering the federally funded system.
“Ohio spent an average of $26.4 million of state revenue on unemployment compensation administrative expenses” between 2017 and 2019, said the report. “The next nearest peer, Washington, spent an average of $12.8 million and has a dedicated employer tax in order to raise these funds. During this time frame, Ohio’s state revenue covered more than 25 percent of program costs while the peer state contribution average was only 5.8 percent.”
The report credits a team of private vendors with avoiding $350 million in fraud this year by implementing cybersecurity measures that are common in the private sector, saying those changes were adopted too late by Ohio’s unemployment system and need to be incorporated into future anti-fraud efforts.
“The focus on the temporary PUA system and the fact that fraud-mitigation operations are being driven by external consultants through the P3 Team raises several concerns about business continuity going forward,” said the report. “To maintain the current level of anti-fraud performance, ODJFS must prioritize a permanent knowledge-transfer from the P3 Team as well as permanently integrating many of the new tools which were quickly stood up in 2021.”