Unemployment Insurance Designated to GAO High Risk List

The Government Accountability Office (GAO) added earlier this month the Unemployment Insurance (UI) system to its list of federal services at “high risk” of waste, fraud, or mismanagement or in need of transformation.

According to the oversight agency, state administration practices and UI policies have contributed to declining worker access and disparities in the distribution of benefits under the current program. Meeting the needs of unemployed workers and mitigating financial loss has been a long-standing challenge that has only gotten worse with the COVID-19 pandemic inciting unprecedented demand.

A supplementary report outlined the government’s biggest challenge: keeping track of its own spending. The Labor Department has estimated that payment errors rose from 9.2 percent of payments to 18.9 percent between fiscal years (FY) 2020 and 2021. The 9.7 percent difference in errors accounts for an excess of $78.1 billion in improper unemployment payments.

The conclusions of the supplementary report prompted GAO officials to place the unemployment benefits program on its high-risk list, a classification designed to inform lawmakers and various regulators of the program’s shortcomings. To this end, GAO has called upon Congress and the Biden Administration to reform the administration and oversight of unemployment benefits.

“The widespread problems plaguing the Unemployment Insurance system are extremely troubling. Not only is the system falling short in meeting the needs of workers and the broader economy,” said Comptroller General Gene Dodaro, “But the potential for huge financial losses could undermine public confidence in the stewardship of government funds.”

Including the UI system, the High-Risk List now consists of 38 programs and activities. To help set oversight agendas, GAO updates the list every two years at the start of every new Congress.