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Outdated systems, overwhelming claims caused failure of Ohio’s unemployment system, state auditor says

Published: Sep. 23, 2021 at 10:18 AM EDT|Updated: Sep. 23, 2021 at 10:41 AM EDT
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COLUMBUS, Ohio (WXIX) - “Egregious customer service failures” of Ohio’s unemployment system are the result of an outdated and overwhelmed system, according to a new state audit out Thursday.

State Auditor Keith Faber’s Office released the first of two audits of the Ohio Job and Family Services (ODJFS) unemployment system.

This performance audit was required by the Ohio General Assembly in response to egregious customer service failures brought on by the COVID-19 pandemic, Faber said.

“Ohioans deserve systems that work- systems that provide the services they pay for in every paycheck and it is unacceptable that when the process is stressed, they are the ones that suffer,” he said.

“Hard-working Ohioans, put out of work through no fault of their own, have been subjected to an exhausting process that leaves them waiting hours, days, weeks and even months for the assistance they desperately need and have rightly earned.

“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.”

Throughout 2020 and the COVID-19 global pandemic, Ohio’s unemployment system was flooded with new claims and was quickly overwhelmed as the federal government extended benefits to those who are not traditionally eligible for unemployment.

These new benefit programs required the state to implement a secondary system for the processing of these claims, further straining existing resources.

Faber met with Ohioans across the state and heard first-hand reports of long wait times, calls being disconnected, inability to obtain benefits, fraudulent claims, and more issues causing stress on tax-paying citizens.

Frustration grew and scrutiny of the department increased among policymakers.

Legislators asked that the performance audit review administrative funding, claims processing, staffing, customer service, technology systems and compiled 18 questions they wanted to be answered.

Key takeaways from the performance audit:

Federal Funding Expenditures:

  • Ohio spends more state revenue on unemployment compensation administration than any other peer state. Ohio spent an average of $26.4 million of state revenue on unemployment compensation administrative expenses between federal fiscal years 2017 and 2019. 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.

Customer Service and System Failures:

  • The Department currently has multiple platforms which an individual may use in order to submit a complaint or inquiry. However, these systems are largely disconnected and do not include a process that allows for the tracking of complaints across platforms. An integrated customer relationship management approach will help ensure staff across various divisions have access to the most current customer information and avoid duplication of effort.
  • The current system does not allow an applicant to easily see the status of a claim. The Department should increase transparency and information visible to applicants on the website. Allowing the applicant to see date estimates for application approval and issues generated during processing. This will reduce the number of calls to the contact center, a large number of which were simply checking their status or making updates to their applications that could be done in a ‘self-service’ model.

Claims Processing Challenges:

  • Prior to the pandemic, Ohio led the peer states and met the federal benchmarks with regard to first payment timeliness. During the pandemic, Ohio not only failed to meet the federal benchmark, but it lagged peer states in timeliness benchmarks. This was due in part to an antiquated system more than two decades old that was not capable of handling the volume of claims being submitted during the pandemic.
  • In 2019, Ohio issued 88 percent of separation and non-separation determinations within 21 days from the issue detection date-exceeding the federal benchmark of 80 percent. In 2020, the percentage dropped to 38 percent, falling well below the federal benchmark. This figure was in-line with the peer average during this same period.

Staffing and Internal Shortcomings:

  • For an agency that applies for and receives a large number of federal dollars, there is surprisingly only one employee responsible for converting Ohio data into the complex format required by the federal government and no documented manual for the process. The Department should develop and document a formal process and review it routinely to maximize federal grant funding.
  • As a part of House Bill 614, the Department was required to create a strategic staffing plan. The plan which was put forth lacks specificity in relation to how additional resources would be obtained and deployed during times of large-scale increases in unemployment. The data collected by the department regarding how individual time is spent should be maintained and monitored in real-time so that the Department’s strategic staffing plan can be updated as appropriate. When used properly, this data can help deploy existing personnel effectively throughout the year based on seasonal changes in unemployment claims or economic cycles.

Many of the findings in this report are the result of an outdated and overwhelmed system, and not necessarily unique to Ohio, Faber notes.

During the course of this audit, the audit team encountered a number of system limitations where the information that was requested and received from the client prevented accurate conclusions to be drawn, and other data was not able to be provided in a timely manner, he said.

Additionally, the peer states were not responsive to data requests. Because of this, information available from the United States Department of Labor was heavily relied on to complete the analysis for the audit, according to Faber.

Additional recommendations are included in the report posted online and a full copy of this report was provided to the Unemployment Compensation Modernization and Improvement Council.

ODJFS Director Matt Damschroder applauded Faber and his team’s work.

“I’m proud of the hard work, ingenuity, and adaptability of ODJFS employees, contractors, and private-sector partners, who have spent the last 18 months working through historic numbers of claims while fighting historic amounts of fraud,” Damschroder said in a statement. “Since the start of the pandemic, nearly 6.6 million initial applications have been filed for both traditional unemployment benefits and Pandemic Unemployment Assistance. As a result, we have distributed $23.8 billion in benefits to more than 2.4 million claimants.”

While he says more work still has to be done, Damschroder adds that the audit’s findings will help with the future work being planned.

The next unemployment audit, which focuses on fraud, will be released later this month and will also be sent to the council.

Since the initiation of this performance audit, Gov. Mike DeWine and Lt. Gov. Jon Husted have assembled a public-private partnership with ODJFS focused on three main areas: fraud prevention, improved call center operations, and efficient claims processing and adjudication.

This partnership has made significant progress in resolving key failures to Ohio’s unemployment system, Faber said.

Finally, the new ODJFS leadership team has communicated their commitment to addressing remaining shortcomings as well as evaluating and implementing the recommendations laid out by Faber.

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