The buzz in Richmond today is a new report from the Joint Legislative Audit and Review Commission (JLARC) indicating that the Virginia Employment Commission (VEC) overpaid to the tune of $930 million dollars in benefits after spending $13.8 billion in the wake of the COVID epidemic in 2020.
James Bacon over at Bacon’s Rebellion has a stellar essay on the topic that you should read in full:
“The rate and dollar amount of incorrect benefit payments — including to fraudulent actors — increased substantially during COVID-19,” JLARC states. The Department of Labor standard for incorrect payments is 10%. In Virginia, the level reached nearly 45%.
JLARC estimates that VEC issued nearly $930 million in “incorrect” payments in 2020 alone. Nearly 100% were classified as overpayments.
Fraud was rampant. VEC’s estimated that the fraud rate for state unemployment payments increased from 1.4% in 2019 to 7.5% in 2020 — by at least $70 million. Meanwhile, the VEC is still reviewing a backlog of 136,000 potentially fraudulent payments. Overpayments will be “difficult” to collect, JLARC observes.
Now that’s the understatement of the year — “difficult to collect” indeed.
The entire JLARC presentation can be found by clicking here.
What is clear at this rate is that the failures at the VEC are entirely at the feet of Democratic Governor Ralph Northam (D) as neither the administration nor the VEC adapted as other state governors did.
Between 40 and 45 percent of the time, the VEC was making incorrect payments, with 1.4% of the $930 million overspent related to fraud. Overall, fraud represents a whopping 7.5% of all monies spent by the VEC.
At present, the VEC continues to lag behind other states, as it is still struggling with a Phase 3 improvement that has handicapped the VEC itself — with only 4% of phone calls being answered and appeals taking an average of 275 days to be resolved. VEC still has a backlog of 100,000 cases that need to be resolved.
The bottom line here may not be as mysterious as one might imagine. You know what’s cheaper than fixing the problem during a pandemic? Throwing money at it.
Gobs and gobs of cash.
One doesn’t have to be Sherlock Homles to figure out what call the Northam administration most likely made. With the VEC already hobbling from a lack of attention and investment over the last eight years, the Northam administration simply settled on cutting checks ad infinitum, believing that flushing the Virginia economy with cash was easier than slowing down an already phlegmatic VEC during a crisis.
So they did what all real leaders do in a crisis.
Which of course raises a deeper question. If one were to commit to a Marshall Plan to fix the Virginia Employment Commission — even during the pandemic — would it have cost $930 million to do?
Worse than a scandal, this is a terrifying mistake. One hesitates to even blame the leadership at the VEC for this problem — they are simply catching grenades and falling on them accordingly.
But there is plenty of blame for the individuals who created the crisis through a program of benign neglect. Both Northam and McAuliffe owe Virginians an answer… and $930 million dollars.