Audit finds accounting problems in fund for jobless benefits system

HARRISBURG, Pa. (WHTM) – Pennsylvania’s auditor general says the Department of Labor and Industry failed to track how it spent millions in payroll taxes that fund the state’s unemployment compensation centers.

Auditor General Eugene DePasquale on Tuesday announced results of an audit that examined how the department used money from the Service and Infrastructure Improvement Fund over the last four years.

The audit found that Labor and Industry spent $178.4 million but failed to use proper accounting methods to record expenditures. DePasquale said his team couldn’t determine whether the money was used appropriately.

The department closed three of its eight unemployment compensation service centers and laid off nearly 500 workers last year after the Senate’s Republican majority blocked a $57.5 million funding bill over concerns the money was going toward an inefficient system.

Since then, people seeking jobless benefits have faced repeated busy signals and average wait times of more than an hour, L&I Secretary Kathy Manderino told a House committee last month.

“People have a right to be frustrated by what we found here,” DePasquale said. “If L&I had appropriately accounted for SIIF funding from the beginning, we may not be dealing with this chaos and looking at such high costs to address the problems going forward.”

DePasquale, a Democrat, said L&I needs an estimated $159.5 million in additional funding over the next four years to keep its remaining service centers open and modernize its 40-year-old computer system.

He said it would take an additional $38.5 million to reopen the three closed centers and recall the furloughed staff.

Gov. Tom Wolf on Monday signed legislation to provide $15 million in SIIF funding. DePasquale called the stopgap funding a step in the right direction but said $12.1 million is needed just to break even this year.

He said that would leave little money to recall furloughed staffers and nothing to replace the old computer system.

Wolf’s administration sued IBM last month over a failed effort to build a modern, integrated system for processing unemployment claims. The governor said taxpayers paid IBM nearly $170 million for a system it never received.

Wolf added that continued use of the aging system has incurred tens of millions in maintenance and other costs.

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