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State: Overpaid just $11 million

Official calls U.S.’ $50 million on jobless benefits an estimate by Alison Sider | September 22, 2011 at 4:40 a.m.

— The state said Wednesday that it paid $11 million too much in unemployment benefits last fiscal year, an amount — sizable as it is — well below the $50 million too much that the U.S. Labor Department said Arkansas overpaid.

The state said its figure was actual, verified overpayments. It did not say the federal figure was wrong, but Kimberly Friedman, a spokesman for the state agency, said, “However, it is important to note that the [federal number] is based on a sample and is an estimate.”

The federal agency released a preliminary report last week stating that nationwide, $50 billion in improper or erroneous unemployment benefits were paid out in fiscal 2011, with more than $50 million of it in Arkansas. In the past three fiscal years, the department put the total overpayment in Arkansas at more than $161 million.

Though the numbers in the federal report came from a state-conducted survey, state Workforce Services Department Director Artee Williams told a legislative committee Friday that the department needed to take a closer look at the federal numbers and compare them with state data.

This week, a spokesman for the state agency said that while it did not dispute the federal report, the state established that it made $11.07 million in overpayments of regular unemployment benefits in fiscal 2011. Some of that was repaid by recipients. The $11 million also included payments made because of a mistake by the state and thus under state law don’t have to be paid back, as well as those that have been deemed “uncollectible.”

Some overpayments that have not been repaid to the state carry over from year to year. The total balance of outstanding overpayments at the end of fiscal 2011 was $45 million, up from $33.17 million at the end of fiscal 2010 and $29.65 million at end of fiscal 2009, Friedman said.

Over those three years, about $13.36 million in overpayments have been repaid to the state.

Labor Department officials stuck by their findings. Officials said the results of the survey come closer to estimating the real rate of overpayment than do the state’s actual payment figures.

Whichever figure is closer to the truth, the report bothered the governor and lawmakers who have enacted laws intended to keep the state’s unemployment insurance trust fund from having to borrow more federal money in the face of a growing number of unemployed workers needing benefits.

The Department of Labor report came out the same week that the state repaid $30 million of the $360 million that the federal government has advanced it to continue making unemployment benefit payments.

Gov. Mike Beebe said the report needs to be taken seriously and the state needs to examine what action to take to prevent fraud and erroneous payments.

“I want to get to the bottom [of it], and I’ve ordered the [state] department to get to the bottom [of it],” he said. “Are the federal figures right, or are they not right?

“If they’re accurate, I want to know that,” he said. “To the extent that they’re accurate or even if they’re not accurate, what causes this? What do we do about it?”

Sen. Jonathan Dismang, RSearcy, and Rep. Davy Carter, R-Cabot, called the report “disturbing” in a letter they sent to the Legislative Audit Division, asking it to examine how the state administers its unemployment insurance trust fund.

Their request will be considered by a committee.

The federal report is based on the Benefit Accuracy Measurement program — a survey process that is carried out by the states. In Arkansas, the Benefit Accuracy Management Unit reviewed 480 paid regular benefit claims and 450 denied claims to “ensure integrity of the [Unemployment Insurance] program,” Friedman said.

On its website, the Department of Labor says the audits of the sample claims are “very thorough and can detect many errors that the state’s Benefits Payment Control (BPC) operation cannot detect under normal procedures.”

The Labor Department uses the results of that survey to derive a rate of overpayment in every state. In 2011, the federal report stated that 12.43 percent of all regular unemployment benefits paid in Arkansas in the first 26 weeks of benefit eligibility were improper. In the past three years, it put the rate at 10.77 percent.

The difference between the amount of overpayment established by the state and the results of that survey is not surprising, Labor Department officials said this week. The survey captures overpayments that the state is not able to find because of its limited staff, resources and the costeffectiveness of seeking repayment in some cases.

Under federal guidelines, the state has a limited time after a claim is made to process it and determine whether to make a payment.

Dan Kasprzyk, vice president of the Center for Excellence in Survey Research at the National Opinion Research Center at the University of Chicago, compared sampling to having a blood test, where results are based on only a small portion of the blood in a person’s body.

Smaller samples can leave more room for error, he said, but as long as a sample is chosen by a truly random process, as are the cases surveyed for the federal report, it is a valid way of drawing inferences about a population.

“The sample is a smaller number, yes, but it represents the entire population because everyone in that population has a chance of selection,” Kasprzyk said.

Information for this article was contributed by Sarah D. Wire of the Arkansas Democrat-Gazette.

Front Section, Pages 1 on 09/22/2011

Print Headline: State: Overpaid just $11 million

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