Court filing
Arizona Auditor General Report 25-101 — DES Unemployment Insurance Program (June 2025)
Filed June 9, 2025 in State Audits; one of 3 filings from this case.
Record facts
| Court | Arizona Auditor General (Lindsey A. Perry) |
|---|---|
| Filed | 2025-06-09 |
Full text
Lindsey A. Perry
Auditor General
Report 25-101
June 2025
Performance Audit
Arizona Department of Economic Security
Unemployment Insurance Program
Department provided inconsistent customer service to some UI
claimants and has not analyzed UI Program data to identify potential
access barriers or systemic discrimination, potentially causing
claimant hardships and frustration and impacting its ability to
implement UI Program improvements
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
Contact information
phone (602) 553-0333
envelope contact@azauditor.gov
globe www.azauditor.gov
2910 N. 44th St., Ste. 410
Phoenix, AZ 85018-7271
The Joint Legislative Audit Committee
The Joint Legislative Audit Committee consists of 5 Senate members appointed by the Senate
President and 5 House members appointed by the House Speaker. The Committee is responsible
for overseeing the Office, including (1) overseeing all audit functions of the Legislature and
State agencies, including sunset, performance, special, and financial audits; special research
requests; and the preparation and introduction of legislation resulting from audit report findings;
(2) requiring State agencies to comply with audit findings and recommendations; (3) receiving
status reports regarding the progress of school districts to implement recommendations; and (4)
scheduling hearings to review the status of State agencies and school districts.
Senator Mark Finchem, Chair
Representative Matt Gress, Vice Chair
Senator Flavio Bravo
Representative Michael Carbone
Senator Tim Dunn
Representative Michele Peña
Senator David C. Farnsworth
Representative Stephanie Stahl-Hamilton
Senator Catherine Miranda
Representative Betty Villegas
Senator Warren Petersen (ex officio)
Representative Steve Montenegro (ex officio)
Arizona Auditor General’s mission
The Arizona Auditor General’s mission is to provide independent and impartial information,
impactful recommendations, and stakeholder education to improve Arizona government for
its citizens. To this end, the Office conducts financial statement audits and provides certain
accounting services to the State and political subdivisions, investigates possible criminal
violations involving public officials and public monies, and conducts performance audits and
special reviews of school districts, State agencies, and the programs they administer.
Audit staff
Jeff Gove, Director
Grace Wills, Team Leader
Monette Kiepke, Manager
Alexis Bell
Katie Peairs, Lead Visual Communications Specialist
Ashley Bjurstrom
Kaylee Arteaga, Visual Communications Specialist
Katherine Ciaramello
Anna LaClair
Oscar Ramirez
June 9, 2025
Members of the Arizona Legislature
The Honorable Katie Hobbs, Governor
Director Wisehart
Arizona Department of Economic Security
Transmitted herewith is a report of the Auditor General, A Performance Audit of the Arizona
Department of Economic Security—Unemployment Insurance Program. This report is in response
to a November 21, 2022, resolution of the Joint Legislative Audit Committee. The performance
audit was conducted as part of the sunset review process prescribed in Arizona Revised Statutes
§41-2951 et seq. I am also transmitting within this report a copy of the Report Highlights to
provide a quick summary for your convenience.
As outlined in its response, the Department agrees with all the findings and plans to implement
or implement in a different manner all the recommendations. My Office will follow up with the
Department in 6 months to assess its progress in implementing the recommendations. I express
my appreciation to Director Wisehart and Department staff for their cooperation and assistance
throughout the audit.
My staff and I will be pleased to discuss or clarify items in the report.
Sincerely,
Lindsey A. Perry
Lindsey A. Perry, CPA, CFE
Auditor General
Arizona Auditor General | 2910 N 44th St., Ste. 410, Phoenix, AZ 85018-7271 | (602) 553-0333 | www.azauditor.gov
ARIZONA
AUDITOR
GENERAL
Lindsey A. Perry, Auditor General
Melanie M. Chesney, Deputy Auditor General
HIGHLIGHTS
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
Arizona Department of Economic Security
Unemployment Insurance Program
Department provided inconsistent customer service to some UI claimants
and has not analyzed UI Program data to identify potential access barriers
or systemic discrimination, potentially causing claimant hardships and
frustration and impacting its ability to implement UI Program improvements
Audit purpose
To determine whether the Department provided timely and accurate customer service for
accessing its UI Program in calendar year 2023 and whether the Department complied with
federal regulation and recommendations for identifying and addressing potential systemic
discrimination and access barriers related to the UI Program.1
Key findings
The Department:
X Is responsible for providing UI Program customer service to the public through call centers
and its website and has planned or initiated various UI Program modernization efforts to
help improve customer service, including developing a new UI Program IT system.
X Provided some UI claimants with accurate and quality phone customer service in calendar
year 2023 but provided other claimants with poor-quality customer service and inaccurate
information, and some claimants experienced long wait times to reach Department call
center staff, potentially causing claimant hardships and frustration.
X Has not analyzed UI Program data for potential systemic discrimination as required by
federal regulation and delayed a required UI Program assessment that could help it
comply with the regulation by identifying and addressing UI Program access barriers. As
such, this impacts the Department’s ability to implement improvements and increases its
risk of poor IT system project outcomes.
Key recommendations to the Department
X Develop and/or revise and implement customer service policies, procedures, and staff training.
X Continue to monitor customer service provided by staff, review and analyze UI Program
customer service performance metrics, and correct identified deficiencies.
X Conduct the required assessment of the UI Program and incorporate corrective actions to
address any identified deficiencies into UI Program modernization efforts.
1 The Arizona Auditor General conducted this performance audit of the Department pursuant to a November 21, 2022, resolution of the Joint
Legislative Audit Committee. This audit was conducted as part of the sunset review process prescribed in A.R.S. §41-2951 et seq.
TABLE OF CONTENTS
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
i
INTRODUCTION
1
X DOL oversees a nation-wide unemployment insurance system administered by
state UI agencies to provide temporary financial assistance to eligible individuals
X Department responsible for operating Arizona’s UI Program, including assessing
eligibility of initial and weekly UI claims, investigating and adjudicating eligibility
issues, timely issuing UI benefits to eligible claimants, and identifying benefit
overpayments
X Department responsible for providing various methods and customer service
for accessing UI Program information and services, consistent with federal
requirements and guidance
X Issues with states’ UI program customer service quality have resulted in federal
recommendations to improve UI benefits delivery through high-quality customer
service and modernizing outdated UI information technology systems
X Department has undertaken, planned, or initiated various UI Program
modernization efforts with $16.83 million in awarded federal grant monies
X UI Program organization and staffing
X UI Program revenues and expenditures
FINDING 1
21
Department provided quality customer service to some UI claimants, but
service quality, accuracy, and timeliness problems exist, potentially causing
claimant hardships and frustration and increasing staff workload
X Department responsible for providing customer service to claimants who inquire
about general UI Program information, claim and benefit eligibility issues,
overpayments, and other questions and concerns
X Department provided some UI claimants with quality phone customer service,
but customer service quality problems exist, including inaccurate and potentially
misleading information provided, most calls not answered, and long call wait
times
X Ineffective customer service may hinder claimants’ access to UI Program
benefits, resulting in financial hardships and frustration for claimants and
additional workload for Department staff
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
ii
X Several factors contributed to claimants receiving poor-quality, untimely,
and inaccurate or inconsistent customer service and information, including
Department’s lack of procedures for monitoring call quality and other key
customer service requirements, inconsistent staff training, high call volumes, and
lack of call-routing system functionality
Recommendations to the Department for providing consistent, accurate, quality, and
timely customer service
43
FINDING 2
45
Inconsistent with federal regulation and recommendations, Department has
not analyzed UI Program data and information to identify potential access
barriers and discrimination, impacting its ability to implement UI Program
improvements, including planned modernization, and increasing risks to
claimants
X Department has not analyzed UI Program data to identify potential systemic
discrimination as required by federal regulation because it was unaware of its
responsibility to do so and has delayed conducting an assessment that could
help it comply with the requirement and implement federal recommendations
for analyzing data and information to identify and address UI Program access
barriers
X Failure to analyze UI Program data for potential access barriers and systemic
discrimination hinders the Department’s ability to identify and correct potential
deficiencies when developing its new UI Program IT system, increasing the risk
of poor IT project outcomes and loss of federal grant monies, and perpetuating
potential claimant confusion and harm we identified
X DOL has issued guidance that could help Department comply with federal data
analysis requirements and implement federal recommendations for identifying
and addressing UI Program access barriers
Recommendations to the Department
55
QUESTIONS AND ANSWERS
57
X Question 1: How does the Department determine and notify claimants of their
monetary eligibility and UI benefit award amount?
X Question 2: What can a claimant do if they disagree with the Department’s
determination of their monetary eligibility or UI benefit award amount?
X Question 3: What are eligibility issues, and what is the Department’s process for
resolving them?
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
iii
X Question 4: What are overpayments, and how do they occur?
X Question 5: Can overpayments be waived?
X Question 6: How does the Department collect overpayment debts, and what
does it do with monies collected?
X Question 7: What appeal rights do claimants or employers have if they disagree
with an eligibility or overpayment determination?
X Question 8: How does the Department investigate the accuracy of UI claims that
are paid and claims that are denied?
X Question 9: What are the Department’s processes to identify and prevent
improper and/or fraudulent payments?
X Question 10: What are the Department’s processes for investigating allegations
of fraud and referring individuals for prosecution?
SUMMARY OF RECOMMENDATIONS
79
The Arizona Auditor General makes 22 recommendations to the Department
APPENDIX A
a-1
Arizona@Work responsible for providing services and resources to
individuals seeking employment, and provides access to computers and
phones for accessing Department’s UI Program
APPENDIX B
b-1
Scope and methodology
AUDITOR GENERAL’S COMMENTS ON THE DEPARTMENT’S
RESPONSE
c-1
Department RESPONSE
FIGURES
X Figure 1
6
Department’s UI claims process includes notifying employer, assessing eligibility,
investigating and adjudicating eligibility issues, and paying UI benefits to eligible
claimants
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
iv
X Figure 2
59
Example claimant filing UI claim in January 2025 would have a base period of
October 2023 to September 2024 to calculate monetary eligibility and UI benefit
amount
X Figure 3
63
Claimants can have more than 1 overpayment, each with different classifications
X Figure 4
64
Department established almost $9.8 million in UI Program overpayments in
calendar year 2023
As of February 2025
(Unaudited)
X Figure 5
65
Department established over $698 million in PUA program overpayments in
calendar year 2023
As of January 2025
(Unaudited)
X Figure 6
71
Department has process for claimants and employers to request appeal or
reconsideration of claim determinations, including varying levels of appeals,
and in calendar year 2023, Department data indicates it received 18,535 and
2,537 initial UI Program and PUA program appeals, respectively, and 4,843
reconsideration requests
(Unaudited)
X Figure 7
74
In the fiscal year 2023 single audit, we tested batches 202227 through 202326
of paid and denied claims and found the Department did not meet all minimum
percentage completion rates
X Figure 8
a-3
Department provides WIOA Title III employment services in 27 Arizona@Work
offices across the State
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
v
TABLES
X Table 1
17
Schedule of revenues, expenditures, and changes in Unemployment
Compensation Fund balances, and number of initial claims filed
Fiscal years 2017 through 2023
(Expressed in thousands)
X Table 2
20
Department’s administrative costs exceeded the amounts DOL allocated to pay
for its administrative costs
Fiscal years 2021 through 2023
(Expressed in thousands)
X Table 3
27
UI call center staff did not follow UI Program customer service procedures for 21
calls we reviewed
X Table 4
28
Many callers to UI call center experienced wait times in excess of 1 hour during
calendar year 2023
X Table 5
31
BPC call center staff did not provide quality customer service for 15 calls we
reviewed, including providing inaccurate information to and/or failing to educate
some callers
X Table 6
42
Percentage of days that maximum wait times exceeded 1 hour increased from
calendar year 2023 to calendar year 2024, despite reduced call volumes and
Department’s call-routing system changes in 2024
X Table 7
53
DOL recommendations for identifying potential UI program access barriers and
discrimination
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
1
INTRODUCTION
The Arizona Auditor General has released the first in a series of audit reports of the Arizona
Department of Economic Security (Department) as part of the Department’s sunset review. This
performance audit determined whether the Department provided timely and accurate customer
service for accessing its Unemployment Insurance Program (UI Program) in calendar year 2023
and whether the Department complied with federal regulation and U.S. Department of Labor
(DOL) recommendations for identifying and addressing potential systemic discrimination and
barriers for accessing the UI Program. This report also provides information related to the UI
Program, including information on claims processing and Department measures for assessing
claim accuracy and detecting and preventing fraud.
DOL oversees a nation-wide unemployment insurance system administered
by state UI agencies to provide temporary financial assistance to eligible
individuals
DOL oversees a nation-wide federal-state UI program to provide unemployment benefits to
eligible workers who are unemployed through no fault of their own and meet other eligibility
requirements. Each U.S. state and several U.S. territories administers a UI program (state
UI programs) and sets its own UI benefit eligibility requirements through state/territorial law
(see textbox, page 2, for examples of Arizona’s eligibility requirements).1 However, all state UI
programs must follow requirements and guidelines established in federal law under DOL’s
oversight and guidance.2,3 For example, federal law requires DOL to ensure that state/territorial
laws include provisions that allow for full payment of UI benefits when they are due.4
In addition, the Coronavirus Aid, Relief, and Economic Security (CARES) Act established the
federal pandemic unemployment assistance (PUA) program to provide temporary benefits
administered by state UI agencies to individuals who lost work due to the coronavirus disease
(COVID-19) pandemic, including those who were not eligible for or exhausted their UI program
benefits. The PUA program expired on September 6, 2021.
1 According to DOL, the nation-wide UI program consists of 53 state UI programs that are administered by the applicable agency (state UI
agencies) in each of the 50 U.S. states and 3 U.S. territories—the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
2 42 United States Code (USC) 501 et seq and 26 USC 3301 et seq establish certain requirements for the unemployment insurance system,
including broad provisions for the categories of workers who must be covered by the program, some benefit provisions, the federal taxable
wage base and tax rate, and other administrative requirements. State laws establish the benefit and state tax structures, including provisions for
eligibility and disqualification, benefit amounts, and the state taxable wage base and tax rates.
3 DOL maintains an advisory system consisting of UI program letters, notices, and technical assistance guides to disseminate program-specific
information, direction, and guidance, including policy and interpretations of federal laws, to state UI agencies responsible for administering UI
programs.
4 42 USC 503.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
2
Department responsible for operating Arizona’s UI Program, including
assessing eligibility of initial and weekly UI claims, investigating and
adjudicating eligibility issues, timely issuing UI benefits to eligible
claimants, and identifying benefit overpayments
The Department is responsible for operating Arizona’s UI Program. This responsibility includes:
X Processing initial claims, including notifying employers
As shown in Figure 1, pages 6 and 7, upon losing employment, an individual may file an
initial claim for UI benefits with the Department by completing an application online or
submitting a paper form via U.S. mail, email, or fax.5 After verifying individuals’ identities
pursuant to Department procedures, the Department is statutorily responsible for notifying
the individual’s employer(s) of the filed claim and that the employer has 10 business
days to protest the claim.6 When filing an initial claim, individuals are also statutorily
required to register for employment services, which is done through the online Arizona Job
Connection portal, a Department resource for helping individuals find reemployment.7,8
5 According to the Department’s fiscal year 2023 annual report, 89% of initial claims and approximately 96% of weekly claims were submitted
online.
6 A.R.S. §23-772.
7 The Department, in partnership with Arizona@Work—the State-wide workforce development entity responsible for implementing provisions of
the Workforce Innovation and Opportunity Act of 2014 (WIOA)—provides resources and services to individuals in the State seeking employment
opportunities. Arizona@Work maintains offices across the State to provide various WIOA services and resources, including no-cost access to
computers and telephones, which UI claimants may use to file claims, appeals, and other related documents, or to access the Department’s
call centers (see Appendix A, pages a-1 through a-3, for more information about Arizona@Work, including office locations across the State and
its partnership with the Department to provide WIOA services).
8 A.R.S. §23-771.
Examples of Arizona’s UI benefit eligibility requirements
Individuals in Arizona must meet several eligibility requirements to receive UI benefits,
including:
X Being unemployed through no fault of their own.1
X Earning a sufficient amount of wages prior to becoming unemployed.
X Being able and available to work.
X Actively seeking work.2
1 Pursuant to Arizona Revised Statutes (A.R.S.) §23-621, individuals are considered unemployed through no fault of their own unless the
loss of full-time work is directly attributable to the fault of the individual. For example, according to the Department’s website, workers
who are laid off for economic reasons, such as a workplace closing, a reduction-in-force, or lack of work, are considered unemployed
through no fault of their own.
2 According to A.R.S. §23-771(A), claimants must complete 4 work search contacts per benefit week on 4 different dates. Claimants are
required to provide information about these 4 work search contacts in their weekly claim for UI benefits, such as the date of the contact,
the employer or company name and address, and the action taken. According to the Department, it does not verify these work-search
contacts prior to disbursing weekly UI benefits and reported that there are no State or federal requirements for doing so. The
Department verifies work search contacts for a sample of paid UI claims during investigations it completes as required by DOL (see
Questions and Answers, Question 8, pages 73 and 74, for more information about these investigations).
Source: Auditor General staff review of A.R.S. §§23-621 and 23-771.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
3
X Assessing claimants’ eligibility to receive UI benefits
The Department is responsible for assessing an individual’s eligibility to receive UI
benefits, which includes assessing an applicant against monetary and nonmonetary
criteria and issuing an eligibility determination based on a claimant’s monetary and
nonmonetary eligibility (see textbox for key terms, and see Questions and Answers,
Question 1, pages 58 and 59, for more information about how the Department determines
monetary eligibility). If the Department finds that a claimant is ineligible to receive UI
benefits, the claimant has 15 calendar days to appeal the Department’s decision (see
Questions and Answers, Question 7, pages 69 through 72, for additional information about
claimants’ appeal rights).
X Adjudicating benefit eligibility issues
When determining if a claimant meets eligibility criteria, the Department may need to
conduct investigations, such as interviewing the claimant and their former employer(s), to
adjudicate issues impacting a claimant’s eligibility and determine if a claimant is eligible
for UI benefits (see textbox for key terms, and see Questions and Answers, Question 3,
pages 60 and 61, for more information about eligibility issues). DOL requirements and
Department policy require the UI Program to adjudicate initial claim eligibility issues within
21 days from the date that the Department detected the eligibility issue.
Key terms
Adjudication: A process for resolving UI benefit eligibility issues, including interviewing
the claimant and/or the claimant’s employer(s) to gather facts and information related to
eligibility.
Determination: The Department’s assessment of whether a claimant has met and
continues to meet eligibility requirements to qualify for UI benefits. Specifically:
Monetary determination: A written determination of eligibility—also known as a wage
statement—based on wages earned by the claimant in the base period, which reflects
the maximum benefit amount, duration, and weekly benefit amount (see Questions and
Answers, Question 1, pages 58 and 59, for additional information about base period).
Nonmonetary determination: A written determination of eligibility based on
nonmonetary factors. Examples include the claimant’s ability or availability to work
and the reason they were separated from their job, such as quitting a job or being
discharged for cause.
Issue: A situation or potential situation that may affect an individual’s eligibility for UI
benefits that requires adjudication to determine eligibility. Examples include a claimant
stating they are unavailable for work; an employer protesting the claim based on the
separation reason; or a claimant potentially receiving severance, vacation, holiday, or sick
pay that exceeds the claimant’s weekly benefit amount, which would make them ineligible to
receive benefits.
Source: Auditor General staff review of Department’s website.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
4
X Paying UI benefits to eligible individuals
After the Department determines that a claimant is eligible to receive UI benefits, the
claimant must serve a 1-week waiting period before receiving their first UI benefit payment.
When claimants file their initial application for UI benefits, they can elect to receive benefits
via direct deposit or on an electronic payment card. As of January 2025, UI benefits in the
State generally ranged between $229 and $320 per week for up to 24 or 26 weeks, with
maximum benefits ranging from $5,496 to $8,320 depending on the claimant’s earnings
prior to becoming unemployed.9,10
X Assessing claimants’ continued UI benefit eligibility
The Department requires claimants to file weekly claims, certifying their continued eligibility
to receive their weekly UI benefit payment amount until they either regain employment,
receive their maximum UI benefit amount, or reach the maximum number of weeks they
can receive UI benefits.11 Throughout the claim, as the Department assesses a claimant’s
continued eligibility to receive UI benefits, the Department may conduct additional
investigations to resolve issues regarding a claimant’s eligibility. Department policy
requires the UI Program to adjudicate weekly claim eligibility issues no later than the
Thursday of the week following the Department’s detection of the eligibility issue.
X Identifying and resolving benefit overpayments
The Department is also responsible for determining if the UI Program has made any
overpayments of UI benefits. Overpayments can occur when a claimant receives UI
benefits but is not eligible to receive them, such as if a claimant regains employment but
continues to file weekly claims, does not report their earnings, and receives UI benefits
while employed.
There are 3 different types of overpayment classifications:
y Administrative
These overpayments occur through no fault of the claimant, such as by Department or
employer error, and are the only type of overpayment that is eligible for a repayment
waiver.
y Nonfraud
These overpayments occur because the claimant unintentionally provided incorrect or
incomplete information to the Department.
9 According to A.R.S. §23-779, the weekly benefit amount is 4% of the wages the claimant earned in the highest quarter of their base period, with
a maximum weekly benefit amount of $320 (see Questions and Answers, Question 1, page 58, for more information about how the Department
determines a claimant’s base period). As of January 2025, the minimum weekly benefit amount is $229 and maximum benefit amount is $320.
According to A.R.S. §23-779, if an eligible claimant earns wages while unemployed and earns more than $160 for that week, the amount earned
over $160 will be subtracted from their weekly benefit amount.
10 According to A.R.S. §23-780, claimants can receive benefits for 24 weeks when the State-wide unemployment rate in the prior calendar quarter
is below 5 percent or 26 weeks when the State-wide unemployment rate in the prior calendar quarter is 5 percent or more. However, a claimant
may not receive more than one-third of their base period earnings, which could impact the number of weeks a claimant is eligible to receive
benefits (see Figure 2, page 59, for an example of how eligibility calculations are determined).
11 Similar to an initial claim for UI benefits, claimants can file weekly claims online or by submitting a paper form via U.S. mail, email, or fax to the
Department.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
5
y Fraud
These overpayments occur because the claimant knowingly misrepresented
information or concealed material facts to obtain UI benefits to which they were not
lawfully entitled.
Claimants are liable for repaying overpayments; however, the Department may waive
repayment of administrative overpayments (see Questions and Answers, Questions 4
through 6, pages 61 through 69, for more information about overpayments, waivers, and
overpayment collections).12
X Administering the State’s Unemployment Compensation Fund
In Arizona, UI benefits are generally paid from the State’s Unemployment Compensation
Fund, which consists of monies employers pay through State UI tax payments.
Specifically, employers are liable to pay State UI taxes, and the Department uses State
UI tax monies to pay UI benefits to eligible individuals.13 Arizona employers contributed
between $377.4 million and $553.4 million annually to the Unemployment Compensation
Fund between calendar years 2017 and 2023 (see Table 1, pages 17 and 18, for
information about the Unemployment Compensation Fund’s revenues, expenditures, and
fund balance).
12 Nonadministrative overpayments, such as nonfraud and fraud overpayments, would need to be reclassified as administrative overpayments to
be eligible for a repayment waiver, which can be done by filing an appeal of the determination (see Questions and Answers, Question 5, pages
65 and 66, for additional information about overpayment waivers and Question 7, pages 69 through 72, for additional information about
appealing Department determinations).
13 Most Arizona employers pay State UI taxes, although some employers, such as nonprofit, government, tribal, and religious organization
employers, do not pay State UI taxes and instead reimburse the Department for the cost of issuing UI benefits to their former employees.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
6
Figure 1
Department’s UI claims process includes notifying employer, assessing eligibility,
investigating and adjudicating eligibility issues, and paying UI benefits to eligible
claimants
Department issues written eligibility determination
After assessing eligibility, including adjudicating issues impacting a claimant’s eligibility,
Department issues a written eligibility determination.
Department issues
UI benefit payment
Claimant receives weekly UI
benefits after a 1-week waiting
period from date of claim.1
Claim approved
Department determines
claimant is eligible for UI
benefits.
Claim denied
Department notifies claimant they are not eligible for
UI benefits and closes claim. Claimant has 15 calen-
dar days to appeal Department decision (see Ques-
tions and Answers, Question 7, pages 69 through 72,
for additional information about appeals).
Employer notified of claim
Department notifies claimant’s
prior employer(s) of claim
filing and right to protest claim
within 10 business days.
Department assesses
claimant’s eligibility
Department determines if
claimant meets eligibility
requirements (see textbox,
page 2, for examples of
eligibility requirements).
Department conducts additional
investigation to assess eligibility
If eligibility issue identified, Department conducts
fact-finding, including interviewing claimant and prior
employer(s) to adjudicate issues impacting claimant’s
eligibility (see Questions and Answers, Question 3,
pages 60 and 61, for examples of eligibility issues).
Individual loses job
Individual files initial claim
for UI benefits.
Continued on next page.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
7
Continued from the last step on the previous page:
Department issues UI benefit payment
Claimant files weekly claim
Claimant files a weekly claim certifying they continue to meet all eligibility requirements,
including actively seeking work. Each week, the Department evaluates the claim.
Department finds claimant ineligible
and benefits cease1
Department identifies
an eligibility issue
Department does not identify
an eligibility issue
Department approves claim
Department investigates
continued eligibility
If eligibility issue identified, Department
conducts additional investigation, including
fact-finding to adjudicate issues impacting
claimant’s continued eligibility.
Although claimaint does not receive weekly
benefits while Department investigates
eligibility issue, claimant should continue
to file weekly claims.
Figure 1 continued
1 If the Department later determines that the claimant was not eligible for the UI benefits received, this could result in the Department establishing
an overpayment (see Questions and Answers, Question 4, pages 61 through 65, for additional information about overpayments).
2 A claimant’s benefit year is the 1-year period that begins the Sunday of the week they submit their initial claim for UI benefits. During this period,
a claimant may file weekly claims for and receive UI benefits, provided that the claimant continues to meet all eligibility requirements.
3 If a claimant stops filing weekly claims for more than 2 consecutive weeks during their benefit year, their benefits will cease. However, the
claimant may reopen their claim and if the Department determines they are eligible, benefits will resume. If a claimant stops filing because they
regained employment and subsequently become unemployed due to no fault of their own during the same benefit year, the claimant may file an
additional claim.
Source: Auditor General staff review of A.R.S. §§23-609, 23-771, 23-772, 23-773, and 23-780; and Department policy, documentation, and website.
Claimant stops receiving benefits
when no longer eligible
Claimant stops receiving benefits when
no longer eligible, such as regaining
employment, receiving maximum benefit
amount, or the benefit year expires.2,3
Department issues benefit payment
Claimant receives weekly benefit amount.1
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
8
Department responsible for providing various methods and customer
service for accessing UI Program information and services, consistent with
federal requirements and guidance
In accordance with various federal laws, regulations, and guidance, state UI agencies, including
the Department, are required to provide members of the public with access to their state UI
programs and their benefits (see textbox
for DOL’s definition of UI program access).
Specifically, as a condition for states to
receive federal monies for administering a
state UI program, federal law requires states
to have methods for reasonably calculating
and ensuring full payment of UI benefits to
eligible claimants “when due.”14,15 To comply
with this provision, DOL indicates that state
UI agencies are responsible for providing
access to the UI program to ensure that all
individuals have the opportunity to be informed
of and take appropriate action(s) to apply for
benefits, maintain their eligibility for benefits,
and access services without undue burdens
or barriers so that eligibility can be determined
and benefit payments can be made promptly.16
DOL also indicates that to comply with the “when due” provision in federal law, as well as various
nondiscrimination requirements in federal law and regulation, state UI agencies are required
to provide various methods for accessing the UI program, such as telephone and/or in-person
options in addition to technology-based methods, to ensure that information technology (IT)
systems used for administering UI programs and services do not create barriers that may prevent
individuals from accessing UI benefits.17,18 Additionally, DOL guidance indicates that meeting
federal requirements for providing access to the UI program also requires state UI agencies to
focus on improving the overall claimant experience and customer service.
14 According to DOL, in addition to ensuring that eligible claimants are paid UI benefits promptly when determined eligible, states must also have
methods for protecting against improper payments and fraud and ensuring they do not pay UI benefits to ineligible claimants.
15 42 USC 503.
16 U.S. DOL, 2023.
17 U.S. DOL, 2023.
18 Federal nondiscrimination laws and regulations govern accessibility requirements for various protected groups, such as individuals with
disabilities or older individuals. Additionally, DOL indicates that access to the UI program pertains to all individuals, regardless of their
background, such as individuals with low literacy levels or individuals living in rural areas that may not have access to technology, such as
computers or broadband internet, even though these individuals are not necessarily in a protected group.
UI program access definition
An individual’s ability to complete, submit,
and obtain information about their initial
and weekly claims, adjudication, appeals,
reemployment services, improper
payments such as underpayments and
overpayments, overpayment waivers, and
any other information, program functions,
or program services available for all
claimants.
Source: Auditor General staff review of U.S. Department of Labor
(U.S. DOL). (2023). Equitable access in the Unemployment
Insurance program. (Unemployment Insurance Program Letter
No. 01-24). Retrieved 4/1/2024 from https://www.dol.gov/
agencies/eta/advisories/uipl-01-24
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
9
Issues with states’ UI program customer service quality have resulted
in federal recommendations to improve UI benefits delivery through
high-quality customer service and modernizing outdated UI information
technology systems
Federal entities, including DOL and the U.S. Government Accountability Office (GAO), have
indicated that nation-wide, UI program customer service has historically been a concern and a
critical weakness, which has resulted in an overall federal emphasis to transform the UI system,
including by focusing efforts on delivering high-quality customer service and modernizing
outdated UI IT systems.
Specifically:
X GAO has issued several reports since 2016 on states’ UI program customer
service challenges, resulting in federal recommendations from GAO and DOL for
customer service improvement
Since 2016, GAO has reported on a variety of customer service challenges that claimants
reported experiencing when accessing state UI programs and services, including during
the 2007-2009 recession and the COVID-19 pandemic.19 According to GAO, claimants
in its focus groups consistently reported that the customer service challenges they
experienced included long phone call wait times and difficulties accessing their state
UI programs and services, such as difficulties reaching knowledgeable staff to help
or accessing translated materials and translation services for non-English speaking
individuals.20
In June 2022, GAO issued 2 reports highlighting a variety of persistent problems in the UI
system nation-wide that it reported were exposed and exacerbated during the COVID-19
pandemic, including customer service challenges. In its first report, GAO recommended
that DOL develop recommended practices for states’ use to improve customer service
for and access to their UI programs.21 DOL developed the recommended practices and
resources in response to GAO’s recommendation.22 Additionally, in its second report,
GAO indicated that the persistent customer service challenges it had reported on in state
UI programs both prior to and during the COVID-19 pandemic further highlighted the
need for substantial changes to the UI system to address long-standing problems or risks
19 U.S. Government Accountability Office (U.S. GAO). (2016). Unemployment Insurance: States’ customer service challenges and DOL’s related
assistance. Retrieved 7/31/2024 from https://www.gao.gov/products/gao-16-430; U.S. Government Accountability Office (U.S. GAO). (2022a).
Unemployment Insurance: Pandemic programs posed challenges, and DOL could better address customer service and emergency planning.
Retrieved 7/31/2024 from https://www.gao.gov/assets/d22104251.pdf; U.S. Government Accountability Office (U.S. GAO). (2022b).
Unemployment Insurance: Transformation needed to address program design, infrastructure, and integrity risks. Retrieved 7/31/2024 from https://
www.gao.gov/products/gao-22-105162
20 U.S. GAO, 2016.
21 U.S. GAO, 2022a.
22 DOL developed a website to provide state UI agencies with information on improving their UI program customer service and IT systems. The
website includes various articles and resources with recommended practices and guidance on how states can improve customer experiences
in their UI programs, such as key customer experience principles; recommendations for improving online UI applications, including application
questions, instructions, and format; recommendations for approaching/improving mobile device usability; and recommendations for directly
observing UI claimants through research methods, such as usability testing, to improve UI benefits delivery, among others. See Finding 2,
pages 52 through 54, for additional information about DOL guidance and resources.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
10
and improve UI benefits delivery nation-wide.23 Consequently, GAO recommended that
DOL develop and execute an improvement plan with coordinated and sustained efforts
to address persistent problems related to providing access to UI program services and
benefits and mitigating financial risk, as the pandemic exacerbated many long-standing
problems that it had previously reported on—including issues with customer service and
timely and accurately processing UI benefits—which hindered the UI program’s ability to
fulfill its intended purpose and exposed it to potentially significant financial losses.24
DOL has since indicated that GAO’s reporting on these issues aligned with its own perspective
that customer service and UI program access could be improved and in November 2023,
disseminated additional guidance and recommendations to states for doing so.25
X Outdated IT systems affect states’ ability to meet the needs of unemployed
workers, including timely and efficiently processing UI claims, highlighting need
for modernization
According to GAO, state UI agencies rely extensively on IT systems to carry out
UI program functions, including eligibility determinations, recording claimant filing
information, and calculating UI benefit amounts.26 However, prior to and during the
COVID-19 pandemic, GAO reported that many states relied on antiquated, or legacy
IT systems that were developed in the 1970s and 1980s and typically ran on outdated
software, which limited states’ ability to timely and efficiently process UI claims and serve
claimants, especially when state UI programs experienced surges in UI claims.27,28 For
example, in 2016, officials in 1 state that GAO visited explained that their outdated system
continued to present challenges because UI program staff had to check multiple systems
for information on UI claims, which could lead to errors in processing UI claims.
Further, during and after the COVID-19 pandemic, GAO and others, such as DOL and
DOL’s Office of Inspector General, reported on the risks and challenges that outdated IT
systems pose for state UI programs, which have led to reduced program efficiency and
effectiveness, including:29,30
y Inefficient IT system performance when processing high volumes of UI claims,
especially during economic downturns, such as the COVID-19 pandemic.
23 U.S. GAO, 2022b.
24 As of January 2025, GAO indicated that in April 2024, DOL had partially addressed its recommendation to develop and execute an
improvement plan by issuing a comprehensive plan for the nation-wide UI program, outlining action areas and strategies in a variety of areas
including delivering high-quality customer service, ensuring access to UI program benefits and services, and building resilient and responsive
state IT systems. GAO indicated that it would close this recommendation once DOL fully executes the improvement plan by working with states
to complete the outlined actions within the plan.
25 U.S. DOL, 2023.
26 U.S. GAO, 2022b.
27 U.S. GAO, 2022b.
28 As of December 2021, GAO reported that according to the National Association of State Workforce Agencies, 32 of the 53 state UI programs,
including Arizona’s, were still using legacy IT systems to support their UI benefits system, tax system, or both.
29 U.S. GAO, 2022b.
30 U.S. Department of Labor - Office of Inspector General (U.S. DOL). (2021). COVID-19: States struggled to implement Cares Act Unemployment
Insurance programs. Retrieved 2/7/2025 from https://www.oversight.gov/reports/audit/covid-19-states-struggled-implement-cares-act-
unemployment-insurance-programs
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
11
y Slower processing of UI claims and benefit payments.
y Inability to detect and recover improper payments, including fraudulent payments.
Department has undertaken, planned, or initiated various UI Program
modernization efforts with $16.83 million in awarded federal grant monies
Pursuant to GAO’s recommendation for developing and executing an improvement plan, DOL
indicated that developing resilient and responsive IT systems is a critical aspect of transforming
the UI program to improve UI benefits delivery, including ensuring timely UI benefit payments,
promoting access to UI program benefits and services, and enhancing protection against fraud.31
As such, DOL has provided some grant monies and assistance to state UI programs, including
resources, recommended practices, and guidance to assist states with UI modernization efforts.
Specifically, DOL received $1 billion through the American Rescue Plan Act of 2021 (ARPA) to
help improve and modernize the UI program nation-wide by focusing on 3 goals: (1) detecting
and preventing fraud, (2) promoting UI program access, and (3) ensuring timely payment of UI
benefits.32 Pursuant to the allowable uses of these monies, DOL provided a variety of grants to
states or territories administering UI programs for such purposes and as of September 2023,
reported awarding $783 million to state UI programs.
Examples of these grants include:
X Equity grant
In August 2021, DOL notified states of its Equity grant to support activities for promoting
UI program access. According to DOL, some examples of such activities could include
improving claimant communications by using “plain language” in UI program materials;
measuring UI benefits delivery and claimant experience to establish metrics for identifying
groups that may be experiencing access barriers to the UI program and benefits; and
expanding and improving collection of claimant demographic data to assess progress in
improving UI program access.
X Tiger Team grant
In November 2021, DOL notified states of its Tiger Team grant intended to help state UI
programs implement DOL recommendations to support the 3 ARPA goals previously
discussed. As part of this grant program, DOL provided some state UI programs with
a team of experts to assess their UI programs—including UI infrastructure, claims and
payment processes, and IT capabilities—and identify recommendations to address
states’ immediate needs and challenges identified through the assessment. According
to DOL, some recommendation examples could include workflow adjustments, process
improvements, technology updates, or communication revisions.
As of January 2025, DOL had awarded the Department a total of approximately $16.83 million
in ARPA grant monies, including $6.84 million for the Equity grant and approximately $3.7
31 U.S. Department of Labor (U.S. DOL). (2024). Building resilience: A plan for transforming Unemployment Insurance. Retrieved 8/5/2024 from
https://oui.doleta.gov/unemploy/transformation_plan.asp
32 ARPA initially provided DOL with $2 billion; however, the Fiscal Responsibility Act of 2023 reduced this amount to $1 billion.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
12
million for the Tiger Team grant, and the Department has planned, undertaken, or is in process
of implementing several UI Program modernization initiatives resulting from these grants,
including:33
X Developing a new UI Program IT system
As part of the Equity grant award the Department received in August 2022, it is responsible
for and in the process of replacing its outdated IT systems used for administering the UI
Program and developing a new IT system to improve service to claimants and streamline
operations. At the time that the Department applied for the Equity grant award, the
Department’s technological infrastructure for administering the UI Program consisted of
legacy IT systems and programming language more than 30 years old, which according
to Department documentation, has been a major contributor to significant disruptions in
services to claimants and employers, especially during economic downturns such as the
COVID-19 pandemic.
In December 2022, the Department began working with a contractor to develop and
implement its new UI Program IT system. According to the Department’s IT project
documentation, plans for the new UI Program IT system include developing new
functionalities for claimants, including an online portal through which individuals will be
able to file UI claims and submit documentation to the Department. The plans also include
developing new functionalities for Department staff to receive and process initial and
weekly UI claims; determine claimants’ eligibility for UI benefits, including adjudication;
issuing and accounting for UI benefit payments, including overpayments; and supporting
call center functions, such as handling claimant inquiries and making updates related
to claimant accounts. As part of its efforts for developing the new UI Program IT system,
the Department also plans to update language on and translate various claimant
communication notices and UI Program webpages into the top 5 languages spoken in
Arizona and provide claimants with the ability to use mobile devices to file UI claims, view
information such as claim status, and submit documents.
The Department initially planned to implement its new UI Program IT system in October
2024; however, the Department did not meet its planned implementation date and revised
its planned implementation date to September 2025 (see Finding 2, pages 46 and 47, for
more information about the Department’s modernization efforts through the Equity grant
award it received).34
X Performing an assessment of the UI Program to identify existing access barriers
or potential discrimination
As part of the Equity grant award it received, the Department was awarded $400,000
to perform an assessment of the UI Program to identify existing access barriers or
potential discrimination and ensure that any identified deficiencies are resolved through
its UI Program modernization efforts, including incorporating corrective actions into the
33 The remaining monies DOL awarded to the Department were intended to support program integrity and fraud detection, including fraud
prevention and overpayment recovery activities.
34 In March 2025, the Department received approval from DOL to extend the deadline for completing the UI Program modernization initiatives
resulting from the Equity grant award it received to March 2026.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
13
development of its new UI Program IT system.28 See Finding 2, pages 46 and 47, for
information about the Department not yet conducting the required UI Program assessment.
X Enhancing the UI Program’s existing workload management system
As part of the Tiger Team grant award it received, the Department began making changes
to its workload management system in early 2023 in an attempt to work through a backlog
of UI claims requiring adjudication and to help ensure more timely UI benefit payments.
These changes included processes for reducing the amount of time that UI claims with
active issues wait for adjudication by distributing issue-adjudication work evenly across
staff and prioritizing adjudication based on claim age date and available staff, and
reviewing the UI Program’s outstanding workload for adjudicating claims—including
completion rates and claim age data—to better facilitate its workload analysis and
subsequent allocation of staff.
X Enhancing the UI Program’s UI call-routing system
The UI Program operates a UI call center to provide information regarding benefit eligibility,
status of claims, and adjudication for eligibility issues on active claims (see Finding 1,
page 21, for more information about the UI call center). As part of the Tiger Team grant
award it received, the Department began making changes to the UI Program’s call-routing
system for the UI call center in January 2024 to help alleviate the impacts of and reduce
caller wait times and improve its ability to assist more callers (see Finding 1, pages 40
through 42, for more information about the Department’s changes to its call-routing system).
UI Program organization and staffing
The Department’s Division of Employment and Rehabilitation Services administers the UI
Program through its Unemployment Insurance Administration with assistance from other
supporting units within the division, such as the Quality Assurance and Integrity Administration.
According to the Department, as of February 2025, the Unemployment Insurance Administration
and Quality Assurance and Integrity Administration had a total of 403 full-time equivalent positions
(FTEs) and 25 vacancies and had the following UI Program responsibilities:
X Unemployment Insurance Administration (289 FTE, 18 vacancies)
Responsible for administering the UI Program and is classified into the following units:
y Benefits staff (196 FTE, 1 vacancy)
Responsible for processing initial and weekly UI benefit claims, including adjudicating
issues to determine if a claimant is eligible for first/ongoing benefit payments.
Several benefits staff teams carry out these responsibilities, including:
Z General inquiry staff (13 FTEs, 0 vacancies)
Responsible for answering inbound general inquiry calls to the UI call center
and providing general information and assistance to callers, which may include
claimants, employers, and members of the public.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
14
Z Adjudicators (107 FTEs, 0 vacancies)
Responsible for adjudicating eligibility issues and issuing claimant eligibility
determinations timely (see Finding 1, page 22, for more information about timely
eligibility determinations), including answering inbound adjudication calls to the
UI call center. Specifically, as of February 2025, 20 of the 107 adjudicators answer
inbound adjudication calls.
Z UI Client Advocate staff (9 FTEs, 0 vacancies)
Responsible for receiving and responding to complaints and concerns regarding UI
claims and customer service from a variety of sources, such as the Department’s
Office of the Ombudsman, DOL, State legislators, and UI claimants. See Finding 1,
page 36, for more information about UI Client Advocate complaints.
Z Special projects and other benefits staff (67 FTEs, 1 vacancy)
Responsible for managing and overseeing UI call center staff, adjudicators, UI
Client Advocate staff, and other teams that are responsible for carrying out various
UI Program specialty tasks. For example, this includes reviewing and processing
employer-provided information to determine an employer’s liability for a claimant’s
UI benefits; reviewing and carrying out appeal determinations; manually processing
paper claims for UI benefits and completing identity verifications; managing billing
for UI claims that involve multiple and/or out-of-State or federal employers; and
managing claims through its Shared Work program.35 See textbox in Questions and
Answers, page 58, for more information about an employer’s accountability for a
claimant’s UI benefits.
y Tax staff (88 FTEs, 17 vacancies)
Responsible for determining employer tax liability, collecting State UI tax payments
and wage information from employers, auditing employers for compliance, processing
employer appeals of UI tax liabilities, and preventing and detecting UI tax fraud.
y Administrative staff (5 FTEs, 0 vacancies)
Responsible for providing administrative support and supervision to benefits and tax
staff.
X Quality Assurance and Integrity Administration (114 FTE, 7 vacancies)
Responsible for assessing the timeliness and accuracy of UI claims and reducing
fraudulent and improper UI benefit payments, including establishing overpayments,
verifying wage and new hire information from employers and cross-matching information
with active UI claims, and auditing UI claims and claim decisions for accuracy.36
35 The Department’s Shared Work program allows employers faced with a reduction in workforce to divide available work among affected
employees in lieu of layoffs and provides a portion of UI benefits to affected employees working reduced hours.
36 The Department conducts new hire and wage cross matches to determine if a claimant has returned to work and earned wages to determine if
a claimant is eligible to continue receiving benefits. See Questions & Answers, Question 9, pages 75 through 77, for more information about the
Department’s processes to identify and/or prevent improper UI benefit payments.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
15
The Quality Assurance and Integrity Administration carries out these responsibilities
through a variety of units, such as:
y Benefit Payment Control (65 FTEs, 5 vacancies)
Responsible for establishing and notifying claimants of UI benefit overpayments
and, if necessary, waiving UI benefit overpayments. This unit is also responsible for
processing overpayment waivers and appeals (see Questions and Answers, Questions
4 through 7, pages 61 through 72, for more information about overpayments, waivers,
and appeals).
y Benefit Accuracy Measurement (10 FTEs, 0 vacancies)
Responsible for conducting audits of paid and denied UI claims, in accordance with
DOL requirements, to validate compliance with federal and State laws, and determine
the accuracy of paid and denied claims. These audits may include identifying errors
in claims processes, improper payments, and strategies to prevent future errors (see
Questions and Answers, Question 8, pages 73 and 74, for more information about the
Department’s Benefit Accuracy Measurement program).
y Benefit Timeliness and Quality (4 FTEs, 1 vacancy)
Responsible for assessing the timeliness and accuracy of nonmonetary determinations
issued by the UI Program.
y Other quality assurance staff (35 FTEs, 1 vacancy)
Responsible for assessing and increasing the accuracy of work performed within other
Division of Employment and Rehabilitation Services programs, such as Workforce
Innovation and Opportunity Act programs (see Appendix A, page a-1, for more
information about the Workforce Innovation and Opportunity Act).
UI Program revenues and expenditures
Unemployment Compensation Fund revenues and expenditures
As previously discussed on page 5, the Department is responsible for administering the State’s
Unemployment Compensation Fund (Fund). As shown in Table 1, pages 17 and 18, in most
years, Fund revenues primarily consist of employer UI tax contributions and reimbursements.
However, in fiscal years 2020 through 2022, the Fund received a significant increase in
intergovernmental revenues from federal grant monies related to the COVID-19 pandemic with
its biggest increase in fiscal year 2021 when intergovernmental revenues totaled approximately
$8 billion. After the federal pandemic grant programs expired, the Fund’s total fiscal year 2023
revenues decreased to approximately $544 million, an amount that was similar to the total annual
revenue amounts it received prior to the pandemic.
The majority of the Fund’s expenditures consist of UI benefit payments to claimants. In fiscal
years 2020 through 2022, Fund expenditures increased significantly to pay for COVID-19 UI
benefit payments, totaling more than $8.5 billion in fiscal year 2021. By fiscal year 2023, Fund
expenditures decreased to approximately $373 million, a level moderately higher than its annual
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
16
expenditures prior to the COVID-19 pandemic. The Fund’s fiscal year 2023 year-end balance
was nearly $1.6 billion and was restricted to pay UI benefits. However, as reported in the State
of Arizona fiscal year 2023 annual comprehensive financial report and the single audit report,
the Department did not maintain accurate records to support Fund cash balances reported in
the State’s financial statements, which would impact its available Fund balance, resulting in
a qualified financial statement opinion (see Questions and Answers, Question 6, page 69, for
additional information about recovered overpayments and/or fraudulent payments of federal UI
monies owed to the federal government).37
37 Arizona Department of Administration (ADOA). State of Arizona—Annual comprehensive financial report, year ended June 30, 2023; Arizona
Auditor General report State of Arizona—Single audit report: Auditors’ section, year ended June 30, 2023.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
17
Table 1
Schedule of revenues, expenditures, and changes in Unemployment Compensation Fund
balances, and number of initial claims filed1
Fiscal years 2017 through 2023
(Expressed in thousands)
2017
(Actual)
2018
(Actual)
2019
(Actual)
2020
(Actual)
2021
(Actual)
2022
(Actual)
2023
(Actual)
Beginning fund balance
$391,445
$626,344
$901,031 $1,114,746
$153,126
$249,908 $1,421,986
Revenues
Employer UI tax contributions
and reimbursements
$495,927
$504,764
$421,477
$377,370
$553,435
$418,288
$377,944
Intergovernmental2
4,451
4,185
2,501
4,518,688
7,982,053
1,216,756
136,507
Fines, forfeitures, and penalties
1,895
1,880
2,260
2,081
2,063
2,491
2,379
Investment income
8,369
14,201
21,932
26,326
5,540
19,770
26,745
Other revenues3
376
696
826
9,606
72,321
1,229
-
Transfers from General Fund4
-
-
-
-
-
62,000
-
Total revenues
and transfers in
$511,018
$525,726
$448,996 $4,934,071 $8,615,412
$1,720,534
$543,575
Expenditures and transfers
Expenditures
Unemployment
compensation benefits5
271,519
246,318
230,259
5,889,387
8,513,303
542,802
368,501
Other
23
30
-
-
28
-
92
Total expenditures
$271,542
$246,348
$230,259 $5,889,387 $8,513,331
$542,802
$368,593
Transfers
Transfers to other funds6
4,577
4,691
5,022
6,304
5,299
5,654
4,780
Total transfers out
$4,577
$4,691
$5,022
$6,304
$5,299
$5,654
$4,780
Total expenditures
and transfers out
$276,119
$251,039
$235,281 $5,895,691 $8,518,630
$548,456
$373,373
Ending fund balance7
$626,344
$901,031 $1,114,746
$153,126
$249,908
$1,421,986 $1,592,188
Net change in fund balance
+$234,899 +$274,687 +$213,715
-$961,620
+$96,782 +$1,172,078 +$170,202
(Difference between revenues and transfers in and expenditures and transfers out)
Number of initial
unemployment claims filed8
223,084
214,590
197,855
873,422
443,841
150,330
171,252
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
18
1 The Department’s Unemployment Compensation Fund does not include the costs for administering the program. See Table 2, page 20, for
more information about the Department’s UI Program administrative costs.
2 Intergovernmental revenues are monies received from federal grant programs, including expanded federal programs established in response to
the COVID-19 pandemic. The significant increase in intergovernmental revenues in fiscal years 2020 through 2023 can be attributed to
increased revenues from federal grant monies for providing economic relief to individuals who were unable to work because of the COVID-19
pandemic, including individuals who historically were not eligible for regular UI benefits such as self-employed and gig workers. These
programs were in effect for weeks of unemployment beginning on or after January 27, 2020, and ending on or before September 6, 2021.
3 Prior to fiscal year 2023, other revenues included contributions and reimbursements for federal employees, ex-service members, and extended
benefit UI Programs; however, these amounts were not reported in this line item in fiscal year 2023. Additionally, in fiscal year 2020, the other
revenues included $9.57 million in emergency supplemental monies in response to the COVID-19 pandemic as part of the Emergency
Unemployment Insurance Stabilization Access Act of 2020. Further, in fiscal year 2021, other revenues included adjustments totaling
approximately $72 million, which primarily consisted of Coronavirus Relief Fund monies from the Governor’s Office for UI Program costs related
to the COVID-19 public health emergency.
4 Transfers from the General Fund included a one-time supplemental appropriation of $62 million in fiscal year 2021, as required by Laws 2021,
Ch. 408, §104.
5 In fiscal years 2020 through 2023, the Fund had an increase in unemployment compensation benefit expenditures because of COVID-19-related
UI benefit programs. Specifically, according to the State of Arizona single audit reports, benefits included COVID-19 related benefits totaling
approximately $5.1 billion in fiscal year 2020, $6.5 billion in fiscal year 2021, $385.3 million in fiscal year 2022, and $100.5 million in fiscal year
2023.
6 Transfers to other funds primarily include UI Program-related interest and penalties transferred to the Department’s Special Administrative Fund,
as required by A.R.S. §23-705, as well as fee revenues. In fiscal year 2020, transfers to other funds included a $2 million transfer to the
Department’s Grant Fund. Specifically, these were Reed Act monies, which are occasional distributions from the federally managed UI trust
fund to states to pay for the costs to administer UI programs.
7 The Fund’s balance is restricted for paying unemployment compensation benefits. However, as reported in the State of Arizona fiscal year 2023
annual comprehensive financial report and the single audit report, the Department did not maintain accurate records to support Fund cash
balances reported in the State’s financial statements, which could impact its available Fund balance, resulting in a qualified opinion. See
Arizona Auditor General report State of Arizona—Single audit report: Auditors’ section, year ended June 30, 2023, for additional information
about this finding and recommendations to the Department.
8 The number of initial unemployment claims filed are unaudited and were obtained from the statistical section of the fiscal years 2022 and 2023
State of Arizona annual comprehensive financial reports. According to the reports, the number of unemployment claims increased significantly
in fiscal year 2020 as a direct result of the COVID-19 pandemic’s effect on the economy and employment.
Source: Auditor General staff review of the State of Arizona annual comprehensive financial reports for fiscal years 2017 through 2023, Laws 2021,
Ch. 408, and Department documents.
Table 1 continued
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
19
UI Program administrative expenditures
Additionally, the Department receives monies from DOL to pay for administrative costs
for operating the UI Program, and these monies are not included in the Unemployment
Compensation Fund shown in Table 1. Specifically, the Department and other states request
administrative funding from DOL by annually completing a required DOL-provided resource
justification model—a data-collection system consisting of 2 spreadsheets that helps states
compile information about their administrative costs, such as personal services and benefits, and
projected expenses for 2 fiscal years.38 DOL uses this resource justification model to annually
allocate monies appropriated by Congress to the states to pay for UI program administrative
costs. However, as shown in Table 2 on page 20, in fiscal years 2021 through 2023, the amount
allocated by DOL to the Department to pay for its administrative expenditures was always less
than what the Department requested and less than its actual administrative costs.
For example, in fiscal year 2023, the Department:
X Requested approximately $44.9 million to pay for UI Program administrative costs.
X Received approximately $35.5 million from DOL to pay for UI Program administrative
costs, which was approximately $9.4 million less than it requested.
X Expended approximately $42.3 million on UI Program administrative costs, which
was approximately $6.8 million more than it received from DOL to pay for UI Program
administrative costs.
When the Department’s UI Program administrative expenditures exceed the amounts allocated
by DOL, the Department must either reduce its administrative costs and/or identify alternative
funding sources, such as appropriations from the State General Fund.
38 States submit their data to DOL no later than the last Friday in January for the federal fiscal year beginning October 1 of the same year to allow
sufficient time for review.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
20
2021
2022
2023
Requested costs
Department’s requested administrative costs
$36,074
$43,421
$44,861
Actual allocation and costs
Amount allocated by DOL for administrative costs
30,949
33,435
35,544
Department’s actual administrative costs1
54,172
49,955
42,334
Amount Department spent in excess
of amount allocated by DOL
$(23,223)
$(16,520)
$(6,790)
Table 2
Department’s administrative costs exceeded the amounts DOL allocated to pay
for its administrative costs
Fiscal years 2021 through 2023
(Expressed in thousands)
1 The Department’s actual UI Program administrative costs were obtained from the “State section” of the Arizona Auditor General State of
Arizona—Single audit reports for fiscal years 2021 through 2023, which do not include the specific funding source for any additional monies the
Department used to pay for its administrative costs. The State section includes agencies’ information that was compiled by the Arizona
Department of Administration.
Source: Arizona Auditor General staff review of Department documentation related to administrative costs; U.S. Department of Labor (U.S. DOL).
(2020a). Corrected attachments I and II to Unemployment Insurance program letter (UIPL) 2-21. (Unemployment Insurance Program Letter No.
2-21, Change 1). Retrieved 3/27/2025 from https://www.dol.gov/agencies/eta/advisories/unemployment-insurance-program-letter-no-02-21-
change-1; U.S. Department of Labor (U.S. DOL). (2022a). Revised and final fiscal year 2022 state workforce agency Unemployment Insurance
resource planning targets and guidelines. (Unemployment Insurance Program Letter No. 25-21, Change 1). Retrieved 3/27/2025 from https://www.
dol.gov/agencies/eta/advisories/unemployment-insurance-program-letter-no-25-21-change-1; U.S. Department of Labor (U.S. DOL). (2022b).
Fiscal year 2023 state workforce agency Unemployment Insurance resource planning targets and guidelines. (Unemployment Insurance Program
Letter No. 18-22). Retrieved 3/31/2025 from https://www.dol.gov/agencies/eta/advisories/uipl-no18-22; and State section from the Arizona Auditor
General State of Arizona—Single audit reports for fiscal years 2021 through 2023.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
21
FINDING 1
Department provided quality customer service to some
UI claimants, but service quality, accuracy, and timeliness
problems exist, potentially causing claimant hardships and
frustration and increasing staff workload
Department responsible for providing customer service to claimants who
inquire about general UI Program information, claim and benefit eligibility
issues, overpayments, and other questions and concerns
Department is responsible for providing UI Program customer service and does so
primarily through call centers and its website
As discussed in the Introduction, page 8, the Department is responsible for providing UI Program
customer service to claimants. When Arizona UI claimants have questions about UI Program
eligibility, active claims, benefits, overpayments, and other concerns, they have 2 primary places
to obtain information and assistance from the Department:
X Department call centers
The Department operates call centers for its programs and services. Claimants primarily
use 2 call centers to receive information about the UI Program as follows:
y UI call center
This call center provides assistance specifically related to the UI Program and operates
2 queues—a general inquiry queue to provide information regarding UI benefit
eligibility, status of claims, and other general information about the UI Program, and
an inbound adjudication queue (hereinafter referred to as the adjudication queue)
to provide information and service related to eligibility issues on active claims.1 In
calendar year 2023, the UI call center received 3,225 calls per day on average.2
y Benefit Payment Control (BPC) call center
This call center provides information regarding overpayments, assistance with
submitting waiver and appeal requests, and status information for overpayment
waiver and appeal requests. The BPC call center operates 2 queues to provide this
information—an overpayments queue for inquiries or questions pertaining to the UI
Program and a PUA queue for matters pertaining specifically to the PUA program (see
1 Adjudication calls help resolve eligibility issues on a claim and may involve interviewing the claimant and/or claimant’s previous employer to
collect information to determine if a claimant is eligible to receive or continue receiving UI benefits (see Questions and Answers, Question 3,
pages 60 and 61, for more information about eligibility issues and the Department’s process for resolving them).
2 The Department’s call center system tracks the total number of calls the UI and BPC call centers handle. However, the population of calls used
to calculate the daily average number of calls received is not specific to unique callers because an individual could make multiple calls to the
call center in 1 day (see page 34 for more information about individuals making multiple calls on the same day).
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
22
Introduction, page 1, for more information on the PUA program). In calendar year 2023,
the BPC call center received 95 calls per day on average.2
X Department website
The Department’s website provides public information about various aspects of the UI
Program, including an overview of the UI Program, an explanation of UI Program eligibility
requirements, answers to frequently asked questions, general UI Program guidance, and
instructional materials and information for applying for UI benefits, completing identify
verification, filing an appeal, or contacting the UI Program. The UI Program’s website also
directs users to an online, self-service UI claim portal where individuals can file initial,
weekly, and additional UI claims, check their claim status, or reopen claims. The website
can be accessed from wherever the internet is accessible, such as through internet-
connected personal computers and mobile phones and at public libraries and Arizona@
Work offices. As discussed in the Introduction, page 2, footnote 7, Arizona@Work offices
provide no-cost access to computers and telephones; however, they do not provide any
in-person customer service related to individual claims or overpayments.
Claimants may contact the Department for various inquiries and questions that can
impact their timely receipt of UI benefits
DOL indicates that most calls and inquiries to state UI agencies are from claimants seeking UI
benefit application or payment status updates, and Department adjudication-timeliness data
from calendar year 2023 indicated that many claimants may have questions or concerns about
their application status. Specifically, as discussed in the Introduction, page 3, the Department is
responsible for timely adjudicating eligibility issues.
However, according to Department data, in calendar year 2023, the Department:
X Did not timely adjudicate 73,460 of more than 91,000, or approximately 81%, of initial claim
issues.3
X Did not timely adjudicate 11,335 of more than 34,000, or approximately 33%, of
weekly claim issues (see Finding 2, pages 50 through 56, for more information and
recommendations we made to the Department related to untimely adjudication of eligibility
issues).4
DOL also indicates that effective customer service is necessary for ensuring that UI claimants
do not experience delays in receiving UI benefit payments. For example, if individuals who
have become unemployed have questions about applying for UI benefits, obtaining timely and
accurate information about the application process can help them accurately and completely
apply for and receive more timely UI benefits. In addition, both claimants and employers
may need to contact the UI Program’s adjudication staff through the UI call center to provide
information to help resolve eligibility issues, and their ability to timely do so can help reduce
delayed payments to claimants.
3 DOL and Department policy require the UI Program to adjudicate initial claim eligibility issues within 21 days of identifying the issue.
4 Department policy requires the UI Program to adjudicate weekly claim-eligibility issues no later than the Thursday of the week following the
Department’s detection of the eligibility issue.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
23
Finally, as discussed in the Introduction, pages 4 and 5, the Department is responsible for
determining if the UI Program has made any overpayments of UI benefits—which can occur when
a claimant has already received benefits and the Department later determines that the claimant
was not entitled to/eligible for the UI benefits—and subsequently may waive some overpayments
(see Questions and Answers, Question 4, pages 61 through 65, for additional information about
overpayments and Question 5, pages 65 and 66, for additional information about overpayment
waivers). In calendar year 2023, the Department identified more than 9,600 and 143,000
claimants with overpayments for both UI Program and PUA program benefits, respectively;
consequently many claimants may have questions or concerns about overpayments and
overpayment waivers (see Introduction, page 1, for more information about the PUA program).
Department provided some UI claimants with quality phone customer
service, but customer service quality problems exist, including inaccurate
and potentially misleading information provided, most calls not answered,
and long call wait times
We reviewed the Department’s provision of UI Program customer service in calendar year 2023
and found that although Department call center staff provided some individuals with quality
phone call customer service and accurate information, the Department’s provision of timely and
quality customer service was inconsistent, including some individuals receiving inaccurate or
potentially misleading information, most call center calls going unanswered, and other callers
waiting long periods of time to have their calls answered.5
UI call center staff generally provided quality phone customer service for reviewed calls
but did not answer most calls and did not return some calls
Our review of a sample of UI call center calls and analysis of Department-reported metrics on
wait time and unanswered calls identified instances where UI call center staff provided quality
customer service as well as areas where the UI call center could improve its customer service
provision as follows:
X UI call center staff were professional and courteous, and provided accurate
information for most calls we reviewed, but for some calls, staff could have done
more to resolve callers’ issues
Our review of a sample of 61 calendar year 2023 calls—consisting of 43 general inquiry
and 18 adjudication calls—found that UI call center staff followed UI Program customer
service procedures for 40 of the calls (see textbox, page 24, for examples of UI Program
customer service procedures).6,7
5 To assess the Department’s provision of UI Program customer service in calendar year 2023, we reviewed customer service provided by both
the UI and BPC call centers and information provided by the Department on its website and other materials.
6 We reviewed a stratified sample of 61 calls—43 general inquiry and 18 adjudication—of approximately 214,349 recorded phone calls that staff
handled through the UI call center in calendar year 2023. This review included a random sample of 50 calls—35 general inquiry and 15
adjudication—and a judgmental sample of 11 calls—8 general inquiry and 3 adjudication—which were associated with the sample of 50. Our
judgmental sample of 11 calls included all instances in which callers had called in multiple times on the same day because this could be an
indication that the caller’s questions or concerns were not being fully addressed or resolved within the first interaction (see Appendix B, page
b-1, for additional information about how we selected this sample).
7 Because of how the Department’s call center system tracks calls, the population figures we report in footnote 6, for general inquiry and
adjudication calls in calendar year 2023 are approximate (see Appendix B, page b-1, for additional information about how we identified these
population figures).
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
24
Specifically, in these 40 calls, UI call center staff:
y Provided accurate information and assistance.
y Stayed positive and professional.
y Acknowledged callers’ questions or problems.
y Worked to de-escalate situations where callers were upset or confrontational.
y Remained patient and assured callers that they heard their concerns.
y Provided UI Program education and alternative solutions to address callers’ concerns.
For example:
y In 1 call we reviewed, UI call center staff provided quality customer service to an upset
caller who expressed frustration regarding her prior attempts to determine whether
the Department had received documentation she had submitted for her PUA claim.
Specifically, the staff member stayed positive and professional, provided accurate
information, and took steps to address the caller’s concerns by reviewing the caller’s
claim, confirming that the UI Program had received the documentation the caller
submitted for her PUA claim, and elevating the caller’s claim to a supervisor.
Examples of UI Program customer service procedures
X Provide name and unique staff identification number when greeting callers.
X Verify claimant information, including name, Social Security number, current address
and phone number, last employer, and date of birth.
X Keep conversation positive and professional.
X Listen to callers and do not interrupt.
X Be patient and acknowledge callers’ statements.
X Adapt communication style to callers.
X Educate the caller.
X Avoid personal opinions or being argumentative.
X Thank caller for calling and ask if you can provide additional assistance.
Source: Auditor General staff review of the Department’s UI call center procedures.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
25
y In another call we reviewed, UI call center staff provided quality customer service
by educating a confused caller who had called in because she had not yet received
UI benefits. Specifically, the caller was unaware of and expressed confusion over
basic UI Program requirements, including needing to file weekly claims to certify her
continued eligibility for receiving UI benefits, which she had not been submitting. The
caller was also unaware that she had 2 active issues that needed to be adjudicated
before she would be eligible to receive UI benefits. The staff member explained
these requirements to the caller and provided detailed instructions for completing
and submitting weekly claims on the Department’s website. The staff member also
informed the caller that she was at risk of being disqualified because she had already
missed 2 weeks of filing weekly claims and that her 2 active issues could not be
adjudicated until she submitted a weekly claim and other required documentation.
However, as shown in Table 3, page 27, for the remaining 21 of 61 calls we reviewed,
we identified 1 or more areas in which UI call center staff did not follow all UI Program
customer service procedures and thus did not provide sufficient customer service to help
resolve the callers’ questions or concerns as follows:
y In 6 of 61 calls, UI call center staff provided some inaccurate information.8 For
example, in 1 call we reviewed, before transferring a claimant to the adjudication
queue, the general inquiry staff member provided inaccurate and irrelevant information
that left the claimant distressed and concerned that they were ineligible for UI benefits.
Only after waiting in the adjudication queue for another 30 minutes was the claimant
informed by the adjudicator that the information the general inquiry staff member gave
was not relevant to the claimant’s eligibility to receive UI benefits.
y In 3 of 61 calls, UI call center staff did not follow UI Program customer service
procedures for educating the caller (see textbox, page 26, for an example).
y In 6 of 61 calls, UI call center staff did not follow UI Program procedures for providing
professional and courteous service (see textbox, page 26, for an example).9
y In 2 of 61 calls, UI call center staff did not acknowledge and address all questions and/
or concerns that the caller raised (see textbox, page 26, for an example).
y In 4 of 61 calls, UI call center staff did not fully verify the claimant’s identity prior to
providing the caller with information, a critical call-handling step for ensuring the
confidentiality of UI claim information.10,11 Specifically, UI call center staff did not verify
8 All 6 calls in which UI call center staff provided some inaccurate information were general inquiry calls. We found that UI call center staff
provided accurate information in all 18 adjudication calls we reviewed.
9 The 6 calls in which UI call center staff did not follow UI Program procedures for providing professional and courteous service consisted of 4
general inquiry calls and 2 adjudication calls.
10 Federal and State law prohibit the Department from disclosing UI claim information to spouses, relatives, friends, and other parties; as such, it is
critical for the Department to identify the caller prior to providing any information.
11 The 4 calls in which UI call center staff did not follow UI Program procedures for verifying the claimant’s identity consisted of 2 general inquiry
calls and 2 adjudication calls.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
26
1 or more of the 5 items of claimant-identifying information required by UI Program
customer service procedures.
y In 7 of 61 calls, UI call center staff did not provide their unique staff identification
number when greeting callers as required by UI Program customer service
procedures.12 This information allows callers to identify who they previously spoke with
if they make a subsequent call to the Department.
We reviewed all 21 calls identified in Table 3 with UI call center supervisors who agreed
with our conclusions that staff did not follow UI Program customer service procedures and
thus could have done more to address callers’ questions or concerns.
12 The 7 calls in which UI call center staff did not follow UI Program procedures for providing their unique staff identification number when greeting
callers consisted of 3 general inquiry calls and 4 adjudication calls.
Some calls we reviewed had multiple customer service quality issues
As shown in Table 3, call 1 (see page 27), UI call center staff did not use a courteous and
professional manner and tone, address all identified questions, or provide sufficient context
or education to the caller. Specifically, the claimant needed to provide information about
his eligibility by completing and submitting a fact-finding questionnaire to the Department
(see Questions and Answers, Question 3, pages 60 and 61, for more information about
the Department’s fact-finding process to determine a claimant’s eligibility). However, the
staff member did not provide information about the next steps in the process, such as time
frames, or explain the reasons why the claimant needed to perform additional actions.
Additionally, when the claimant continued to express confusion about the purpose of
the questionnaire, the staff member used a rude tone and did not attempt to modify his
instructions or communication style. Eventually, the claimant disconnected the call without
receiving additional information.
Source: Auditor General staff analysis of 1 Department UI call center recorded phone call from calendar year 2023 that had deficiencies
related to UI Program customer service procedures (see footnote 6, page 23, for information about the sample of recorded calls reviewed).
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
27
Call
Employee
provided
accurate
information
to caller
Employee
educated
caller and
provided
context
Employee
displayed
courteous &
professional
manner
Employee
addressed
all of
caller’s
questions
Employee
fully
verified
caller’s
identity
Employee
used
required
greeting at
beginning
of call
1
check
x
x
x
check
check
2
x
check
x
x
check
check
3
x
x
check
check
check
check
4
check
check
check
check
x
x
5
check
x
x
check
check
check
6
check
check
check
check
x
check
7
check
check
check
check
check
x
8
check
check
check
check
check
x
9
check
check
check
check
x
check
10
check
check
check
check
check
x
11
check
check
check
check
check
x
12
check
check
x
check
check
check
13
check
check
check
check
check
x
14
check
check
check
check
check
x
15
x
check
check
check
check
check
16
check
check
check
check
x
check
17
x
check
check
check
check
check
18
check
check
x
check
check
check
19
x
check
check
check
check
check
20
x
check
check
check
check
check
21
check
check
x
check
check
check
Total
calls with
deficiencies
6
3
6
2
4
7
Table 3
UI call center staff did not follow UI Program customer service procedures for 21
calls we reviewed
Source: Auditor General staff analysis of 21 Department UI call center recorded phone calls from calendar year 2023 that had 1 or more deficiencies
related to UI Program customer service procedures (see footnote 6, page 23, for information about the sample of recorded calls reviewed).
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
28
X UI call center staff did not answer most calls received, and many callers
experienced long wait times in calendar year 2023
According to DOL, long wait times and unanswered calls indicate that a call center may be
operating inefficiently, and DOL recommends that state UI agencies reduce wait times and
unanswered calls to improve customer service.
However, our review and analysis of calendar year 2023 UI call center metrics found:
y The UI call center answered an average of only 817 of 3,225 calls it received per day,
or 25%.
y Many callers to the UI call center experienced long wait times. Specifically, as shown
in Table 4, the maximum daily wait time for the UI call center’s general inquiry queue
was between 1 and 2 hours for 48% of the days it received calls during the year, and
the maximum daily wait time for the adjudication queue was between 1 and 3 or more
hours for 65% of the days it received calls during the year.
Additionally, our review of 61
calendar year 2023 UI call
center calls found that for
18 calls, callers experienced
longer wait times because
they were transferred from the
general inquiry queue to the
adjudication queue to resolve
their questions and concerns,
requiring additional wait time to
speak with an adjudicator after
already waiting to speak with
a general inquiry staff member
(see footnote 6, page 23, for
information about the sample of
UI call center calls we reviewed).
For example, 1 claimant waited in
the general inquiry queue before
being transferred and then also
waited in the adjudication queue.
However, upon reaching an
adjudicator, the call disconnected
midconversation and the claimant
then repeated the process,
waiting in both the general
inquiry and adjudication queues
a second time to reach another
adjudicator, bringing his total wait
time across the 2 phone calls to
approximately 90 minutes.
1 Although the UI Program tracks some data on caller wait times, such as
the maximum wait time and the average wait time for callers to reach
Department staff, it did not have a metric for how often or how many
callers experienced long call wait times. See Finding 2, page 51, and
recommendation 19, page 55, for more information about our review of
the UI call center’s data; see footnote 32, page 40, for more information
on the UI Program tracking average wait times for callers to reach
Department staff.
Source: Auditor General staff review of UI call center metrics for general
inquiry and adjudication phone calls in calendar year 2023.
Percentage of days that
maximum wait time fell within
the indicated ranges1
General
inquiry queue
Adjudication
queue
1 hour or less
0-1 hour
52%
35%
Subtotal
52%
35%
1+ hours
1-2 hours
48%
38%
2-3 hours
0%
20%
3+ hours
0%
7%
Subtotal
48%
65%
Table 4
Many callers to UI call center experienced
wait times in excess of 1 hour during
calendar year 2023
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
29
X UI call center staff did not perform callbacks when calls disconnected or when
requested by callers after speaking directly to UI call center staff
Finally, we found that for 6 of 61 calendar year 2023 UI call center calls we reviewed, call
center staff did not follow the Department’s unwritten expectation to attempt to reconnect
with callers when the call either disconnected midconversation or the caller requested a
callback for additional assistance or followup after speaking directly with UI call center
staff (see footnote 6, page 23, for information about the sample of UI call center calls
we reviewed). Specifically, despite confirming the caller’s current phone number at the
beginning of each call, UI call center staff did not perform callbacks for any of these 6
calls.
BPC call center staff did not provide accurate or available information or sufficient
education, were unprofessional during some calls, and did not return some calls we
reviewed
Our review of a sample of BPC call center calls identified several areas where BPC call center
staff could improve its customer service, as follows:
X BPC call center staff did not always provide callers with accurate information, did
not always use a professional manner or tone, and in some cases, did not educate
callers or provide context
Our review of 19 calendar year 2023 BPC call center calls found that staff did not always
provide quality customer service for 15 of the calls as shown in Table 5, page 31.13,14
Specifically:
y In 6 of 19 calls, BPC call center staff did not provide callers with accurate or available
information about their benefit overpayments. For example, in 2 calls, the same BPC
staff member directed the claimants to call the UI call center’s adjudication queue
instead of providing information about the claimants’ cases that the staff member
could access. In another call, the BPC staff member failed to explain to the claimant
that their overpayment had been classified as fraud and that before the caller could
submit a request to have the overpayment waived, the claimant would first need to file
an appeal to have the overpayment reclassified as an administrative overpayment.15
13 We reviewed a sample of 19 calls—11 overpayments and 8 PUA—of 10,732 recorded phone calls with a call duration of 2 minutes or longer
that staff answered through the BPC call center in calendar year 2023. This review included a stratified random sample of 14 calls—8
overpayments and 6 PUA—and a judgmental sample of 5 calls—3 overpayments and 2 PUA—that we selected because the caller had called in
multiple times on the same day, as this could be an indication that the caller’s questions or concerns were not being fully addressed or resolved
within the first interaction (see Appendix B, pages b-1 and b-2, for additional information about how we selected this sample).
14 Prior to October 2023, the BPC call center did not have written procedures for handling inbound calls, including customer service requirements.
However, to assess the quality of customer service that BPC call center staff provided, we evaluated the BPC calls using BPC call-handling
procedures established in October 2023 and the UI Program customer service procedures as shown in the textbox on page 24, despite these
procedures not being applicable to the BPC call center for most of the period we reviewed. See pages 38 and 39 for more information on BPC’s
lack of call-handling procedures outlining customer service requirements for call center staff and how it contributed to the customer service
quality issues we identified in 15 of the 19 BPC calls we reviewed.
15 As discussed in the Introduction, pages 4 and 5, administrative overpayments are the only type of overpayments that are eligible for a waiver of
repayment. Nonfraud and fraud overpayments would need to be reclassified as administrative overpayments to be eligible for a repayment
waiver, which can be done by filing an appeal of the determination. See Questions and Answers, Question 5, pages 65 and 66, for more
information about overpayment waivers and Question 7, pages 69 through 72, for more information about appealing determinations.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
30
y For 9 of 19 calls, BPC call center staff did not provide sufficient education to ensure
that callers understood the information provided. In several calls, callers had to ask
clarifying questions at multiple points throughout the calls and did not always receive
comprehensive information from BPC call center staff to resolve their questions and
concerns. For example, in 1 call we reviewed, the BPC staff member instructed the
claimant to appeal his nonfraud PUA overpayment but did not provide additional
context about the claimant’s overpayment or why the appeal was necessary. Further,
rather than answering the claimant’s questions, the BPC staff member directed the
claimant to review his overpayment determination letter several times, despite the
claimant stating that he did not have access to the overpayment determination letter.
y In 6 of 19 calls, BPC call center staff did not use a professional manner or tone when
interacting with callers. For example, in 1 call, the BPC staff member did not provide
an opportunity for the claimant to share their concerns and spoke over the claimant
multiple times, including while attempting to obtain the claimant’s Social Security
number, which took multiple attempts due to the staff member’s interruptions.
y In 6 of 19 calls, BPC staff did not acknowledge or address all questions and/or
concerns that the caller raised (see Call 1 in textbox, page 35, for an example).
y In 5 of 19 calls, BPC staff did not fully verify the caller’s identify prior to providing the
caller with information. As previously mentioned on pages 25 and 26, UI Program
customer service procedures require this critical call-handling step to ensure the
confidentiality of UI claim information.
y In 12 of 19 calls, BPC call center staff did not provide their name and unique staff
identification number when greeting callers. As previously mentioned on page 26, this
information allows callers to identify who they previously spoke with if they make a
subsequent call to the Department.
We reviewed the 15 calls in Table 5 with BPC supervisors who agreed with our conclusions
that staff did not provide quality customer service and could have done more to address
callers’ questions or concerns.
X BPC call center staff did not perform callbacks when calls disconnected or when
requested by callers after speaking directly to BPC call center staff
Finally, we found that for 2 of 19 calendar year 2023 BPC call center calls we reviewed,
staff did not follow the Department’s unwritten expectation to attempt to reconnect with
callers in which the call either disconnected midconversation or the caller requested a
callback for additional assistance or followup after speaking directly with BPC call center
staff (see footnote 13, page 29, for information about the sample of BPC call center calls
we reviewed). Specifically, despite confirming the caller’s current phone number at the
beginning of each call, BPC call center staff did not perform callbacks for either of these 2
calls.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
31
Call
Employee
provided
accurate
information
to caller
Employee
educated
caller and
provided
context
Employee
displayed
courteous &
professional
manner
Employee
addressed
all of
caller’s
questions
Employee
fully
verified
caller’s
identity
Employee
used
required
greeting at
beginning
of call
1
x
x
x
check
x
x
2
x
x
check
x
check
x
3
x
x
x
x
check
check
4
x
x
check
check
x
x
5
check
x
x
x
check
x
6
x
x
x
x
check
check
7
x
x
check
x
check
x
8
check
x
x
x
check
x
9
check
check
check
check
x
x
10
check
check
check
check
x
x
11
check
check
check
check
x
x
12
check
x
x
check
check
check
13
check
check
check
check
check
x
14
check
check
check
check
check
x
15
check
check
check
check
check
x
Total
calls with
deficiencies
6
9
6
6
5
12
Table 5
BPC call center staff did not provide quality customer service for 15 calls we
reviewed, including providing inaccurate information to and/or failing to educate
some callers
Source: Auditor General staff analysis of 15 Department BPC call center recorded phone calls from calendar year 2023 that had 1 or more
deficiencies when assessed against BPC call-handling procedures and UI Program customer service procedures (see footnote 13, page 29, for
information about the sample of recorded calls we reviewed).
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
32
Department’s website and other materials provided inconsistent and potentially
misleading information
We identified 2 specific examples of inconsistent and potentially misleading information on the
Department’s website and in UI Program materials.
Specifically:
X Department’s website and other materials provided inconsistent information about
the type and availability of in-person UI Program assistance at Arizona@Work
offices
As discussed in the Introduction, page 2, footnote 7, and Appendix A, pages a-1 and a-2,
Arizona@Work offices provide resources and services to individuals in the State seeking
employment opportunities, including no-cost access to computers that individuals can use
to file UI claims, appeals, and other related documents and telephones that they can use
to access the UI and BPC call centers. The Department does not operate any UI Program
offices at which claimants can receive in-person assistance. However, our review of the
Department’s website and various Department materials, including claimant documents
and notices, found that the Department has provided inconsistent and potentially
misleading information about the types of services and availability of in-person assistance
at Arizona@Work offices around the State, which may make it difficult for claimants to
navigate the UI Program, including seeking UI assistance from the appropriate access
point.16
Specifically, we found:
y Some Department materials and information direct claimants to visit in-person
Arizona@Work offices for UI activities, including filing appeals or receiving help with
the online UI application; however, they do not clearly explain that Arizona@Work
office staff cannot access an individual’s specific UI claim information and that the
assistance provided by Arizona@Work office staff is generally limited to providing
claimants with use of a phone or computer to access the UI and BPC call centers or UI
Program website, fax or email to submit initial and weekly claims, or access to paper
applications.17
y Department materials and information do not use consistent terminology when
directing claimants to in-person offices. For example, although some materials and
information refer to the offices as “Arizona@Work job centers,” “Employment Service
offices,” or “One Stop partner office,” other materials refer to them incorrectly as
“Unemployment Insurance office,” which could mislead claimants to believe that these
offices provide in-person assistance specific to the UI Program.
16 DOL indicates that as part of state UI agencies’ responsibility to provide various methods for accessing the UI program, states must broadly
and conspicuously disseminate information about alternative ways to access the program to ensure that individuals who need such options are
aware of how to utilize them. Further, DOL indicates that providing and communicating information about alternative access options is part of
providing customer service to help UI applicants/claimants successfully navigate the UI program.
17 During the audit, in September 2024, the Department developed a process, including written procedures, for providing some in-person
assistance at some Arizona@Work offices by having office staff complete identity verification for claimants applying for UI benefits with a paper
application (see Introduction, page 2, for more information on identity verification; see Finding 2, page 48, for more information about some
actions the Department has taken to better support UI claimants visiting Arizona@Work offices).
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
33
X Department’s website and other materials provided conflicting information for
time frames claimants have to file a wage protest
As discussed in the Introduction, page 3, the Department assesses claimants’ eligibility
for receiving UI benefits and issues a monetary determination—also known as a wage
statement—notifying claimants of their monetary eligibility based on wages they earned.
If a claimant believes their wage statement is inaccurate, the claimant may file a wage
protest with the Department (see Questions and Answers, Question 2, page 60, for more
information about the wage protest process). However, our review of the Department’s
website and examples of claimant wage statements found that the Department has
provided inconsistent and potentially misleading information about the time frames
claimants have to file a wage protest with the Department.
Specifically:
y According to the wage statement, the first page states “Protests must be filed within
10 working days of the date on this form.” However, the second page of the wage
statement states “In order to pay benefits in a timely manner, your wage protest should
be filed within 10 working days of the mail date on your wage statement.” Because the
term “mail date” could be interpreted as either the statement’s postmark date or the
date on the statement, claimants could be confused about their deadline for filing a
wage protest with the Department.
y The Department’s website states: “In order for benefits due to be paid in a timely
manner, it is recommended that you file a wage protest within 10 working days of the
statement date on your wage statement.”
Conversely, the Department’s rules state that the claimant may protest the wage statement
prior to the expiration of the claimant’s benefit year (see Questions and Answers, footnote
2, page 60, for a definition of benefit year).18
Ineffective customer service may hinder claimants’ access to UI Program
benefits, resulting in financial hardships and frustration for claimants and
additional workload for Department staff
As previously mentioned on page 22, DOL indicates that effective customer service is necessary
for ensuring that UI program claimants do not experience delays in receiving UI benefit payments.
In addition, in 1 report GAO issued in 2022 on customer service challenges in selected states
during the COVID-19 pandemic, GAO found that some claimants who experienced delays
in UI benefit payments reported a variety of impacts resulting from those delays, including
financial and health impacts (see Introduction, pages 9 through 11, for more information on
18 Arizona Administrative Code (AAC) R6-3-1803.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
34
GAO’s reporting on issues with states’ UI program customer service quality).19,20,21 For example,
according to GAO’s report, 1 claimant reported having his car repossessed and, for a time, loss
of electricity while waiting to receive UI benefits. Additionally, GAO reported that other claimants,
including some from Arizona, reported having to use other sources of monies to pay for their
living expenses while waiting for UI benefit payments, including using monies from retirement
accounts and other savings, relying on family and friends for loans to meet living expenses, and
accepting assistance from community-based food pantries and other organizations to get help
with food and paying for utilities.
Further, in addition to minimizing delays, DOL also indicates that effective customer service is a
key component of minimizing frustrations for claimants, which can reduce claimants’ need for
additional assistance from state UI agency staff and thus reduce workloads for state UI agencies.
For example, as previously mentioned on page 22, DOL indicates that most calls and inquiries to
state UI agencies are from claimants seeking application or payment status updates and further
indicates that proactively and accurately answering these questions is key to managing claimant
satisfaction and call center volume.
Our review of the Department’s provision of UI Program customer service in calendar year 2023
identified examples of these impacts as follows:
X Claimants needing to make multiple phone calls to resolve their questions/
concerns resulted in frustration for claimants and increased workload for staff
Our review of the 80 calendar year 2023 calls from the UI and BPC call centers identified
10 callers who made multiple calls to these call centers on the same day to have their
questions/concerns resolved, despite Department staff having the ability to address their
questions/concerns during the first call.22 Not only did callers express frustration during
these calls, but the callers needing to call in multiple times resulted in additional workload
for Department staff. See the textbox on page 35 for an example of a series of calls we
reviewed that exemplifies these impacts.
19 U.S. GAO, 2022a.
20 GAO reviewed states’ challenges during the COVID-19 pandemic, including the provision of UI program customer service, in 6 states—Arizona,
Florida, Massachusetts, Michigan, Minnesota, and Wyoming—through interviews with state UI agency officials and UI claimant advocates and
discussion groups with claimants who had received UI benefits in these selected states.
21 To protect claimant privacy and confidentiality, we did not contact any UI Program claimants to assess whether they experienced any of these
impacts.
22 As previously mentioned, our review of UI and BPC calls from calendar year 2023 included 11 UI call center calls and 5 BPC calls that were
judgmentally selected because callers had called in multiple times on the same day (see footnote 6, page 23, and footnote 13, page 29). These
judgmentally selected calls consisted of 10 unique callers, as some callers made as many as 4 calls to the UI or BPC call centers in the same
day (see textbox, page 35, for an example of a series of calls we reviewed).
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
35
A claimant had to make 4 calls in 1 day to obtain accurate information from the BPC call
center
BPC call center staff’s failure to provide accurate information and quality customer service
led a claimant to call the BPC call center 4 times in 1 day and speak with 4 different staff
members to obtain information on her overpayment and receive guidance for requesting an
overpayment waiver.
Call 1: During the first call, the claimant reported receiving an overpayment letter after having
previously paid an overpayment of the same amount. In response, the BPC staff member
clarified that although the claimant had paid the previous overpayment, the claimant had
another overpayment on the account. The BPC staff member explained that the claimant
could request a waiver because the second overpayment was classified as an administrative
overpayment, but the BPC staff member disconnected the call before providing the
claimant with information about how to request a waiver. Although the call disconnected
midconversation, the BPC staff member did not attempt to make a callback.
Call 2: After the first call disconnected midconversation, the claimant immediately made a
second call to request information about how to request a waiver. In response to the claimant’s
questions, a different BPC staff member provided an incorrect overpayment amount that
contradicted the information given to the claimant during the first call and did not handle the
call in a professional manner. For example, the BPC staff member repeatedly interrupted
the claimant, told the claimant that the BPC call center was unable to provide assistance,
and incorrectly stated that the claimant needed to call accounts receivable. Additionally, the
BPC staff member did not empathize with the claimant who was expressing frustration and
confusion. During our review of this call with BPC supervisors, they also identified that the staff
member did not use a courteous and professional tone.
Call 3: After the second call ended, the claimant made a third call to request information
about submitting an overpayment waiver request and asked how to file a complaint against
the staff member from the second call. A third BPC staff member who answered this call
correctly told the claimant to submit the waiver application by fax or email and file a complaint
through the Department’s website. However, the staff member provided an incorrect email
address for the claimant to submit the waiver request.
Call 4: Approximately 4 minutes after the third call, the claimant made a fourth call and
explained to a fourth BPC staff member that the email address she had received during the
third call was not working because her waiver request had bounced back. Although the BPC
staff member who answered this call did not provide their unique staff identification number or
verify the claimant’s identity, the staff member did provide the correct email address, and the
claimant thanked the staff member for her help.
BPC supervisors agreed with our assessment that the claimant had received inaccurate
information and poor-quality customer service and acknowledged that if the first BPC staff
member had taken appropriate action by making a callback after disconnecting the call, the 3
subsequent phone calls would not have been necessary.
Source: Auditor General staff review of a series of calls made by a claimant who did not receive a callback from their initial call. See footnote
13, page 29, for additional information about the sample selection.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
36
X Some claimants who may have received poor-quality and untimely customer
service have filed complaints through the Department’s Ombudsman and UI Client
Advocate to seek assistance, increasing Department staff workload
As discussed in the Introduction, page 14, the UI Program’s UI Client Advocate staff are
responsible for responding to and resolving UI Program complaints received from a variety
of sources, including complaints that are forwarded from the Department’s Office of the
Ombudsman (Ombudsman).23 According to the Department’s Ombudsman complaint
data, in calendar year 2023, the Department’s Ombudsman forwarded nearly 1,600
complaints to the UI Client Advocate for response and resolution. The top 3 categories
of complaints that it forwarded to the UI Client Advocate in calendar year 2023 included
inability to reach Department staff through the call centers, not receiving timely action
or assistance from the Department, and requests for assistance with claims, such as
questions or concerns related to claim status, receiving payment, and/or overpayments,
indicating frustration may have led to the claimant filing a complaint.24 Additionally, the
need to review, forward, respond to, and resolve these complaints increases Department
staff workloads and could result in duplicative work for Department staff. For example,
when UI Client Advocate staff review complaints, they may need to contact other
Department staff, such as UI Program adjudicators or BPC staff, to obtain additional
information related to the complaint, duplicating efforts to resolve claimant questions
and concerns. See Finding 2, pages 51 through 56, for more information about and
recommendations we made to the Department related to the UI Client Advocate.
X Arizona@Work offices reported that claimants often express frustration related to
their attempts to receive UI Program customer service
As discussed in the Introduction, page 2, and Appendix A, pages a-1 through a-3,
Arizona@Work offices around the State offer claimants no-cost access to computers and
telephones that they can use to access the Department’s UI and BPC call centers and
website, but these offices do not provide in-person assistance related to the UI Program
(see Appendix A, Figure 8, page a-3, for a map of Arizona@Work offices around the
State). Our interviews with staff from a sample of 7 of 27 Arizona@Work offices in the
State found that staff at 6 of 7 Arizona@Work offices reported that visitors come to their
locations weekly, or in some cases daily, seeking a variety of UI-related assistance, such
as attempting to obtain information about their claims, complete identity verifications, and
submit initial and weekly UI claims.25,26 Additionally, staff at these offices shared that many
visitors seeking UI assistance have expressed frustration over a variety of areas, including
not being able to receive in-person, claim-specific assistance at an Arizona@Work office
and difficulty reaching UI Program staff through the UI call center. Staff at 1 office also
23 According to the Department’s website, the Department’s Ombudsman is a confidential, independent, and impartial resource for members of
the public that can assist in resolving issues of concern when receiving or attempting to receive benefits and services from the Department.
24 It is unknown how many complaints the UI Client Advocate received and resolved in calendar year 2023 because the UI Client Advocate does
not track this information (see Finding 2, page 51, for more information).
25 We reviewed a sample of 7 of 27 Arizona@Work offices around the State, consisting of 3 randomly selected urban locations and 4 judgmentally
selected rural locations. Urban counties were determined as those with a population of more than 1 million according to 2023 U.S. Census data.
Our judgmental selection considered county unemployment rates for calendar year 2023, and geographic location and number of Arizona@
Work offices in the county (see Appendix B, pages b-2 and b-3, for additional information about our sample selection).
26 For 1 of the 7 Arizona@Work offices we reviewed, staff reported that although they provide access to computers and telephones, they do not
have on-site staff who track the number of visitors seeking UI Program-related assistance.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
37
reported that trying to assist UI claimants who visit their office daily seeking UI assistance
limits the time and resources they have to assist members of the public who visit the
office seeking employment services under the Workforce Innovation and Opportunity Act
(WIOA).27 Arizona@Work office staff also reported that UI Program visitors often exhibit
frustration when office staff are unable to answer their questions about the UI Program
and refer the claimants to the UI call center or website, and that these visitors often report
additional frustrations with accessing the call center, including experiencing long wait
times. Further, staff from the Winslow Arizona@Work office reported that some UI Program
visitors who attempt to obtain UI Program assistance at their office travel from as far as the
Four Corners area near the Arizona-Colorado border and the Arizona-Utah border, such as
Page, both of which are at least a 2-hour drive away from the office.
Several factors contributed to claimants receiving poor-quality, untimely,
and inaccurate or inconsistent customer service and information, including
Department’s lack of procedures for monitoring call quality and other
key customer service requirements, inconsistent staff training, high call
volumes, and lack of call-routing system functionality
We identified several factors that likely contributed to the Department’s inconsistent provision
of timely and quality customer service and some individuals receiving inaccurate or potentially
misleading information.
Specifically:
X Department lacked call-monitoring processes to identify and correct UI and BPC
call center customer service quality issues during most of the time frame we
reviewed
During portions of calendar year 2023, the Department was not monitoring calls handled
by staff in its UI and BPC call centers or reviewing audio recordings of these calls to
assess and improve customer service quality, as follows:
y In November 2023, the UI Program implemented a process requiring UI call center
supervisors to review call center audio recordings to evaluate UI call center staff’s
customer service quality for a random sample of UI call center calls each month and
to work with call center staff to correct any identified deficiencies related to the UI
Program customer service procedures.28 However, this review process was not in
place during most of calendar year 2023—the time frame we reviewed—which likely
contributed to the customer service quality issues we identified in 21 of the 61 UI call
center calls we reviewed.
27 See Appendix A, pages a-1 and a-2, for more information about the employment services available at Arizona@Work offices under WIOA.
28 Effective November 2023, the UI Program requires UI call center supervisors to review a monthly total of 8 calls for each general inquiry staff
member and 4 calls for each adjudicator. In July 2024, the UI Program increased its requirement for supervisors to review adjudication calls
from 4 to 8 calls per adjudicator each month.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
38
y The Department reported that the BPC call center hired a quality control analyst in April
2023 to help identify and correct BPC customer service quality issues, and in June
2023, the quality control analyst began reviewing audio recordings of some BPC calls
to evaluate BPC staff’s customer service quality. However, our review of the quality
control analyst’s call review documentation from calendar year 2023 found that some
BPC staff members had similar deficiencies over several months of reviews, indicating
that previously identified issues had not been corrected. Specifically, our review
found multiple instances of BPC staff members not performing 5-point verification or
providing poor-quality customer service, including interrupting and talking over the
claimant, and that the quality control analyst’s reviews performed up to 4 months later
identified similar customer service quality deficiencies for some of the same BPC staff
members.
y During the audit, in October 2024, BPC implemented written procedures for BPC
supervisors to access call recordings to perform call monitoring, in addition to reviews
the quality control analyst was conducting. According to the Department, supervisors
were expected to evaluate customer service quality by using a point system to score
the calls and provide coaching or corrective action to BPC staff members who do
not achieve the minimum score. However, BPC’s procedures did not include steps
and requirements for using this point system to score calls and provide coaching or
corrective action as applicable, selecting calls for review, the frequency of reviews,
and the number of calls that supervisors should review. In April 2025, the Department
developed supervisor quality review procedures that include these steps and
requirements.
X Department lacked written policies and/or procedures requiring UI and BPC call
center staff to perform callbacks
As previously discussed (see pages 29 and 30), UI Program and BPC supervisors stated
that there is an expectation that UI call center and BPC staff perform callbacks when calls
disconnect or callers request a callback.29 However, as of October 2024, the Department
lacked written policies and/or procedures outlining requirements, time frames, and/or
guidance for UI and BPC call center staff to perform callbacks, which likely contributed
to call center staff not performing callbacks for any of the applicable calls we reviewed.
As of April 2025, BPC had developed written policies and procedures requiring its staff
to perform callbacks when calls disconnect or callers request a callback after speaking
directly to staff; however, although the UI call center developed written policies and
procedures requiring staff to perform callbacks when calls disconnect, it had not similarly
done so for instances where callers request a callback after speaking directly to staff.
X BPC lacked written procedures outlining customer service requirements for call
center staff
As previously discussed on pages 23 and 24, the Department has developed written UI
Program customer service procedures that its UI call center staff are required to follow.
29 As previously discussed on page 29, BPC established call-handling procedures in October 2023. Although these procedures require BPC staff
to obtain the caller’s phone number to perform callbacks, it does not explicitly state that BPC staff should perform callbacks when calls
disconnect or callers request a callback.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
39
However, as previously discussed in footnote 14 (see page 29), prior to October 2023,
it had not developed similar written procedures for BPC call center staff, which likely
contributed to the customer service quality issues we identified in 15 of the 19 BPC call
center calls we reviewed. BPC did not have written procedures for handling calls, including
customer service requirements, because BPC did not have a dedicated BPC call center
until July 2024. Specifically, the Department reported that prior to July 2024, BPC staff
split their time between answering inbound phone calls and performing other work, such
as establishing overpayments and performing wage audits (see Questions and Answers,
Question 9, pages 75 and 76, for more information about the Department’s process
for performing wage audits). In October 2023, BPC established written call-handling
procedures that included some steps similar to UI Program customer service procedures,
such as providing staff names and unique identification numbers when greeting callers
and verifying callers’ identities prior to providing any information. As of November 2024,
BPC’s written call-handling procedures included customer service requirements similar to
the UI Program’s customer service procedures.
X BPC call center staff received less training for answering calls than UI call center
staff
New UI call center staff complete computer-based training modules on UI Program
policies and procedures for answering inbound phone calls and undergo multiweek
training that includes listening to recorded inbound calls independently, shadowing
experienced UI call center staff as they answer phone calls, and according to the
Department, having UI call center supervisors listen to live calls the new UI call center staff
answer during their first 2 weeks of taking calls. Conversely, although new BPC call center
staff complete computer-based training modules, in calendar year 2023, they were not
required to listen to recorded calls or shadow experienced BPC call center staff as part of
their training, and BPC supervisors were not required to listen to live calls that new staff
answered, such as during their first 2 weeks of taking calls. As previously mentioned, the
Department reported that BPC staff were responsible for completing assigned case work
in addition to answering phone calls and further reported that because of this, BPC did
not have specific training requirements for answering inbound phone calls and providing
customer service.30 In July 2024, BPC revised its organizational structure by designating
specific staff for answering phone calls to the BPC call center, and in October 2024,
BPC revised its training process to require new call center staff to independently review
recorded calls with varying customer service quality, shadow experienced BPC call center
staff, and complete instructor-led customer service skills training in addition to completing
computer-based training modules. Further, BPC also revised its training process to require
its supervisors to listen to live calls that new call center staff answer during the first month
of training.
30 Although not required, the Department reported that some BPC staff may have listened to recorded phone calls or shadowed experienced BPC
staff members as needed.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
40
X High call volumes and lack of call-routing system functionality contributed to
long UI call center wait times in calendar year 2023, and although call volumes
decreased in calendar year 2024, long call wait times persisted
According to the Department, high call volumes contributed to its staff not answering most
UI call center calls it received and callers experiencing long call wait times, and our review
of 2023 average daily UI call center call volumes found them more than 2 times as high as
average daily call volumes in calendar 2024. As previously discussed on page 22, DOL
indicates that most calls and inquiries to state UI agencies are from claimants seeking
UI benefit application or payment status updates; as such, the difference in call volumes
in 2023 and 2024 could be attributed to the Department’s untimely adjudication of the
majority of eligibility issues for initial claims in calendar year 2023 (see Finding 2, page 50,
for more information about the Department’s adjudication untimeliness in 2024 compared
to 2023).
In addition, in January 2024, during our audit, the UI Program began making changes to
its automated call-routing system for the UI call center to help alleviate the impacts of and
reduce caller wait times and improve its ability to assist more callers. For example, the UI
Program modified its call-routing system to notify callers of their estimated wait time and
offer callers waiting in the general inquiry and adjudication queues the option to receive
a callback rather than continuing to wait to speak with a staff member. The Department
also modified the call-routing system to determine, verify, and share the status of callers’
claims based on their Social Security numbers. Department management reported that
they expected these system changes would increase the number of callers it could assist
by providing callers with information they could not previously receive without speaking
directly to call center staff and minimize the amount of time that callers spend waiting
on the phone to speak with call center staff. Our review of UI call center data found that
since the Department made these changes, the call-routing system provided the status
of callers’ claims based on their Social Security numbers for approximately 157,000 calls
from May through December 2024, or an average of 623 calls for each day it received
calls during this time frame.31Additionally, the daily average wait time to reach Department
staff decreased slightly in both queues from calendar year 2023 to calendar year 2024.
Specifically, the daily average wait time to reach Department staff decreased from
approximately 29 to 26 minutes for the general inquiry queue and approximately 39 to 35
minutes for the adjudication queue.32
Additionally, the Department modified the call-routing system to automatically route callers
with active adjudication issues to the adjudication queue. Department management
reported that this change would improve its ability to assist more callers by reducing the
number of calls transferred from the general inquiry queue to the adjudication queue.
31 Although the Department started tracking this data monthly in January 2024, the Department did not track this data on a daily basis until May
2024. Additionally, although the Department’s data includes the total number of calls during this time frame for which the system provided the
status of a caller’s claim, this data may not represent unique callers because an individual could make multiple calls to the UI call center
throughout their claim to obtain information on their claim status.
32 Although the UI Program tracks the daily average wait times for callers to reach Department staff, its metric for doing so does not include the
wait times experienced by callers who did not reach Department staff, such as those who disconnected before their call was answered. As
such, the daily average amount of time that callers spent waiting in each queue, regardless of whether they reached Department staff, is
unknown. See Finding 2, page 51, for more information about our review of the UI call center’s data and how limitations with this data impact
the Department’s ability to assess the extent of UI Program access barriers.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
41
Our review and analysis of UI call center data for a 2-month period in 2023 compared to
the same period in 2024 found that since the Department made these changes, the total
number of calls that were transferred from the general inquiry queue to the adjudication
queue decreased from 10,985 of 144,227 inbound calls received in April and May
2023—or approximately 8%—to 1,166 of 63,756 inbound calls received in April and May
2024—or approximately 2%. However, our review of 4 randomly selected calls from April
and May 2024 in which the callers were transferred from the general inquiry queue to
the adjudication queue found that the callers were not offered the option of receiving
a callback or provided their estimated wait times after being transferred.33 Additionally,
3 of these 4 callers waited more than an hour to speak with an adjudicator after being
transferred, with a maximum wait time of more than 2 hours. After we shared our initial
findings with Department leadership, the Department reported that it modified its call-
routing system in February 2025 to provide callers with their estimated wait times and the
option of receiving a callback after being transferred from the general inquiry queue to the
adjudication queue.
However, despite the decrease in UI call center call volumes and average wait times
in calendar year 2024, and the Department implementing some call-routing system
functionality to help alleviate the impacts of and reduce caller wait times, as shown in Table
6 (see page 42), our review and analysis of UI call center metrics found that maximum wait
times for both UI call center queues exceeded an hour more often in calendar year 2024
compared to calendar year 2023.
Specifically:
y Maximum wait times for the general inquiry queue were more than an hour for 48% of
the days the UI call center received calls during calendar year 2023 but rose to nearly
70% of the days it received calls during calendar year 2024.
y Maximum wait times for the adjudication queue were more than an hour for 65% of the
days it received calls during calendar year 2023 but rose to 87% of the days it received
calls during calendar year 2024.
According to the Department, long call wait times have persisted due to the complexity
of calls that were routed to the adjudication queue after the call-routing system changes
and a decrease in staff assigned to the UI call center; however, the Department lacked
documentation to demonstrate how staff shortages led to long call wait times (see next
paragraph for more information about Department-reported staffing shortages).
33 We reviewed 2 random samples of UI call center calls that were transferred from the general inquiry queue to the adjudication queue as follows:
2 of 284 transferred calls in April 2024 and 2 of 305 transferred calls in May 2024 (see Appendix B, page b-2, for additional information about
how we selected these samples).
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
42
X Department believes some calendar year 2023 calls to the UI call center
went unanswered because of staff inexperience and shortages, but lacked
documentation to demonstrate how these issues contributed to unanswered calls
According to the Department, staff inexperience and shortages may have contributed to
some UI call center calls in calendar year 2023 going unanswered because inexperienced
staff may take longer to handle calls or provide inaccurate information during calls, leading
to subsequent calls from callers. Specifically, the Department reported that in calendar
year 2023, it moved experienced staff out of the UI call center and reassigned them to
work on adjudicating eligibility issues and issuing claimant eligibility determinations,
as well as other complex tasks.34 The Department reported that this resulted in less-
experienced staff answering inbound calls to the UI call center, and these staff may have
taken longer to handle calls. Additionally, although the Department reported providing
34 As discussed in the Introduction, page 14, although some adjudicators answer inbound adjudication calls to the UI call center, the majority of
these staff adjudicate eligibility issues and issue claimant eligibility determinations outside of the UI call center.
1 Although the UI Program tracks some data on caller wait times, such as the maximum wait time and the average wait time for callers to reach
Department staff, it did not have a metric for how often or how many callers experienced long call wait times. See Finding 2, page 51, and
recommendation 19, page 55, for more information about our review of the UI call center’s data; see footnote 32, page 40, for more information
on the UI Program tracking average wait times for callers to reach Department staff.
2 This data includes callers who waited in a queue to speak with call center staff, including callers who opted to receive a callback in lieu of
waiting on the phone to speak with call center staff. This data does not include callers who obtained the status of their claim from the call-
routing system after entering their Social Security number and did not wait in a queue.
Source: Arizona Auditor General staff review of UI call center metrics for general inquiry and adjudication phone calls in calendar years 2023 and 2024.
Percentage of days that maximum wait
time fell within the indicated ranges1,2
General inquiry queue
Adjudication queue
2023
2024
2023
2024
1 hour or less
0-1 hour
52%
31%
35%
13%
Subtotal
52%
31%
35%
13%
1+ hours
1-2 hours
48%
62%
38%
79%
2-3 hours
0%
7%
20%
6%
3+ hours
0%
0%
7%
2%
Subtotal
48%
69%
65%
87%
Table 6
Percentage of days that maximum wait times exceeded 1 hour increased from
calendar year 2023 to calendar year 2024, despite reduced call volumes and
Department’s call-routing system changes in 2024
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
43
new staff with training and its UI call center procedures for answering inbound phone
calls, the Department reported that these staff members could have provided inaccurate
information, leading to callers making additional calls to obtain accurate information and
increasing call volumes. However, although the Department provided data for how long
staff had been working in their roles as of calendar year 2023, its data does not provide
information on the experience levels of staff based on the work they were responsible for
performing, including answering UI call center calls.35
Further, the Department reported that after reassigning its more experienced staff from the
UI call center to other responsibilities, it hired temporary staff to backfill these positions.
However, although the Department provided data on the average number of staff for the UI
call center, its data does not identify how many of these staff were temporary. Additionally,
the Department’s calendar year 2023 vacancy data included positions it does not intend
to fill, and as such, the number of vacancies the UI call center had in calendar year 2023 is
unknown.36
X Department attributed inconsistent terminology to historical name changes to
Arizona@Work offices and stated it was unaware of potential confusion with its
website and materials
According to the Department, the name of Arizona@Work offices has changed over time,
which has led to the Department’s website, UI Program materials, and other UI Program
information not using consistent terminology when directing claimants to these offices. In
addition, until we informed the Department, it was unaware that some of its documents did
not clearly explain the types of assistance available at the Arizona@Work offices or that its
website and wage statements contained inconsistent and conflicting information. In March
2025, the Department reported that it was working to update the information provided on
its website but reported that changes to its various materials would not be completed until
it implements its new UI Program IT system (see Introduction, page 12, and Finding 2,
pages 46 and 47, for additional information about its IT system modernization).
Recommendations to the Department for providing consistent, accurate,
quality, and timely customer service
Develop or continue to develop and implement written policies and procedures that outline:
1. The number of calls UI call center and BPC supervisors should review each month,
including time frames for completing the reviews.
35 In the data it provided, the Department identified how long staff had been working in their roles based on the respective job position codes for
these roles. However, our review of the data found that the job position codes could apply to staff working both within and outside of the UI call
center. For example, the same job position code is used for adjudicators who work within and outside of the UI call center as well as special
projects and other benefits staff, as discussed in the Introduction, page 14. As such, because of these data limitations, we are unable to assess
the experience levels of UI call center staff in calendar year 2023.
36 The Department reported that as of March 2025, its vacancy data included vacancies for temporary positions that were added in response to
the COVID-19 pandemic, even though the Department does not intend to refill those positions. The Department further reported that it was in
the process of determining the number of vacancies it intended to fill.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
44
2. Methods for selecting staff calls for review, such as randomly selecting calls, using a
risk-based and/or judgmental selection, or using a combination of selection methods.
3. Requirements and time frames for following up with staff to correct identified
deficiencies, including guidance for when to provide coaching, additional training,
and/or discipline, as appropriate.
4. Requirements, time frames, and guidance for UI and BPC call center staff to perform
callbacks, including when calls disconnect midconversation and when callers request
a callback.
5. Customer service steps and guidance for BPC call center staff when answering BPC
calls that are consistent with UI Program customer service procedures.
Evaluate customer service quality by:
6. Continuing to review, analyze, and take steps to improve its call center customer
service metrics, such as call wait times and the number of calls answered or
transferred, including investigating and correcting issues that are hindering
improvement.
7. Continuing to identify, revise, and implement UI call center call-routing system
changes for reducing caller wait times and assisting more callers.
8. Continuing to revise and implement BPC call center staff training to include new staff
listening to recorded inbound calls independently and shadowing experienced BPC
call center staff as they answer phone calls, and requiring BPC supervisors to listen to
calls that new call center staff answer during their first 2 weeks of taking calls.
9. Develop and implement a documented process, including written policies, procedures, and/
or guidance, for analyzing data to inform staff-allocation decisions, such as analyzing data
on staff experience levels and number of staff vacancies, to help ensure the UI call center
maintains sufficient experience and staffing levels.
10. Continue to revise the Department website, UI Program materials, and other relevant
information to use consistent terminology when directing claimants to Arizona@Work offices
and clearly explain the types of assistance available at the Arizona@Work offices, including
explaining that Arizona@Work office staff do not provide assistance with UI Program
questions or concerns.
11. Revise the Department website and wage statements to provide consistent information and
direction to claimants about the time frames for submitting a wage protest.
Department response: As outlined in its response, the Department agrees with the finding and
will implement or implement in a different manner the recommendations.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
45
Inconsistent with federal regulation and recommendations,
Department has not analyzed UI Program data and information
to identify potential access barriers and discrimination,
impacting its ability to implement UI Program improvements,
including planned modernization, and increasing risks to
claimants
Department has not analyzed UI Program data to identify potential systemic
discrimination as required by federal regulation because it was unaware
of its responsibility to do so and has delayed conducting an assessment
that could help it comply with the requirement and implement federal
recommendations for analyzing data and information to identify and
address UI Program access barriers
Federal regulation requires state UI agencies, including the Department, to collect claimant
demographic data, including their race/ethnicity, sex, age, limited English proficiency, preferred
language, and disability status, and to analyze the data to identify and investigate possible
indications of systemic discrimination, such as identifying and investigating any statistically
significant differences related to accessing UI program benefits between specific populations
(see textbox on page 46 for more information about this requirement and DOL guidance and
recommendations for implementing it).1 The Department requests demographic information from
claimants through its initial UI application form, as required by federal regulation.2 However, as
of February 2025, the Department had not analyzed the claimant demographic data it collects to
identify and investigate possible indications of systemic discrimination, as required.3
The Department was unaware of its responsibility to analyze demographic data despite DOL
issuing guidance to state UI agencies for doing so in 2014 and again in 2023. Specifically, in
October 2024, when we asked the Department how it was complying with the requirement
to analyze claimants’ demographic data, Department management responded that they
were researching whether the data analysis outlined in federal regulation was mandatory or
recommended for the UI Program. Subsequently, DOL officials we contacted later that month
confirmed that the Department is required to comply with the federal regulation for collecting and
1 29 Code of Federal Regulations (CFR) 38.51.
2 The Department’s initial UI application form requests claimants to provide specific personal and demographic information, including their name,
Social Security number, address, previous place(s) of employment, age, educational level, gender, race, ethnicity, primary language, and
disability status.
3 The Department established procedures for investigating and resolving complaints and other feedback it receives concerning the UI Program,
which may include reported access barriers and/or concerns related to discrimination. However, according to these procedures, the
Department handles these complaints/concerns on a case-by-case basis, and our review of the Department’s UI Client Advocate complaint
data found that it does not include a systematic process, such as tracking and reviewing complaint and other information to identify possible
indications of systemic discrimination (see page 51 for additional information about the Department lacking complaint-tracking information).
FINDING 2
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
46
analyzing claimant demographic data to identify and investigate possible indications of systemic
discrimination.
When we informed the Department of the confirmation from DOL and asked if and how it
would implement the federal requirements, the Department reported that it planned to review
the federal requirements and ensure that it incorporates them in an assessment it is required
to conduct as part of its efforts to modernize the UI Program. Specifically, as discussed in the
Introduction, pages 12 and 13, the Department received a $400,000 federal award to conduct
an assessment of the UI Program to identify existing access barriers or potential discrimination
and ensure that any identified deficiencies are resolved through its modernization efforts.4
According to Department documentation, the Department planned to complete the assessment
and develop associated corrective actions by May 2023 as part of its new UI Program IT system.
However, despite initiating the assessment in late 2022, as of November 2024, Department
management reported that the Department had not yet completed the assessment because the
Department prioritized other UI Program improvements over the assessment, such as changes
to its call-routing system and implementing its new UI Program IT system (see Finding 1, pages
40 through 42, for more information about changes the UI Program made to its call-routing
system). Additionally, the Department received approval to extend the deadline for completing
the assessment and its new UI Program IT system to March 2025, despite commencing its new
UI Program IT system development in May 2023 with a planned implementation date of October
4 According to Department grant documentation, the required assessment includes evaluating the full scope of available data within the
Department to identify and correct any data limitations that hinder the Department’s ability to identify potential barriers or discrimination for
accessing the UI Program. In addition to the required assessment, the Department also plans to develop reporting capabilities for its staff to
analyze the collected data and generate reports for review by the Department or other relevant stakeholders and facilitate ongoing monitoring
and evaluation of potential access barriers and discrimination.
Department responsible for collecting and analyzing claimant demographic data for
possible indications of systemic discrimination, consistent with federal regulation
29 CFR 38.51 requires state UI agencies to collect claimant demographic data and conduct
statistical or other quantifiable data analyses to demonstrate UI program compliance
with nondiscrimination requirements in federal law. Since 2014, DOL has issued multiple
guidance documents indicating that a key aspect of complying with the federal requirement
should be identifying and addressing where certain people may be facing disproportionate
barriers when trying to access UI benefits, such as individuals with low literacy levels or
individuals living in rural areas who may not have access to technology. For example, DOL
recommends that state UI agencies review available technology and nontechnology-based
access points, including web-based, telephone, and in-person options, and evaluate
how different populations use them to determine which individuals or populations may
experience barriers utilizing technology to access the UI program (see pages 52 through 54
for more information on DOL’s recommendations).
Source: Auditor General staff review of 29 CFR 38.51; U.S. Department of Labor (U.S. DOL). (2014). Collection and analysis of claimant
demographic data. (Unemployment Insurance Program Letter No. 11-14). Retrieved 7/16/2024 from https://www.dol.gov/sites/dolgov/
files/ETA/advisories/UIPL/2014/UIPL_11-14.pdf; U.S. Department of Labor (U.S. DOL). (n.d.). Unemployment Insurance: Equitable access
toolkit. Retrieved on 8/5/2024 from https://www.dol.gov/agencies/eta/ui-modernization/promising-practices/equity-toolkit; and U.S. DOL,
2023.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
47
2024.5 As of February 2025, the Department had not yet expended any of the $400,000 it was
awarded and submitted another request to DOL to extend the deadline for completing the
assessment and the new UI Program IT system. In March 2025, DOL approved the Department’s
request to extend the deadline to March 2026.
Failure to analyze UI Program data for potential access barriers and
systemic discrimination hinders the Department’s ability to identify and
correct potential deficiencies when developing its new UI Program IT
system, increasing the risk of poor IT project outcomes and loss of federal
grant monies, and perpetuating potential claimant confusion and harm we
identified
The Department’s failure to analyze claimant demographic data to identify and investigate
possible UI Program access barriers and systemic discrimination limits its ability to incorporate
corrective actions for any identified deficiencies into its development of its new UI Program IT
system, which is a requirement of the grant it received to pay for the assessment. This failure
to address potential issues while developing the system also increases the Department’s
risk of incurring additional IT project costs and having system functionality problems if its
planned assessment identifies corrective actions that must be made to the IT system after
the Department and its contractor have completed its development and implementation (see
Arizona Auditor General report 23-104 Arizona Department of Administration—Arizona Strategic
Enterprise Technology Office (ASET) IT project oversight, Finding 1, pages 8 through 11, for
more information about risks to IT project success, including budget or schedule overruns and
outstanding functionality limitations or technical issues after IT project implementation).6 Further,
failure to complete the planned assessment within the time frames established in its federal
grant agreement could result in a loss of the $400,000 federal grant monies the Department was
awarded.
In addition, our work to assess the Department’s provision of UI Program customer service
identified some potential UI Program access barriers and associated claimant impacts.
According to DOL, state UI agencies should endeavor to identify populations in their states
that may be facing disproportionate barriers when trying to access UI benefits because some
access barriers could have a discriminatory impact on certain populations, even if they are not
expressly implicated or targeted for different treatment.7 As such, the potential UI Program access
barriers and associated claimant impacts we identified could be perpetuated and could have a
discriminatory impact if left unaddressed as the Department moves forward with its IT system
modernization.
5 The Department did not meet its October 2024 planned implementation date for its new UI Program IT system and revised its planned
implementation date to September 2025.
6 Arizona Auditor General report 23-104 Arizona Department of Administration—Arizona Strategic Enterprise Technology Office (ASET) IT project
oversight.
7 In guidance that DOL issued to help state UI agencies improve UI program access, DOL indicated that the nondiscrimination laws that apply to
state UI agencies prohibit discrimination on both disparate treatment (i.e., intentionally treating members of protected groups differently based
on their protected status) and disparate impact (i.e., the use of policies or practices that are neutral on their face but have a disproportionate
impact on members of protected groups).
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
48
For example:
X Claimants regularly visit Arizona@Work offices seeking in-person assistance
despite these offices not offering in-person assistance
As discussed in Finding 1, pages 36 and 37, Arizona@Work office staff reported to us
that claimants regularly visit their offices for a variety of UI-related assistance and regularly
express frustration at not being able to receive claim-specific assistance in person. For
example, Arizona@Work office staff reported that UI Program visitors exhibit frustration
when office staff are unable to answer their questions about the UI Program and refer them
to the UI call center where visitors then report experiencing long wait times. Meanwhile,
staff from 1 Arizona@Work office reported that some claimants travel multiple hours to visit
their Arizona@Work offices for UI Program assistance.
During the audit in May 2024, the Department distributed a survey to Arizona@Work
offices throughout the State to understand why UI claimants visit these offices. Based
on the survey results, the Department developed and reported implementing several
recommendations for the UI Program to better support UI claimants visiting Arizona@Work
offices. For example, in September 2024, the Department developed a process, including
written procedures, for providing some in-person assistance at some Arizona@Work
offices by having office staff complete identity verification for claimants applying for UI
benefits with a paper application. However, as of April 2025, the Department reported
that it had not established plans for implementing the remaining recommendations it
developed based on the survey results.8
Additionally, our review of the Department’s survey identified some limitations that could
restrict the Department’s ability to assess the extent of UI Program access barriers
experienced by claimants who visit Arizona@Work offices. For example, the Department’s
survey captured limited data only for UI claimants assisted during a 2-week period in
May 2024, and the Department received survey responses from less than 60%, or 16, of
27 Arizona@Work offices that the Department sent the survey to. Further, our interviews
with Arizona@Work office staff identified additional information/concerns not reflected in
the survey results, including discrepancies between the survey and information and data
staff provided to us about the number of UI claimants assisted at some locations, and
office staff concerns with the accuracy and readability of Spanish-translated claimant UI
materials.9
According to DOL, some individuals may struggle with filing or completing a UI claim
independently for a variety of reasons, including but not limited to lack of available
8 Examples of these recommendations include providing basic, high-level training on the UI Program to Arizona@Work office staff, developing
standardized responses for office staff to address the most common UI-related questions received at Arizona@Work offices, establishing a
system for Arizona@Work offices to communicate trends and issues to the UI Program, and standardizing guidelines for Arizona@Work office
staff to use when redirecting claimants to the UI call center and UI Client Advocate.
9 The Department’s survey results indicated that 2 of 7 Arizona@Work offices we interviewed each submitted 1 survey in May 2024, indicating
that each office assisted 1 UI claimant during the 2-week survey period; however, both offices reported to us that they provided resources and
assistance to UI claimants daily, which is consistent with calendar year 2023 data they shared with us. Specifically, these offices independently
maintain visitor data, including data on each occasion they provided resources or assistance to UI claimants. Although these offices use
different data-collection and tracking methods, data from both offices indicates that they provided resources or assistance to UI claimants on
more than 1,000 occasions in calendar year 2023. Specifically, in calendar year 2023, 1 office provided resources or assistance to UI claimants
on 1,193 occasions, or approximately 23 per week, and the other office provided resources or assistance to UI claimants on 326 occasions, or
approximately 6 per week.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
49
nontechnology-based methods for accessing UI programs and benefits.10 Further,
as previously discussed (see textbox on page 46), DOL recommends that state UI
agencies review and evaluate how different populations use available technology and
nontechnology-based access points to identify individuals or populations that may be
facing barriers when trying to access UI benefits. Individuals can file initial and weekly UI
claims by submitting a paper form via U.S. mail, email, or fax to the Department instead of
filing online (see Introduction, page 2, and footnote 11, page 4); however, as discussed,
our interviews with Arizona@Work office staff indicated that some individuals reportedly
visit Arizona@Work for assistance beyond filing initial and weekly claims, including seeking
in-person and claim-specific assistance. As such, although the Department provides a
nontechnology-based option to file initial and weekly claims and has taken some steps to
better support UI claimants visiting Arizona@Work offices, failure to address this potential
barrier could have a potential discriminatory impact on certain populations, such as
individuals who have difficulty filing or completing a claim independently.
X Missing information and potentially unclear translations in some Department
Spanish-translated documents could potentially confuse claimants
As previously mentioned, staff at 1 Arizona@Work office we interviewed reported concerns
with the accuracy and readability of Spanish-translated claimant UI materials.11 In addition,
our review of the Department’s Spanish-translated initial UI claim application, weekly UI
claim application, basic UI information document, and claimant UI benefits guide found
that each of these documents, when compared to the corresponding English version,
had potentially unclear translations and missing information that could make it difficult for
Spanish-speaking claimants to understand UI Program requirements and guidelines or
could impact a claimant’s ability to provide accurate information in UI forms.
For example:
y The English version of the Department’s weekly UI claim application states “If you did
not look for work or meet the required contacts, you will be disqualified until you are
reemployed and earn eight times your weekly benefit amount. You have the option to
skip filing for the week. If you skip filing for the week you will not receive benefits for
the week. You will be able to file next week.” However, the Spanish version of this form
does not specifically indicate to applicants that they will be able to file the next week.12
y Some words in the Spanish version of the Department’s weekly UI claim application
are missing letters, potentially confusing applicants.
10 U.S. DOL, 2023.
11 In addition to providing UI Program materials and claimant communication notices in English and Spanish, according to the Department’s
website, it also provides no-cost language assistance to individuals with limited English proficiency through a variety of methods, including
access to bilingual staff, staff interpreters, and local organizations providing interpretation or translation services. Further, as discussed in the
Introduction, page 12, as part of its efforts to modernize the UI Program, the Department plans to translate various claimant communication
notices and UI Program webpages into the top 5 languages spoken in Arizona, which it identified as English, Spanish, Navajo, Slavic, and
Vietnamese.
12 The Spanish version reads as follows: “Si usted no buscó trabajo ni se comunicó con las personas requeridas, usted será descali icado hasta
que tenga empleo y gane ocho veces lo de la cantidad de su bene icio semanal. Usted tiene la opción de declinar a presentar su reclamo
semanal. Si no tramita su reclamo, usted no recibirá bene icios por la semana.”
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
50
y The Department’s English version of its claimant UI benefits guide identifies specific
categories of wages or circumstances when UI benefits cannot be collected and titles
the section as “Wages earned by an Educational Institution, School Bus Contractor,
Contract Educational Provider and Charter School.” However, in the Spanish
version, the section title could be translated to read “Wages Earned by Most School
Employees, School Provider Employees, or Private School Bus Contractors.”13
According to DOL, poor-quality translations could be a barrier to UI program access
because some claimants could make errors that can lead to overpayments as a
result of misunderstanding questions due to limited English proficiency and complex
language.14 Additionally, GAO’s 2016 report on customer service in state UI programs
indicated that poor-quality translations can contribute to UI benefit delays or result
in erroneous eligibility determinations for claimants.15 As such, failure to address this
potential barrier increases the Department’s risk of having a discriminatory impact on
certain populations, such as individuals with limited English proficiency.
X Untimely eligibility determinations delay claimants’ receipt of UI benefits,
potentially impacting their livelihood
As discussed in Finding 1, page 22, the Department did not timely adjudicate the majority
of eligibility issues in calendar year 2023, which delays UI benefit payments to eligible
claimants. Additionally, although the Department took some steps in early 2023 to improve
its UI benefit payment timeliness, such as adjusting its workload management system
to distribute issue-adjudication work evenly across staff and prioritizing adjudications
based on claim age date and available staff, from April to October 2024, the Department
continued to untimely adjudicate most claim issues (see Introduction, page 13, for more
information about the Department’s changes to its workload management system).
Specifically, during this time frame, the Department took more than 21 days to adjudicate
between approximately 72% to nearly 88% of initial and weekly claim eligibility issues.
Further, although the Department’s adjudication timeliness improved in November and
December 2024, as of December 2024, the Department still untimely adjudicated some
claim issues and took more than 21 days to adjudicate 2,671 of 8,185, or approximately
33%, initial and weekly claim eligibility issues.16
As discussed in the Introduction, page 8, and Finding 1, pages 33 and 34, eligible
claimants are entitled to receive timely UI benefit payments, and payment delays are a
barrier for claimants who are eligible for UI benefits, which can result in financial or other
hardship for these individuals.17
13 The Spanish version reads “Los Salarios Ganados por la Mayoría de los Empleados de la Escuela, Empleados de Proveedores Escolares, o
Contratistas de Autobuses de las Escuelas Privadas.”
14 U.S. DOL, 2023.
15 U.S. GAO, 2016.
16 As discussed in Finding 1, footnotes 3 and 4, page 22, the UI Program is responsible for adjudicating initial claim eligibility issues within 21 days
of identifying the issue and weekly claim eligibility issues by no later than Thursday of the week following the Department’s detection of the
eligibility issue, which is between 6 and 11 calendar days based on the weekly time frame in which claimants can file a weekly UI claim.
Because these 2,671 eligibility issues are for both initial and weekly claims, the remaining 5,514 eligibility issues that were adjudicated in 21
days or less may include some weekly UI claim issues that were adjudicated untimely.
17 See Finding 1, pages 33 and 34, for more information on financial or other hardships for claimants resulting from payment delays.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
51
X UI Client Advocate complaints indicate that claimants report experiencing UI
Program access barriers when seeking assistance
As discussed in Finding 1, page 36, the UI Client Advocate staff received a variety of
complaints from claimants in calendar year 2023 indicating UI Program access barriers,
such as an inability to reach Department staff through its call centers, not receiving timely
action or assistance from the Department, and requests for assistance with claims.
According to DOL, states should routinely monitor their UI programs, including claimant-
reported data and information such as complaints, to identify UI program access barriers
or potential discrimination that some individuals or populations experience.18 However,
our review of the UI Client Advocate’s complaint data found that the Department does
not track or review relevant information for all UI Program complaints it receives—such as
number of complaints received, reason for the complaint, number of complaints resolved,
and complaint resolution—which could be helpful for identifying and assessing the extent
of any UI Program access barriers or potential discrimination that claimants may be
experiencing.19
X Some claimants experienced UI Program access barriers resulting from call
center customer service quality problems, including callers experiencing long
wait times and receiving inaccurate and potentially misleading information
As discussed in Finding 1, pages 23 through 31, in calendar year 2023, Department call
center staff did not return some calls, provided inaccurate or misleading information to
some callers, and did not answer most of the calls its UI call center received. Some callers
also had to make multiple calls to the UI and BPC call centers to obtain assistance and
information. Additionally, according to the Department’s UI call center data, maximum
wait times for both UI call center queues exceeded an hour more often in calendar year
2024 compared to calendar year 2023, despite the Department making changes to its
call-routing system in January 2024 to reduce and help alleviate the impacts of caller wait
times (see Finding 1, pages 40 through 42, for more information about the Department’s
changes to its call routing system). Further, our review of UI call center data found that
although the UI call center’s system tracks some data on caller wait times—specifically,
maximum wait times and average wait times to reach call center staff—these metrics
do not quantify the prevalence of long wait times, restricting the Department’s ability to
assess the extent of UI Program access barriers within the UI call center.20
18 U.S. DOL, 2023.
19 As discussed in Finding 1, page 36, the Department’s Ombudsman categorizes UI Program complaint data by complaint topic and forwards
such complaints to the UI Client Advocate for response and resolution. However, the UI Client Advocate does not similarly track this information
for all UI Program complaints it receives. Further, although the UI Client Advocate tracks daily complaint workload for each staff member, its
method for doing so prevents it from identifying the total number of unique complaints received. As such, this limits the Department’s ability to
identify and assess the extent of any UI Program access barriers or potential discrimination that claimants may report experiencing.
20 Maximum wait time for each day tracks the maximum amount of time that a caller spends waiting in the queue before connecting with call
center staff or abandoning the call. However, this metric does not reflect how many callers experienced maximum or near-maximum wait times.
Further, because calculations to obtain an average include outlier values, such as the minimum and maximum, average wait time may not
accurately represent the wait time experienced by most callers.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
52
X Some claimants who received PUA program benefits potentially did not receive
time-sensitive PUA program notices, including overpayment determination letters
Although the Department’s process for informing claimants or employers of a claim
determination involves sending UI Program notices, including overpayment determination
letters, through the mail, the Department did not send physical overpayment determination
letters through the mail for the PUA program (see Questions and Answers, Question 4,
pages 61 through 65, for more information about overpayments; see Introduction, page
1, for more information about the PUA program). Instead, the Department used its PUA
IT system portal and claimants’ preferred method of notification—email or text—to notify
claimants that they had a message or document to review. We found and brought to
the Department’s attention that Department data indicated that 91% of claimants who
received a determination letter for fraud and nonfraud PUA overpayments in calendar
year 2023 had not read their determination letter in the PUA IT system portal. Specifically,
as of August 2024, approximately 43,500 of the more than 47,000 claimants who had an
overpayment determination letter had not read their determination letter sent through the
PUA IT system portal, approximately 1.5 years to more than 2 years after the PUA program
had expired.21 Although some claimants who opted to receive email notifications from the
PUA IT system portal should have received their PUA overpayment determination letter as
an email attachment, other claimants who opted to receive text notifications would have
needed to access the PUA IT system portal to obtain and review their PUA overpayment
determination letter. These determination letters contain specific information on repayment,
claimants’ appeal rights, and associated time frames for filing an appeal; as such, some
claimants who the Department determined had a PUA fraud or nonfraud overpayment may
have missed deadlines to appeal their overpayment.
As part of its UI Program IT system modernization efforts, the Department plans to use
a similar notification method by providing notices through a portal in its new UI Program
IT system. Although the Department plans to offer claimants the option of selecting a
secondary preferred notification method in addition to the system portal, such as through
email, text, or mail, claimants will also be offered the option of receiving notifications
exclusively through the system portal. However, DOL recommends that state UI agencies
use multiple methods to correspond with or notify claimants of important information,
including also sending portal correspondence through the mail, because using only 1
method could be a barrier to UI program access for claimants with limited access to and
understanding of technology.22
DOL has issued guidance that could help Department comply with federal
data analysis requirements and implement federal recommendations for
identifying and addressing UI Program access barriers
As discussed on pages 45 through 47, the Department reported that it plans to comply with the
federal demographic data analysis requirement by completing an assessment required as part of
its UI Program modernization efforts and anticipates delaying completion of the assessment until
21 As previously mentioned in the Introduction, page 1, the PUA program expired on September 6, 2021.
22 U.S. DOL, 2023.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
53
March 2026. As it moves forward with planning and conducting the assessment, to help ensure
it meets federal requirements for demographic data analysis to identify and investigate possible
indications of systemic discrimination, the Department may find it helpful to review guidance that
DOL has issued for state UI agencies to help them develop systems and processes for identifying
UI program access problems and developing and implementing action plans for proactive and
continuous improvement. For example, as shown in Table 7, DOL recommends that state UI
agencies take a variety of actions to identify where claimants, and potentially certain populations,
experience challenges or face undue barriers accessing the UI program. DOL has also
established a toolkit for state UI agencies to use for developing more accessible UI programs.23
23 U.S. DOL, n.d.
Table 7
DOL recommendations for identifying potential UI program access barriers and
discrimination
Recommendation examples
Consider trends in UI application and recipiency rates in the state and differences among
historically marginalized groups and other groups the state has identified as struggling with UI
program access.1
Identify populations that struggle with UI program access, including identifying specific steps
where individuals or populations may disengage or reach out to UI program staff for assistance.
Identify how long the UI process takes for a typical individual and establish methods to identify
individuals or populations for whom the process may take longer and investigate why.
Review available technology and nontechnology-based access points, including web-based,
telephone, and in-person options, and evaluate how different populations use them to determine
which individuals or populations may experience barriers utilizing technology to access the UI
program.
Analyze claims-based data by demographic category and portion of the claimant journey, such
as the adjudication and appeals processes, to identify which individuals or populations may
experience barriers for filing and maintaining a claim for benefits.2
Engage community partners that support historically underserved or marginalized populations to
assist and provide feedback when developing and implementing technological improvements to
the UI program.
Review data and information related to claimant experiences with the UI process and claimant
journey, including customer feedback surveys and feedback, to identify where individuals or
populations report experiencing barriers to accessing the UI program.
1 DOL defines UI recipiency rates as the percentage of unemployed workers who receive UI benefits.
2 As previously discussed on page 45, federal regulation requires state UI agencies to analyze claimant demographic data, which includes at a
minimum, analyses by race/ethnicity, sex, age, limited English proficiency, preferred language, and disability status, to identify possible
indications of systemic discrimination, such as any statistically significant differences in the success rates of claimants who are members of
these demographic categories. However, DOL recommends that in addition to the required analysis, state UI agencies should also analyze
claims-based data across these demographics throughout various steps of the claimant journey.
Source: Auditor General staff review of U.S. DOL, 2023.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
54
For example, DOL’s toolkit includes steps for:
X Collecting, analyzing, and utilizing data to identify accessibility gaps and
developing action plans to address those gaps
Steps include assessing internal processes for capturing claimant demographic and user
experience data, including determining what, when, and how data is collected, stored,
and used throughout the UI claim process, to identify data and accessibility gaps. State
UI agencies should then establish improvement strategies to mitigate any identified
gaps, such as identifying new data points across the UI claim process that are critical for
measuring claimant access and user experience, and develop and implement procedures
and resources, such as reporting capabilities, to regularly measure and act upon
accessibility findings to continuously improve UI program access.
X Determining how and where to provide alternative access points, including
nontechnological options, through the UI claim process to improve claimant
access
Steps include identifying populations who are experiencing or may experience technology
barriers and where in the claim process those barriers impact the claimant. State UI
agencies should use claimant benefit data to determine where claimants abandon claims,
stop responding to Department correspondence, and access web-based and offline
services. After analyzing access points and identifying gaps, state UI agencies should
establish strategies to improve existing access points, including conducting outside user
testing and quality assurance before launching improvements and conducting regular
monitoring to facilitate continuous improvements.
X Providing language assistance services to improve communications and the
overall customer service experience
Steps include identifying all documents and contact methods containing vital information
for translation, identifying the languages into which that vital information should be
translated, and determining the capability and cost-benefit of internal staff or vendors
translating the vital information. State UI agencies should then recruit diverse participants
to provide feedback on translated vital information and make continuous improvements.
X Identifying claimant pain points to make continuous improvements for accessing
UI program contact centers, including call centers
Steps include analyzing internal processes, staff effectiveness, and data-collection and
analysis methods to identify claimant pain points and developing and implementing
action plans to address those pain points. State UI agencies should also create, publish,
and train staff on standard operating procedures; conduct quality assurance tests;
and continually measure, check, and act to adjust and fine-tune operations, including
compiling data and reporting to UI program leadership so that they may identify trends
and areas of improvement and corresponding actions, such as targeting staff training or
knowledge gaps.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
55
Recommendations to the Department
12. Analyze claimant demographic data to identify and investigate possible indications of
systemic discrimination, as required by federal regulation, and take action to address any
deficiencies identified by such analysis.
13. Conduct the required assessment of the UI Program to identify existing access barriers
or systemic discrimination and incorporate corrective actions to address any identified
deficiencies into Department modernization efforts, including the development of the new UI
Program IT system, as required by the federal grant award received in 2022.
To identify existing access barriers or systemic discrimination when implementing
recommendation 13, review and evaluate various areas of the UI Program including, but not
limited to:
14. Continuing to evaluate the number and characteristics of individuals who seek in-
person assistance with various aspects of the UI Program at Arizona@Work offices to
identify and implement corrective actions necessary to address potential UI Program
access barriers that these individuals experience.
15. Evaluating translated documents and information, including Spanish-translated
materials and planned work for translating documents and information into the top
5 languages spoken in Arizona, to ensure that translated materials are accurate and
clear.
16. Evaluating the timeliness of UI benefit eligibility determinations, in particular the
reasons for untimely eligibility issue adjudication, to identify and implement corrective
actions.
17. Developing and implementing a documented process, including written policies,
procedures, and/or guidance, for systematically tracking UI Client Advocate complaint
data, including receipt and resolution dates, complaint source, complaint topics and/
or categories, and action(s) taken to resolve complaints, in a format that facilitates
analysis.
18. Developing and implementing a documented process, including written policies,
procedures, and/or guidance, for regularly and systematically analyzing UI Client
Advocate complaint data to identify and address potential UI Program access barriers
or potential discrimination.
19. Evaluating methods for collecting UI call center data to identify and implement
performance metrics necessary for assessing the extent of UI Program access
barriers within the UI call center, such as tracking and analyzing data on the frequency
and prevalence of callers experiencing long call wait times.
20. Evaluating planned methods for communicating important/time-sensitive UI
Program information to claimants and incorporate necessary corrective actions
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
56
when implementing the new UI Program IT system to ensure that claimants receive
information timely, such as requiring claimants to select a secondary preferred
notification method in alignment with DOL recommendations for using multiple
methods for corresponding with claimants.
21. Conduct a review of relevant federal and State laws and regulations impacting the UI
Program to ensure that all UI Program requirements have been identified.
22. Develop and implement processes to comply with all UI Program requirements, including any
requirements it identifies when implementing recommendation 21.
Department response: As outlined in its response, the Department agrees with the finding and
will implement or implement in a different manner the recommendations.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
57
QUESTIONS AND ANSWERS
Table of contents
Claim processes
X Question 1:
58
How does the Department determine and notify claimants of their monetary
eligibility and UI benefit award amount?
X Question 2:
60
What can a claimant do if they disagree with the Department’s determination of
their monetary eligibility or UI benefit award amount?
X Question 3:
60
What are eligibility issues, and what is the Department’s process for resolving
them?
X Question 4:
61
What are overpayments, and how do they occur?
X Question 5:
65
Can overpayments be waived?
X Question 6:
67
How does the Department collect overpayment debts, and what does it do with
monies collected?
X Question 7:
69
What appeal rights do claimants or employers have if they disagree with an
eligibility or overpayment determination?
Claim accuracy and fraud prevention and detection
X Question 8:
73
How does the Department investigate the accuracy of UI claims that are paid
and claims that are denied?
X Question 9:
75
What are the Department’s processes to identify and prevent improper and/or
fraudulent payments?
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
58
X Question 10:
77
What are the Department’s processes for investigating allegations of fraud and
referring individuals for prosecution?
Questions and answers
Question 1: How does the Department determine and notify claimants of
their monetary eligibility and UI benefit award amount?
The Department uses wage information reported by employers to determine a claimant’s
monetary eligibility and their UI benefit award amount. Specifically, pursuant to A.R.S. §23-722
and AAC R6-3-1703, employers are required to submit quarterly reports to the Department to
report wages paid to each employee during the quarter and include the employee’s name and
Social Security number (see Introduction, page 5, for more information about employers required
to pay UI taxes). When an individual files a
claim for UI benefits, the Department’s IT
system is automated to match the claimant’s
Social Security number to the quarterly wage
data filed by employers and determine whether
the claimant is monetarily eligible (see textbox
for monetary eligibility requirements). If the
claimant is monetarily eligible, the Department’s
IT system is automated to then calculate the
claimant’s weekly and total UI benefit amount
using the claimant’s highest earning quarter
from their base period (see Figure 2, page 59,
for an example of a claimant’s base period).
According to A.R.S. §23-779, the weekly UI
benefit amount is 4% of the wages the claimant
earned in their base period’s highest earning
quarter, but if that amount is more than $320,
the weekly UI benefit amount is $320.
To notify claimants of their monetary
eligibility and UI benefit award amounts, the
Department’s IT system develops a wage
statement that the Department sends to
the claimant via U.S. mail to summarize the
claimant’s wages earned during their base
period as reported by their former employer(s).1
1 According to Department policy, after initial processing, the Department will add any wages the claimant earned to the claim that are not subject
to the quarterly reporting requirements, such as wages earned from the federal government or earned in another state. According to
Department staff, the Department becomes aware of these additional wages through a wage protest filed by a claimant (see Question 2, page
60, for more information about wage protests).
Monetary eligibility requirements
To meet monetary eligibility for UI
benefits, claimants must have worked for
an employer who paid State UI taxes, and
they must have earned:
X At least 390 times the Arizona
minimum wage in their highest
earning base period quarter and a
combined total in the other three
quarters equal to half the amount
of wages in their highest earning
quarter, or
X At least $8,000 in total wages in
at least 2 quarters of their base
period, with wages in 1 quarter
equal to at least $7,987.50.1
1 According to A.R.S. §23-605, the base period is the first 4 of
the last 5 completed calendar quarters from before the UI
claim was filed.
Source: Auditor General staff review of A.R.S. §§23-771 and
23-622.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
59
If the claimant is monetarily eligible for UI benefits, their wage statement will include the weekly
and maximum UI benefit award amounts the claimant may receive if they file claims and meet all
nonmonetary eligibility requirements during their benefit year. For example, as seen in Figure 2,
we reviewed a wage statement for an example claimant whose weekly benefit amount was $292,
which is 4% of the claimant’s highest earning base period quarter rounded to the nearest dollar.
The claimant’s maximum UI benefit amount, which is the amount they can receive in total over
their benefit year from January 2025 to January 2026, was $5,657, which is one-third of their total
base period wages. If a claimant is not monetarily eligible, the wage statement will inform the
claimant why they do not qualify to receive UI benefits.
Figure 2
Example claimant filing UI claim in January 2025 would have a base period of
October 2023 to September 2024 to calculate monetary eligibility and UI benefit
amount
If a claimant filed for UI benefits in January 2025:
X Their monetary eligibility would be calculated using the wages earned between
October 2023 to September 2024, identified as their base period. Any wages earned
from October 2024 to December 2024 would not be considered.
X Claimants’ weekly UI benefit amounts would be calculated from their base period’s highest
earning quarter. As shown below, our example claimant’s highest earning quarter was
April to June 2024, and 4% of these wages results in a weekly UI benefit amount of $292,
rounded to the nearest dollar.
X Claimants are eligible for their weekly UI benefit amount for up to 24 or 26 weeks,
depending on the State’s unemployment rate. However, claimants cannot receive more
than one-third of their total base period wages. As shown below, our example claimant’s
total base period wages totaled $16,971, and one-third of their total base period wages
means that their maximum benefit amount is $5,657, or approximately 19 weeks of
benefits.
2023
2024
2025
OCT
NOV
DEC
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
JAN
FEB
MAR
Example
claimant:
$3,406
$6,269
$7,296
$0
Claimant
files claim
Total base period wages: $16,971
Source: Auditor General staff review of A.R.S. §§23-605, 23-771, 23-779, and 23-780; and a wage statement for a claimant who filed an initial UI
claim in January 2025.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
60
Question 2: What can a claimant do if they disagree with the Department’s
determination of their monetary eligibility or UI benefit award amount?
Pursuant to AAC R6-3-1803, if a claimant believes their wage statement is inaccurate, such as
if they believe it is missing wages or includes wages that they did not earn, the claimant can file
a wage protest with the Department. The Department’s wage statement and website instructs
claimants to file a wage protest by contacting the UI Program or submitting a wage protest
form found on the Department’s website to the Department by fax or email within 10 working
days of the statement date.2 The Department’s wage protest form requires claimants to provide
information related to their prior employment, such as their employer’s name and address,
supervisor’s name, hire date, and termination date.3 Additionally, according to the Department’s
website, the claimant should provide copies of tax records and pay stubs to support their wage
protest. According to Department procedures, to investigate a wage protest, Department staff
should review Department data and the claimant’s supporting documentation but may also
contact employers or request proof of earnings from the claimant. If the investigation determines
the wages should be modified, the Department should issue a revised wage statement to the
claimant. However, if the investigation does not support a wage modification, the Department
should send the claimant a determination letter explaining the reason why no change is
supported and additional information for appealing the determination (see Question 7, pages 69
through 72, for more information on appealing determinations). Department procedures require
the Department to complete wage protests within 14 days. According to Department data, the
Department investigated 2,288 wage protests in calendar year 2023.
Question 3: What are eligibility issues, and what is the Department’s
process for resolving them?
Eligibility issues occur when the Department receives information from a claimant, an employer,
or another source that has the potential to affect a claimant’s past, present, or future eligibility
to receive UI benefits. For example, a claimant’s employer might protest a claim and provide
information that results in a monetary eligibility issue, such as the employer stating the claimant
was not an employee as defined by A.R.S. §23-613.01 but was an independent contractor.4 An
employer might also protest a claim and provide information that could lead to a nonmonetary
eligibility issue, such as the employer stating the employee was discharged for willful or negligent
misconduct, which is a disqualification for UI benefits in accordance with A.R.S. §23-775.
Alternatively, a claimant might provide information in their initial or weekly UI claim that indicates
they may not meet 1 or more nonmonetary eligibility requirements for UI benefits, such as
2 Although the Department’s wage statement and website instructs claimants to file wage protests within 10 business days of receiving a wage
statement, AAC R6-3-1803 allows claimants to file a wage protest at any time during their benefit year (see Finding 1, page 33, for issues we
identified, including inconsistencies with information on the Department’s website, wage statement, and rule for time frames for filing a wage
protest). Pursuant to A.R.S. §23-609, a benefit year is a 1-year period starting the Sunday of the week a claimant filed their first claim for UI
benefits.
3 The Department requires the claimant to submit a separate wage protest form related to each employer for which the claimant is protesting the
reported wages.
4 A.R.S. §23-772 requires the Department to promptly notify a claimant’s most recent employer of the UI claim filing and the employer has 10
business days to protest payment to the claimant (see Introduction, page 2, for more information).
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
61
stating in their claim that they are unable to work, which is a requirement to receive UI benefits in
accordance with A.R.S. §23-771.5
Pursuant to A.R.S. §§23-771 and 23-773, eligibility issues require adjudication in order for the
Department to determine whether a claimant is eligible for UI benefits. Department adjudicators
obtain the facts necessary to issue a determination and resolve the eligibility issue. The
Department’s adjudication process may involve conducting fact-finding interviews to obtain
statements and information from the claimant, employer(s), or a third party, and may include
reviewing available documentation. Additionally, for some monetary eligibility issues, adjudication
may require an investigation by the Department’s UI Tax unit to issue a determination, such as
if an employer alleges the claimant’s employment should be excluded from or exempt from UI
Program coverage.
Claimants are not eligible to receive UI benefits if they have open eligibility issues. According to
the Department, after it resolves all eligibility issues, claimants who were determined eligible will
receive all of their weekly UI benefit payments for which they filed a claim within 24 to 48 hours
from the determination date, as long as the claimant remained unemployed, filed their weekly UI
claim(s), and no further eligibility issues were identified.
Question 4: What are overpayments, and how do they occur?
An overpayment of UI benefits occurs when a claimant has already received benefits and the
Department later determines the claimant was either not eligible for the UI benefits or not entitled
to the amount of benefits that they received (see textbox, page 62, for the top 5 overpayment
causes of calendar year 2023).6
The Department classifies overpayments in 3 categories, as follows:
X Administrative
These overpayments occur through no fault of the claimant, such as by Department
or employer error. For example, for 1 overpayment case we reviewed, a Department
adjudicator determined the claimant was not eligible for UI benefits but made an error
entering the disqualification date into the Department’s IT system. As a result, the claimant
was inaccurately marked as eligible for 1 week of UI benefits and was subsequently
overpaid the 1 week when they should have been disqualified. Administrative
overpayments are eligible for a repayment waiver (see Question 5, pages 65 and 66, for
more information about waiving administrative overpayments).
5 In addition to the claimant and employer responses, Department staff can identify potential eligibility issues during their investigations of UI
claim accuracy (see Question 8, page 73 and 74, for more information about UI claim accuracy investigations).
6 The Department’s requirements for identifying and establishing overpayments, including establishing penalties for fraudulent overpayments,
remained the same between the UI Program and for the PUA program.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
62
X Nonfraud
These overpayments occur because the claimant unintentionally provided incorrect
or incomplete information to the Department. For example, in 1 overpayment case we
reviewed, according to the Department, when the claimant initially filed for UI benefits, they
reported to the Department that they did not receive any severance pay; however, when
the claimant filed their weekly claim for UI benefits, they reported receiving a severance
Top 5 causes of overpayments in calendar year 2023
Unreported earnings: These overpayments occur when a claimant has received UI benefits
but the Department later determines the claimant earned wages they did not report to the
Department, making them ineligible for the benefits they received. According to A.R.S. §23-
779, unemployed claimants will receive their weekly UI benefit amount when eligible, minus
any wages earned in excess of $160.
Voluntary quit: These overpayments occur when a claimant has received UI benefits but
is later disqualified because the Department determines they left employment voluntarily
without good cause in connection with the employment, which is grounds for disqualification
pursuant to A.R.S. §23-775.1
Discharge: These overpayments occur when a claimant has received UI benefits but is
later disqualified for benefits because the Department determines they were discharged
from employment for willful or negligent misconduct connected to the employment, which is
grounds for disqualification pursuant to A.R.S. §23-775.2
Paid for waiting week: These overpayments occur when the Department determines that a
claimant earned wages during their UI benefit waiting week.3 Claimants cannot earn wages
equal to or greater than their weekly benefit amount during their waiting week. According to
the Department, when this occurs, the claimant’s next eligible week during which benefits
were paid would then be considered the claimant’s waiting week, and the benefits they were
paid for that week are considered an overpayment.
Other: These overpayments occurred for various reasons, such as the claimant’s
wages being revised, thereby revising the claimant’s monetary eligibility and causing an
overpayment, or when a claim is canceled at the claimant’s request.4
1 According to AAC R6-3-5005, “in connection with the employment” means that a condition related to employment caused a worker to
leave employment. If the employer changes the conditions or terms of employment, and the changes affect the worker’s personal
affairs, the worker leaves employment in connection with the employment rather than as a result of personal circumstances.
2 According to AAC R6-3-5185, a disqualification for misconduct is assessed only when a claimant’s discharge is determined to be in
connection with the work, which includes any action by the worker in the course of their duties or committed on the employer’s premises
during working hours. However, Department rules outline guidance for adjudicators to assess when off-duty conduct could be
connected with the work.
3 A claimant’s waiting week is the first week for which they file a weekly claim and meet all eligibility requirements during which they do not
receive benefits.
4 According to AAC R6-3-5475, the Department may cancel a claim that has an established benefit year at the request of the claimant for
various reasons, such as if the claimant has sufficient wage credits in another state to qualify for a claim.
Source: Auditor General staff review of A.R.S. §§23-771, 23-775, and 23-779; AAC R6-3-5475; AAC R6-3-5185 and R6-3-5005; Department
data on UI Program overpayments established in calendar year 2023; and Department-reported information.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
63
payment as wages earned, resulting in an eligibility issue. The Department determined
through its adjudication process that the claimant was disqualified for UI benefits for the
2 weeks following their last day of employment because of the severance payment the
claimant received.7 The Department reported that during this 2-week period, the claimant
filed 1 valid weekly claim and had received UI benefits, leading to an overpayment. The
Department reported in the overpayment determination that the claimant unintentionally
provided incomplete or incorrect information or failed to correct the erroneous information.
Nonfraud overpayments are not eligible for a repayment waiver.
X Fraud
These overpayments occur because the claimant knowingly misrepresented information,
or concealed material facts, to obtain UI benefits to which they were not lawfully
entitled. For example, in 1 overpayment case we reviewed, according to Department
documentation, the claimant reported voluntarily leaving employment due to working
conditions, but the Department later determined through its adjudication process and
reported in the overpayment determination that the claimant was discharged for being
repeatedly late to work, which was an intentional failure to report the correct reason
they were no longer employed and a misrepresentation of an important fact. Fraud
overpayments are not eligible for a repayment waiver. Additionally, according to A.R.S.
§23-787, fraud overpayments are subject to a 15% penalty of the overpayment amount,
and the individual is not eligible to receive UI benefits until the total amount of the
overpayment and all penalties and interest have been recovered (see Question 6, pages
67 through 69, for more information about collection efforts).8
Claimants can have more than 1 overpayment established for their claim(s). Further, the
Department reported that because claimants can have more than 1 eligibility issue and each
eligibility issue is adjudicated separately, a claimant can have multiple disqualifications that may
cause overpayments for different UI benefit weeks. As such, each overpayment could have a
different classification because the classification is based on the cause of the overpayment (see
Figure 3 for an example of an overpayment with different classifications).
7 According to A.R.S. §23-621, an individual is not considered unemployed if the individual is receiving severance pay.
8 DOL requires states to apply the same monetary penalties for PUA program fraud overpayments as it does for the UI Program.
Week 1
Week 2
$320 nonfraud overpayment
$320 administrative overpayment
$640
Claimant’s
overpayments
total
Figure 3
Claimants can have more than 1 overpayment, each with different classifications
Source: Auditor General staff example based on review of Department documentation and interviews with Department staff.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
64
After identifying an overpayment, the Department establishes the overpayment, meaning it is
officially recorded in the Department’s system in order to initiate recovery. As shown in Figure
4, Department data indicates that in calendar year 2023, it established almost $9.8 million
in UI Program overpayments, with most of these overpayments being classified as fraud.
Additionally, as shown in Figure 5, page 65, Department data indicates that in calendar year
2023, it established more than $698 million in PUA program overpayments, with most of these
overpayments being classified as administrative.
Figure 4
Department established almost $9.8 million in UI Program overpayments in
calendar year 2023
As of February 20251
(Unaudited)
1 Figure 4 presents calendar year 2023 overpayments in the Department’s IT system as of February 2025. However, according to the Department,
there may have been additional overpayments established in calendar year 2023 not reflected in this figure because they were canceled due to
Department reconsiderations and appeal decisions.
2 All UI Program administrative overpayments were waived from repayment (see Question 5, pages 65 and 66, for more information on
overpayment waivers).
3 As previously discussed on page 63, claimants may have more than 1 overpayment with different classifications. As such, the total number of
claimants with an overpayment will not be equal to the combined number of claimants who had an administrative, nonfraud, or fraud
overpayment.
Source: Auditor General staff review of Department data and Department-provided information on UI Program overpayments established in
calendar year 2023.
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
Overpayments established
$2,474,392
Waived2
$2,452,594
$4,861,022
Total overpayments
$9,788,008
Total claimants
9,6833
Administrative
923 claimants
Nonfraud
5,274 claimants
Fraud
3,724 claimants
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
65
Question 5: Can overpayments be waived?
According to statute, the Department may waive all or a portion of an overpayment when the
claimant is without any fault for the amount overpaid and repayment would be against equity
and good conscience (see textbox, page 66, for criteria the Department has established in line
with DOL guidance for identifying repayments that are against equity and good conscience).9
Only administrative overpayments, which are defined as having occurred without any fault by the
claimant, are eligible for a repayment waiver.10
9 A.R.S. §23-787(C).
10 If a claimant has a nonfraud or fraud overpayment, their overpayment needs to be reclassified as administrative to be eligible and considered
for a waiver. Reclassification can be sought by appealing the overpayment determination (see Question 7, page 69 through 72, for more
information on appeals).
Figure 5
Department established over $698 million in PUA program overpayments in
calendar year 2023
As of January 20251
(Unaudited)
1 Figure 5 presents calendar year 2023 overpayments in the Department’s PUA system portal as of January 2025. However, according to the
Department, there may have been additional overpayments established in calendar year 2023 not reflected in this figure because they were
canceled due to Department reconsiderations and appeal decisions.
2 All PUA program administrative overpayments were waived from repayment (see Question 5, pages 65 and 66, for more information on
overpayment waivers).
3 As previously discussed on page 63, claimants may have more than 1 overpayment with different classifications. As such, the total number of
claimants with an overpayment will not be equal to the combined number of claimants who had an administrative, nonfraud, or fraud
overpayment.
Source: Auditor General staff review of Department data and Department-provided information on PUA program overpayments established in
calendar year 2023.
$0
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
Overpayments established
$518,150,153
Waived2
$177,218,736
$2,740,588
Administrative
127,227 claimants
Nonfraud
18,404 claimants
Fraud
320 claimants
Total overpayments
$698,109,477
Total claimants
143,2093
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
66
According to Department procedures, BPC staff establish administrative overpayments in
the Department’s IT system or PUA portal and, in accordance with Department policy and
DOL guidance, can process a waiver of repayment on the claimant’s behalf. By doing so,
the Department determines that pursuant to statute, repayment would be against equity and
good conscience. After establishing the overpayment, the Department sends the claimant
an overpayment determination letter that includes a statement that a waiver for repaying the
overpayment has been granted. As seen in Figures 4 and 5, pages 64 and 65, the Department
waived all UI Program and PUA program administrative overpayments from calendar year 2023.
According to the Department, BPC has steps in place to oversee some overpayment waivers
issued. Specifically, the Department reported that BPC supervisors complete 5 quality audits
each month for BPC staff, which may include reviewing waived administrative overpayments.
The quality audit form for BPC supervisors outlines various metrics for assessing BPC staff when
completing the 5 quality audits, including metrics for accurately and timely establishing and
waiving overpayments.
Criteria for repayment being against equity and good conscience
According to Department policy, which is based on DOL guidance, at least 1 of the
3 following conditions must be met to determine that repayment of an administrative
overpayment would be against equity and good conscience:
1. Repayment would cause financial hardship to the person from whom it is sought. For
example, according to DOL guidance, a financial hardship might exist if a review of
the individual’s income and debt indicates the individual needs much of their current
income to meet ordinary and necessary living expenses.
2. The overpayment recipient can show, regardless of their financial circumstances, that
they have either relinquished a valuable right or changed positions for the worse. For
example, according to DOL guidance, if the individual incurred a financial obligation
by signing a lease for a more expensive apartment based on receiving the UI benefit
payments, requiring repayment would cause them to be in a worse financial position
than if they had not received the UI benefits.
3. Recovery would be unconscionable under the circumstances. For example,
according to DOL guidance, it would be extremely unfair to require repayment when
the individual was not at fault for receiving the overpayment and requiring repayment
would undermine many individuals’ financial stability and the purposes for which the
benefits were paid.
Source: Auditor General staff review of Department policy and U.S. Department of Labor (U.S. DOL). (2022c). Additional state instructions
for processing waivers of recovery of overpayments under the coronavirus aid, relief, and economic security (CARES) act, as amended.
(Unemployment Insurance Program Letter No. 20-21, Change 1). Retrieved 7/23/2024 from https://www.dol.gov/agencies/eta/advisories/
unemployment-insurance-program-letter-no-20-21-change-1
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
67
Question 6: How does the Department collect overpayment debts, and what
does it do with monies collected?
According to A.R.S. §23-787(A), an individual who receives any amount of UI benefits to
which they are not entitled is liable to repay the overpaid amount to the Department, including
applicable interest and penalties, except for waived administrative overpayments (see Question
5, pages 65 and 66, for information about waivers).11,12 Department policy states that collection
efforts begin the day after an overpayment has become final (see Question 7, page 69, for more
information about appeals and when determinations become final). The Department sends
claimants a statement of their account balance by U.S. mail, notifying them of their balance owed.
According to the Department’s website, claimants can contact the Department to establish a
payment plan. The Department accepts credit and debit card payments online, by phone, and
through a mobile application, and check or money order by mail.
In addition, the Department also uses the following methods for recovering overpayment debts:
X Offsetting with State tax refunds or State lottery winnings
The Department may recover claimants’ UI overpayments by offsetting State tax refunds
and/or lottery winnings due to the claimant. Specifically, A.R.S. §§42-1122 and 5-575
established programs authorizing the Arizona Department of Revenue and the Arizona
Lottery Commission, respectively, to establish liability setoff programs by which State tax
refunds and State lottery prize payments can be used to satisfy debts that a person owes
to the State. According to the Department, its system automatically notifies the Arizona
Department of Revenue of all overpayment debts after they have been collectable for
90 calendar days. If the Arizona Department of Revenue identifies that an overpayment
debt matches with an individual who is due a State tax refund, it is required by statute to
notify the Department.13 Once notified, the Department is required by statute to send the
claimant a letter, notifying them that the Department intends to offset the overpayment
debt using the claimant’s State tax refund and that the claimant has the right to appeal
or request a review within 30 days after the physical or electronic mailing of the notice.
Additionally, the Department reported that it reports all overpayment debts to the Arizona
Lottery Commission monthly. Statute requires the Arizona Lottery Commission to perform
a match using this information to identify individuals who are entitled to a State lottery
prize payment of at least $600.14 If a match is identified, the Arizona Lottery Commission
is required to offset the debt from the prize due and notify the individual of their right to
an appeal or to request a review. The Arizona Department of Revenue and the Arizona
Lottery Commission remit these monies to the Department when matches are identified,
and the Department subsequently credits these monies to claimants’ overpayment
accounts. According to Department data, in calendar year 2023, it collected approximately
$4.9 million and $556,000 in State income tax offsets for UI Program and PUA program
11 Pursuant to A.R.S. §23-787(G), UI benefit overpayment debts accrue interest at 10% each year. However, according to DOL requirements,
states may not apply interest or other collection costs to PUA program overpayments.
12 DOL requires states to collect PUA program overpayments from claimants, except for administrative overpayments that are waived, similar to UI
Program requirements.
13 A.R.S. §42-1122.
14 A.R.S. §5-575.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
68
overpayments, respectively. Further, according to Department data, in calendar year
2023, it collected approximately $90,760 and $33,400 in State lottery winning offsets for UI
Program and PUA program overpayments, respectively.
X Offsetting with federal income tax refunds
In accordance with federal laws and regulations, the Department may recover some UI
overpayments by offsetting federal income tax refunds due to the claimant.15 Specifically,
in accordance with federal requirements, the Department refers a debt to the U.S.
Department of Treasury if the claimant owes at least $25, the debt is a result of unreported
earnings or is a fraud overpayment, and the debt is past-due and has remained
uncollected for 1 year. According to Department policy, the Department refers the debt
to the U.S. Department of Treasury only after it has made a reasonable effort to collect
the debt for 1 year. Further, the Department is required by federal regulations to notify
the claimant in writing of the intent to recover the overpayment balance through an offset
of any federal income tax refunds, providing at least 60 days for the claimant to present
evidence that all or part of the overpayment is not past due or that the overpayment is not
the result of unreported earnings or fraud.16 According to the U.S. Department of Treasury
website, prior to federal payments being issued to individuals, it checks these payments
against a database to determine if the individual owes a past-due debt that has been
reported. The U.S. Department of Treasury remits the federal payment to the Department
when a match is identified, and the Department subsequently credits these monies to
claimants’ overpayment accounts. According to Department data, in calendar year 2023, it
collected over $8.8 million in federal income tax offsets for UI Program overpayments.17
X Offsetting with future UI benefits
In accordance with federal law and State statute, the Department may recover some
outstanding administrative or nonfraud UI overpayments by offsetting UI benefits owed to
a claimant.18,19 Specifically, according to statute and Department policy, the Department
can use up to 25% of a claimant’s weekly UI benefit to offset an outstanding administrative
overpayment balance.20 This amount increases to 100% of the weekly UI benefit amount
for nonfraud overpayment balances.21 According to Department data, in calendar year
2023, it recovered approximately $1.2 million and $2,900 in UI Program and PUA program
overpayments, respectively, by offsetting UI benefits owed to claimants.
15 26 USC 6402; 42 USC 503; and 31 CFR 285.8.
16 31 CFR 285.8(c)(3).
17 No federal income tax offsets were collected for PUA program overpayments in calendar year 2023.
18 42 USC 503 and A.R.S. §23-787.
19 As previously discussed on page 63, claimants with a fraud overpayment are not eligible to receive UI benefits until the total amount of the
overpayment and all penalties and interest have been recovered.
20 According to A.R.S. §23-787(D) and Department policy, this amount can increase to 50% if the individual previously received UI benefits but has
not filed for at least 1 year and has not made a reasonable effort during the 1 year to pay at least $250 or 20% of the unpaid principal and
interest balance, whichever is less. When the percentage increases to 50%, the Department will issue an appealable determination (see
Question 7, pages 69 through 72, for more information about appealing Department determinations).
21 According to Department policy, claimants with an outstanding nonfraud overpayment balance can request that the Department reduce the
offset percentage to 50%. If they are denied, the Department will issue an appealable determination (see Question 7, pages 69 through 72, for
more information about appealing Department determinations).
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
69
X Seeking a judgment through the Arizona Attorney General’s Office
Statute authorizes the Department to pursue civil court action through the Arizona
Attorney General’s Office to recover a fraud or nonfraud overpayment.22 The Department
has developed a checklist that outlines the criteria it reviews before an overpayment is
referred to the Attorney General’s Office, including that the outstanding principal balance
is more than $1,000; that the claimant is not on active public assistance benefits; that
the overpayment debt is at least 90 days old but is not more than 10 years old; and that
the claimant has a minimum of 6 months of full-time wages with the same employer
and makes a minimum amount of wages based on household size. According to the
Department, once obtaining a judgment, it may pursue wage and bank garnishments
to collect outstanding overpayments. According to Department data, in calendar year
2023, the Department submitted 103 cases to the Arizona Attorney General’s Office and
obtained 60 judgments. Department data indicates that in calendar year 2023, it collected
approximately $6,300 from these judgments.
Monies collected for UI Program overpayments are deposited into the Unemployment
Compensation Fund whereas monies collected for PUA program overpayments are owed to
the federal government. However, as reported in the State of Arizona fiscal year 2023 annual
comprehensive financial report and the single audit report, the Department did not maintain
accurate records to support UI cash balances reported in the State’s financial statements,
including amounts owed to the federal government, resulting in a qualified financial statement
opinion.23 Specifically, the Department did not prepare complete and accurate bank listings or
reconciliations to support why the Unemployment Compensation Fund’s reported cash balance
was $231.1 million less than bank records, but reported these monies consisted of recovered
overpayments and/or fraudulent payments of federal UI monies. As such, the State may be
required to return approximately $231.1 million to the federal government if the unreconciled
cash consisted of recovered overpayments and/or fraudulent payments of federal UI monies as
reported by Department management.
Question 7: What appeal rights do claimants or employers have if they
disagree with an eligibility or overpayment determination?
Claimants and employers have the right to appeal Department claim determinations (see textbox,
page 70, for examples of claim determinations). Specifically, as shown in Figure 6, pages 71
and 72, in accordance with A.R.S. §23-773 and Department policy, after being notified of a
claim determination, claimants and employers have 15 calendar days to either submit a request
asking the Department to review and reconsider its determination or to file an appeal. Once 15
calendar days have passed with no reconsideration request or appeal, or after all filed appeals
have been exhausted, the determination becomes final.24 Once either the Department reviews
the determination and denies the reconsideration request or an appeal is filed, a Department
administrative law judge will hold a hearing, allowing the claimant and/or employer to present
22 A.R.S. §23-787(F).
23 Arizona Department of Administration (ADOA). State of Arizona—Annual comprehensive financial report: Independent auditors’ report, year
ended June 30, 2023, and Arizona Auditor General report State of Arizona—Single audit report: Auditors’ section, year ended June 30, 2023.
24 A.R.S. §23-773(B).
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
70
their case, and will issue a decision. If the claimant or employer disagrees with the administrative
law judge’s decision, they can further appeal to the Appeals Board within the Department.25 The
Appeals Board may send the case back to the administrative law judge for further proceedings
or can review the case record, take additional evidence, or rehear the case, and issue a decision
that either affirms, reverses, modifies, or sets aside the administrative law judge’s decision.26 If
the claimant or employer disagrees with the Appeals Board’s decision, they can further appeal to
the Arizona Court of Appeals.
25 According to A.R.S. §23-672, the Appeals Board consists of 3 members, appointed by the Department director, with 1 member being
designated as the chairman. According to the Department, all 3 members are Department employees.
26 According to the Appeals Board, it will reverse an administrative law judge’s decision when it believes the administrative law judge dealt with the
correct issue in the case but reached the wrong result. However, if it finds that the administrative law judge misunderstood the issue in the case
or ruled on the wrong issue, the Appeals Board will set aside the administrative law judge’s decision and replace it with a new decision. The
Appeals Board reported it can also set aside and send the case back to the administrative law judge if it believes the administrative law judge’s
decision should be voided and the case should be reopened and heard again by the administrative law judge, such as if the Appeals Board
reviewed the record and found there were due process violations during the administrative law judge’s hearing. Finally, according to the
Appeals Board, it can set aside and send a case back to the Department for further administrative review/action, such as if new evidence
becomes available for the Department to reconsider.
Examples of claim determinations
Determination of Deputy: Informs the claimant of the determination made by a UI Program
deputy (i.e., adjudicator) of whether they are eligible for UI benefits and whether the
employer will be accountable for the claimant’s UI benefits.1
Determination of Overpayment: Informs the claimant that they received UI benefits they
were not eligible for, resulting in an overpayment of UI benefits. The determination includes
the overpayment classification.
1 As discussed in the Introduction, page 5, the Department collects State UI taxes from employers to pay for claimants’ UI benefits. When
a claimant receives UI benefits, their former employer(s)’ UI tax rates may be impacted.
Source: Auditor General staff review of A.R.S. §§23-773 and 23-727, and examples of claim determinations.
Figure 6
Department has process for claimants and employers to request appeal or reconsideration of claim determi-
nations, including varying levels of appeals, and in calendar year 2023, Department data indicates it received
18,535 and 2,537 initial UI Program and PUA program appeals, respectively, and 4,843 reconsideration requests1
(Unaudited)
Department issues claim determination
Department notifies claimant and/or employer(s) of claim determination(s). Claimant/employer has 15 calendar days to submit a request for
reconsideration or file an appeal.2,3
Department calendar year 2023 data indicates: It issued 251,608 monetary and nonmonetary determinations related to claimants’ eligibility.
Additionally, it issued 11,731 and 271,460 determinations of overpayments for the UI and PUA programs, respectively.
Department administrative law judge holds hearing
Department administrative law judge holds a hearing where claimant and/or employer present their information. After the hearing, the judge issues a
decision that becomes final within 30 days unless claimant/employer files a petition for review by the Appeals Board.
Department calendar year 2023 data indicates: Department administrative law judges issued 15,673 UI Program and 11,180 PUA program
appeal decisions, with 25% and 27% ruled in favor of the appellants, respectively. Further, claimants/employers filed 312 and 331 petitions for review
to the Appeals Board for the UI and PUA programs, respectively.
Reconsideration issued
Department issues revised determination, overturning the
prior Department determination.
Department calendar year 2023 data indicates: It issued
a revised determination for 1,795 of the 4,843 requests for
reconsiderations, or 37%, for the UI and PUA programs.
Reconsideration denied
Denied reconsideration request is considered an appeal
and assigned to a Department administrative law judge for
review.
Department calendar year 2023 data indicates: It denied
3,048 of the 4,843 requests for reconsiderations, or 63%, for
the UI and PUA programs.
Claim
determination
is appealed
Claimant or employer
appeals Department’s
determination(s).
Department calendar
year 2023 data
indicates: Claimants/
employers filed 18,535
and 2,537 initial
appeals for the UI
and PUA programs,
respectively.
Claimant or employer
requests Department
reconsideration
Claimant or employer
submits request for Depart-
ment reconsideration of its
determination(s). Depart-
ment has 7 calendar days
to either deny the request
or issue a reconsidered
determination.
Department calendar
year 2023 data indicates:
It received 4,843 requests
for reconsiderations for the
UI and PUA programs.
Claim
determination
becomes final
If the claimant or
employer does not
submit a request for
reconsideration or file
an appeal within 15
calendar days, the
claim determination
becomes final.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
71
Continued on next page.
Appeals Board reviews administrative law judge’s decision
Appeals Board may send the case back to the administrative law judge for further proceedings or review the case record, receive additional evidence,
or rehear the matter and either affirm, reverse, modify, or set aside the administrative law judge’s decision.4 After claimants and/or employers have
reasonable opportunity for a fair hearing, the Appeals Board shall issue its decision.
Department calendar year 2023 data indicates: The Appeals Board issued 803 UI Program and 955 PUA program appeal decisions, with 15%
and 16% ruled in favor of the appellants, respectively.
Right to appeal to Arizona Court of Appeals
Claimants and employers can appeal Appeals Board decisions by filing an appeal with the Arizona Court of Appeals within 30 days of the Appeals
Board decision mailing date.
Department calendar year 2023 data indicates: There were 197 UI Program and 145 PUA program appeals filed with the Arizona Court of
Appeals following an Appeals Board decision.
Figure 6 (continued)
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
72
Continued from the last step on the previous page:
Department administrative law judge holds hearing
1 Figure 6 presents Department data on the number of appeals filed and reconsideration/appeal decisions made during calendar year 2023. Because of the amount of time that can elapse between
a claim determination and subsequent steps in the reconsideration and appeals process, this data may not include all decisions for some claim determinations appealed in calendar year 2023 and
may also include some decisions for claim determinations appealed in calendar year 2022.
2 According to A.R.S. §23-773(E), within the 15-day appeal deadline, the Department may issue a reconsideration on its own accord, such as if it discovers a staff error.
3 According to A.R.S. §23-773(E), the Department may issue a reconsideration after the 15-day deadline expires, but within 1 year of the original determination, if it discovers new evidence that by
due diligence could not have been previously discovered and no appeal has occurred or is pending. If the redetermination is based on fraud, the 1-year limitation does not apply. According to the
Department, it could learn about new evidence outside of the appeals process through UI benefits supervisors performing quality reviews or through a claimant contacting the UI call center or the
UI Client Advocate (see Finding 1, pages 21 and 36, for more information about the UI call center and the UI Client Advocate). For example, the Department reported that a UI benefits supervisor
may perform a quality review and find that there was an error or delay in uploading a document to its document IT system that was timely provided by a claimant and it was therefore not taken into
consideration by the adjudicator at the time of the determination.
4 According to A.R.S. §23-672, a petition for Appeals Board review may be reviewed by 1 member designated by the Appeals Board chair after notifying the interested parties. However, if a claimant
and/or employer objects, the case will be heard by all 3 members. If all 3 members cannot reach a unanimous decision, Appeals Board decisions can be issued by 2 concurring members.
Source: Auditor General staff review of A.R.S. §§23-671, 23-672, 23-674, 23-773, and 41-1993; Department data on appeals made to the Arizona Court of Appeals in calendar year 2023; Department
data on requests for reconsiderations in calendar year 2023 and the outcomes of the requests; Department data sent to DOL on UI and PUA programs appeal decisions and outcomes in calendar
year 2023; Department policy; and appeal decisions.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
73
Question 8: How does the Department investigate the accuracy of UI claims
that are paid and claims that are denied?
State UI programs, including the Department’s, are required by federal regulations and DOL to
establish Benefit Accuracy Measurement (BAM) programs to investigate whether paid and denied
claims for the UI program were processed accurately and to determine if their administration
of their UI programs is consistent with State and federal law.27 Pursuant to this requirement, the
Department’s BAM program is required to review and investigate a representative sample of
approved and denied claims to assess whether claimants were properly paid UI benefits or were
appropriately denied UI benefits, which involves investigating the accuracy of a paid claim’s
monetary determination and reason for separating from employment, and continuing eligibility
requirements, such as verifying that the claimant completed required work searches and was
able and available for work. During BAM program investigations, Department staff review UI
Program records and interview the claimant, employer(s), and any other relevant parties. For
example, BAM program procedures require Department staff to contact the employers that
are listed as work search contacts to verify the claimant’s work search efforts.28 If an employer
provides information that is contradictory to the claimant-provided information, Department staff
are required to make at least 3 attempts to obtain a rebuttal and associated documentation from
the claimant. Upon completion of the BAM program investigation, Department staff prepare a
case summary report that describes the basis for their conclusions when errors were identified.
For example, paid claim investigations can lead to eligibility issues that require adjudications and/
or determinations of ineligibility and the establishment of overpayments. For 1 case summary we
reviewed, the Department found that the claimant did not comply with work search requirements,
and as a result, it established a fraud overpayment for this claimant.
DOL requires BAM program investigations to be completed within certain time frames, including
98% of paid and denied claims investigations being completed within 120 days of calendar
year-end from the sample, or batch’s, week-ending date. However, as reported in the State’s
fiscal years 2021 through 2023 single audit reports, the Department did not meet all minimum
percentage completion rates for paid and denied cases we tested for those fiscal years.29 Further
in the State’s fiscal year 2023 single audit, for batches of paid and denied claims we tested, we
found that the Department did not meet any of the minimum percentage completion rates for
paid claims and did not meet the required minimum percentage completion rates within 120
days of the calendar year-end for denied claims (see Figure 7, page 74, for the completion rates
for the batches we tested). As a result, the Department was at an elevated risk of not detecting
and reporting accurate error rates and the types and causes of benefit payment errors to
Department management and DOL. Further, Department management may not have developed
and implemented plans for corrective actions to improve its benefit accuracy rates, which DOL
requires. As of March 2025, DOL found that the finding was corrected. Further, according to
Department data, in fiscal year 2024, the Department met the minimum percentage completion
rates for paid and denied cases.
27 20 CFR 602.21.
28 As previously discussed in the Introduction (see textbox on page 2, footnote 2), claimants are required to be available for and actively seeking
work to be eligible for UI benefits, including completing 4 work search contacts per benefit week on 4 different dates.
29 Arizona Auditor General reports State of Arizona—Single audit report: Auditors’ section, year ended June 30, 2021, State of Arizona—Single audit
report: Auditors’ section, year ended June 30, 2022, and State of Arizona—Single audit report: Auditors’ section, year ended June 30, 2023.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
74
In accordance with federal regulations, DOL releases BAM program results each year on behalf
of the states, and the results from the sample are used to estimate improper payment rates
for the entire population.30 According to DOL data, in calendar year 2023, the Department’s
BAM program investigations found that in Arizona, an estimated $19.1 million was overpaid
to claimants and $155,000 was underpaid.31 BAM program investigations found that the top
2 causes of the estimated overpayments were related to claimant work-search requirements
and reasons for job separation, resulting in estimated overpayments of $5.7 million and $3.6
million, respectively. Further, BAM program investigations identified that approximately 66% of
the estimated overpayments were attributable to the claimant only, and approximately 14% of the
estimated overpayments were attributable to both the claimant and the Department.
30 20 CFR 602.21(g).
31 According to DOL requirements, improper payment rates reported by BAM programs exclude payments with eligibility issue(s) where the state
cannot take action because the determination is considered final under law and therefore considered “technically proper.”
Percentage of paid claims case
investigations completed within:
Required minimum
percentage completed
Department
percentage completed
60 days of the batches’ week-ending date
70.00%
58.63%
90 days of the batches’ week-ending date
95.00%
77.76%
120 days of calendar year-end
98.00%
85.24%
Percentage of denied claims case
investigations completed within:
Required minimum
percentage completed
Department
percentage completed
60 days of the batches’ week-ending date
60.00%
75.05%
90 days of the batches’ week-ending date
85.00%
88.08%
120 days of calendar year-end
98.00%
93.38%
Department met minimum percentage
Department did not meet minimum percentage
Figure 7
In the fiscal year 2023 single audit, we tested batches 202227 through 202326
of paid and denied claims and found the Department did not meet all minimum
percentage completion rates
Source: Arizona Auditor General report State of Arizona—Single audit report: Auditors’ section, year ended June 30, 2023.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
75
Question 9: What are the Department’s processes to identify and prevent
improper and/or fraudulent payments?
The Department has established policies, procedures, and processes to help it identify and
prevent some improper and/or fraudulent payments of UI Program benefits, including:32
X Verifying claimant identity before UI claims are filed
Statute requires the Department to verify the identity of an individual by incorporating
an identity verification process to ensure UI Program integrity.33 According to the
Department’s website, identity verification is required for new claimants before submitting
a claim for UI benefits. For online applications, the Department contracts with a private
vendor to perform the identity verification electronically. For paper applications, the
Department reported that Department staff manually verify the claimant’s identity by
first reviewing the claimant’s government-issued photo identification and then reviewing
whether the claimant’s Social Security number was validated (see page 77 for more
information on validating Social Security numbers).
X Performing wage audits of UI claimants with available data to identify claimants
who may be ineligible for UI benefits
In accordance with DOL requirements and federal regulations, the Department performs
wage audits to identify claimants who have received UI benefits but may be ineligible
because the claimant has regained employment and/or earned wages.34,35 This process
involves sending wage audit notices to employers requesting information about UI
claimants they may have hired and wages they may be earning; however, according to the
Department, it has not identified any federal or State laws or guidance requiring employers
to respond to these notices.
There are 2 types of crossmatches that generate a wage audit:
y New hire crossmatch
According to Department procedures, it crossmatches UI claims to national and State
new hire data on a weekly and daily basis, respectively, to identify claimants who may
have returned to work but are still collecting UI benefits.36 When a match is identified,
according to Department procedures, its audit reporting and tracking system is
32 As part of the State of Arizona single audits, we have reviewed whether the Department has identity verification and anti-fraud measures in place
for the State’s UI Program and have not identified any findings. For more information on our findings and recommendations to the Department
related to identity verification and anti-fraud measures for the federal CARES Act programs, see Arizona Auditor General reports State of
Arizona—Report on internal control and on compliance, year ended June 30, 2020 and State of Arizona—Single audit report: Auditors’ section,
year ended June 30, 2021.
33 A.R.S. §23-799.01(A).
34 U.S. Department of Labor (U.S. DOL). (2011). National effort to reduce improper payments in the Unemployment Insurance program.
(Unemployment Insurance Program Letter No. 19-11). Retrieved 07/29/2024 from https://www.dol.gov/agencies/eta/advisories/unemployment-
insurance-program-letter-no-19-11
35 20 CFR 603.23.
36 In accordance with A.R.S. §23-722.01, employers are required to report new hires, including employees who have been rehired or returned to
work, to the Department, and the Department is required to operate the State Directory of New Hires. Additionally, in accordance with 42 USC
653, the Department is required to furnish this information to the National Directory of New Hires, operated by the U.S. Health and Human
Service’s Office of Child Support Services, within 3 days of entry into the State Directory of New Hires.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
76
automated to send a wage audit notice to the employer and the claimant. The claimant
notice informs the claimant that the Department has received information indicating
they have returned to work, that an overpayment may exist, and that UI benefits will be
denied or delayed if the claimant fails to respond within 5 days. The employer notice
asks the employer to respond and provide information about the claimant, including
hire date and wages earned. Based on the information returned from claimants and/
or employers, this could result in an eligibility issue that could lead to fraud or nonfraud
overpayments being established. Department data indicates that as of August 2024, in
calendar year 2023, approximately 22,500 wage audit notices were sent to employers,
and the Department received responses from approximately 70% of employers. The
Department reported that, because employers are not required to respond to new hire
crossmatch wage audits, it may need to use only the claimant’s response to determine
whether an overpayment exists. In calendar year 2023, more than $2.3 million in
overpayments were established for 3,889 claimants.37
y Wage crossmatch
According to Department procedures, it crossmatches UI claims to the wage
information employers provide to the Department in accordance with A.R.S. §23-
722 and AAC R6-3-1703 on a quarterly basis. This crossmatch is performed to
identify claimants who earned wages but did not report or underreported earnings
and collected UI benefits. According to Department data, it performs the wage
crossmatches within 4 months of the quarter ending. According to Department
procedures, if a match is identified, its audit reporting and tracking system is
automated to send a wage audit notice to the employer, and the employer is asked to
provide any additional information about the claimant, such as hire date and wages
earned. Based on the information returned from employers, this could result in an
eligibility issue that could lead to fraud or nonfraud overpayments being established.
The Department reported that employers are not required to respond to the wage
audits, and if it does not receive a response from the employer, it cannot move forward
with establishing an overpayment. Specifically, to determine an overpayment exists,
the Department needs information from the employer verifying that the claimant’s
earnings are for the same weeks that the claimant collected UI benefits, but without
this information, it cannot make an overpayment determination. Department data
indicates that as of August 2024, for crossmatches against employer wage data from
calendar year 2023, approximately 82,500 wage audit notices were sent to employers,
and the Department received responses from approximately 30% of the employers.
This resulted in more than $1.2 million in overpayments being established for 1,899
claimants.38,39
37 Although the Department provided us with the total number of overpayments established and the total amounts collected during calendar year
2023 (see Figure 4 on page 64, Figure 5 on page 65, and Question 6, pages 67 through 69), the Department reported that due to IT system
limitations it could not provide us with the amount of overpayments collected specifically for the overpayments established as a result of wage
audit crossmatches.
38 According to Department data, as of September 2024, 2,049 claimants had open eligibility issues from this crossmatch, and this could result in
additional overpayments being established.
39 Although the Department provided us with the total number of overpayments established and the total amounts collected during calendar year
2023 (see Figure 4 on page 64, Figure 5 on page 65, and Question 6, pages 67 through 69), the Department reported that due to IT system
limitations it could not provide us with the amount of overpayments collected specifically for the overpayments established as a result of wage
audit crossmatches.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
77
X Validating UI claims as they are filed
The Department has established various procedures and processes to validate UI claims
as they are filed and to uncover suspicious fraudulent characteristics that are consistent
with DOL recommendations.40
These include:
y Validating Social Security numbers provided by UI claimants.
y Verifying immigration status of non-U.S. citizens and confirming validity of information
provided during claim filing.
y Comparing UI claimants’ information to local, state, and federal prison databases.
y Identifying internet protocol (IP) addresses linked to multiple UI claims or claims filed
outside of the U.S.
y Comparing UI claimants’ information to detect duplicate UI claims filed in other states.
y Performing data analytics to identify shared characteristics that can be indicators of
suspicious or fraudulent claims activity.
Question 10: What are the Department’s processes for investigating
allegations of fraud and referring individuals for prosecution?
The Department’s Office of Inspector General (OIG) receives and investigates allegations of
UI benefit fraud (fraud referrals) and also performs data analytics to identify potential fraud.
Specifically, the Department receives fraud referrals through several avenues, including by phone
through its fraud hotline, online, and internally from Department staff. According to Department
data, in calendar year 2023, OIG received 4,129 fraud referrals, with the highest referral source
being from the public, followed by referrals from the Department’s Division of Employment and
Rehabilitation Services.
After receiving an allegation of or identifying potential fraud, OIG assesses whether the case
meets the Arizona Attorney General Office’s prosecution standards, which includes thresholds for
number of weeks payments occurred and fraudulent UI benefits amounts. For those cases that
do not meet these prosecution standards, OIG declines the case or sends it to the UI Program
for review and adjudication. If the case meets these prosecution standards, OIG performs
the investigation and collects evidence, which may include generating subpoenas, reviewing
relevant case documentation, and identifying witnesses who could testify in the event of a trial.
When the evidence collected by OIG is not sufficient for prosecution, according to Department
procedures, the investigation will still result in overpayments being established. For example, in 1
case we reviewed from December 2023, a claimant had filed for and received UI benefits but was
40 U.S. Department of Labor (U.S. DOL). (2020b). Addressing fraud in the Unemployment Insurance system and providing states with funding to
assist with efforts to prevent and detect fraud and identity theft and recover fraud overpayments in the Pandemic Unemployment Assistance (PUA)
and Pandemic Emergency Unemployment Compensation (PEUC) programs. (Unemployment Insurance Program Letter No. 28-20). Retrieved
03/18/2024 from https://www.dol.gov/agencies/eta/advisories/unemployment-insurance-program-letter-no-28-20
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
78
identified as earning wages. However, during the investigation, the claimant’s former employers
were no longer in business and/or failed to respond to the OIG investigator, and as a result, the
case did not meet the criteria for prosecution and was sent for civil collection. If the evidence
collected by OIG is sufficient, the claimant receives their determination of overpayment and can
appeal. If the claimant does not appeal or does not win their appeal, OIG forwards the case to the
Arizona Attorney General’s Office for criminal prosecution.
According to Department data, in calendar year 2023, it submitted 441 cases to the Arizona
Attorney General’s Office, and as of August 2024, 336 cases were accepted and led to charges.41
Additionally, according to Department data, in calendar year 2023, 234 convictions with over $2.8
million were ordered in restitution.42
41 Department data indicated that as of August 2024, 10 cases were declined by the Arizona Attorney General’s Office and 95 cases were still
pending. According to the Department, when the Arizona Attorney General’s Office declines cases, overpayments have usually already been
established to allow for claimants to voluntarily pay overpayment debts prior to court proceedings. If the overpayment was not already
established when the case was declined, which the Department reported would mostly occur for identity theft cases, the Department would
then establish the overpayment to start collection recovery.
42 According to the Department’s website, in addition to paying restitution, convicted individuals may also face time in jail or prison, probation, and
community service hours.
FINDING X
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
79
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
79
SUMMARY OF RECOMMENDATIONS
FINDING 1
21
Develop or continue to develop and implement written policies and procedures that outline:
1. The number of calls UI call center and BPC supervisors should review
each month, including time frames for completing the reviews.
43
2. Methods for selecting staff calls for review, such as randomly
selecting calls, using a risk-based and/or judgmental selection, or
using a combination of selection methods.
44
3. Requirements and time frames for following up with staff to correct
identified deficiencies, including guidance for when to provide
coaching, additional training, and/or discipline, as appropriate.
44
4. Requirements, time frames, and guidance for UI and BPC call
center staff to perform callbacks, including when calls disconnect
midconversation and when callers request a callback.
44
5. Customer service steps and guidance for BPC call center staff when
answering BPC calls that are consistent with UI Program customer
service procedures.
44
Evaluate customer service quality by:
6. Continuing to review, analyze, and take steps to improve its call
center customer service metrics, such as call wait times and the
number of calls answered or transferred, including investigating and
correcting issues that are hindering improvement.
44
7. Continuing to identify, revise, and implement UI call center call-routing
system changes for reducing caller wait times and assisting more callers.
44
8. Continuing to revise and implement BPC call center staff training to
include new staff listening to recorded inbound calls independently
and shadowing experienced BPC call center staff as they answer
The Arizona Auditor General makes 22 recommendations to
the Department
Click on a finding, recommendation, or its page number to the right to go directly to that finding
or recommendation in the report.
Recommendations to the Department
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
80
phone calls, and requiring BPC supervisors to listen to calls that new
call center staff answer during their first 2 weeks of taking calls.
44
9. Develop and implement a documented process, including written policies,
procedures, and/or guidance, for analyzing data to inform staff-allocation
decisions, such as analyzing data on staff experience levels and number of
staff vacancies, to help ensure the UI call center maintains sufficient experience
and staffing levels.
44
10. Continue to revise the Department website, UI Program materials, and other
relevant information to use consistent terminology when directing claimants to
Arizona@Work offices and clearly explain the types of assistance available at
the Arizona@Work offices, including explaining that Arizona@Work office staff
do not provide assistance with UI Program questions or concerns.
44
11. Revise the Department website and wage statements to provide consistent
information and direction to claimants about the time frames for submitting a
wage protest.
44
FINDING 2
45
12. Analyze claimant demographic data to identify and investigate possible
indications of systemic discrimination, as required by federal regulation, and
take action to address any deficiencies identified by such analysis.
55
13. Conduct the required assessment of the UI Program to identify existing
access barriers or systemic discrimination and incorporate corrective actions
to address any identified deficiencies into Department modernization efforts,
including the development of the new UI Program IT system, as required by the
federal grant award received in 2022.
55
To identify existing access barriers or systemic discrimination when implementing
recommendation 13, review and evaluate various areas of the UI Program including, but not
limited to:
14. Continuing to evaluate the number and characteristics of individuals
who seek in-person assistance with various aspects of the UI
Program at Arizona@Work offices to identify and implement
corrective actions necessary to address potential UI Program access
barriers that these individuals experience.
55
15. Evaluating translated documents and information, including Spanish-
translated materials and planned work for translating documents and
information into the top 5 languages spoken in Arizona, to ensure that
translated materials are accurate and clear.
55
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
81
16. Evaluating the timeliness of UI benefit eligibility determinations, in
particular the reasons for untimely eligibility issue adjudication, to
identify and implement corrective actions.
55
17. Developing and implementing a documented process, including
written policies, procedures, and/or guidance, for systematically
tracking UI Client Advocate complaint data, including receipt
and resolution dates, complaint source, complaint topics and/or
categories, and action(s) taken to resolve complaints, in a format that
facilitates analysis.
55
18. Developing and implementing a documented process, including
written policies, procedures, and/or guidance, for regularly and
systematically analyzing UI Client Advocate complaint data to identify
and address potential UI Program access barriers or potential discrimination.
55
19. Evaluating methods for collecting UI call center data to identify and
implement performance metrics necessary for assessing the extent of
UI Program access barriers within the UI call center, such as tracking
and analyzing data on the frequency and prevalence of callers
experiencing long call wait times.
55
20. Evaluating planned methods for communicating important/time-
sensitive UI Program information to claimants and incorporate
necessary corrective actions when implementing the new UI Program
IT system to ensure that claimants receive information timely, such
as requiring claimants to select a secondary preferred notification
method in alignment with DOL recommendations for using multiple
methods for corresponding with claimants.
55
21. Conduct a review of relevant federal and State laws and regulations impacting
the UI Program to ensure that all UI Program requirements have been identified.
56
22. Develop and implement processes to comply with all UI Program requirements,
including any requirements it identifies when implementing recommendation 21.
56
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
a-1
Arizona@Work responsible for providing services and resources
to individuals seeking employment, and provides access to
computers and phones for accessing Department’s UI Program
As discussed in the Introduction, page 2,
UI claimants are required to register for the
Department’s employment services through
the online Arizona Job Connection portal when
they file for UI benefits, and the Department,
in partnership with Arizona@Work, provides
resources and services to individuals seeking
employment opportunities. Specifically, the
federal Workforce Innovation and Opportunity
Act of 2014 (WIOA) was designed to strengthen
the nation-wide workforce development
system for states and provided various federal
workforce development programs (see textbox
for more information about WIOA). In Arizona,
Arizona@Work is the workforce development
entity responsible for implementing provisions
of WIOA, including providing core programs
through a centralized delivery system that
includes the corresponding State entities
that are responsible for administering them.1
Specifically, as shown in the textbox and
in accordance with statute, the Arizona
Department of Education is the State’s
administrative entity for administering WIOA’s
Title II program whereas the Department is
responsible for administering the remaining
core programs, including employment services
under Title III.2
As part of its responsibility for maintaining
a delivery system to provide the services
established by WIOA, Arizona@Work operates
multiple types of offices with its various
partners, including (1) Arizona@Work Job
1 In accordance with federal and State law, the Workforce Arizona Council oversees Arizona@Work. The Workforce Arizona Council’s members
include the Governor, individuals from private business, community and labor organizations, local and State government agencies, and
members from the State Legislature.
2 A.R.S. §§41-1954, 15-232, 15-234, and 15-206.
APPENDIX A
Workforce Innovation and
Opportunity Act
WIOA was signed into law in July 2014 to
strengthen and improve the nation’s public
workforce system and help get individuals,
including youth and those with significant
barriers to employment, into high-quality
jobs and careers and help employers hire
and retain skilled workers. Specifically,
WIOA Titles I through IV established
several core programs designed to
help job seekers access employment,
education, training, and support services
to succeed in the labor market and to
match employers with the skilled workers
they need to compete in the global
economy, including:
X Title I: Adult, dislocated worker,
and youth programs.1
X Title II: Adult education and
literacy program.2
X Title III: Employment services
program.1
X Title IV: Vocational rehabilitation
program.1
1 Administered by the Department.
2 Administered by the Arizona Department of Education.
Source: Auditor General staff review of 29 USC 3101 et seq;
A.R.S. §§41-1954, 15-232, 15-234, and 15-206; and DOL
website.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
a-2
Centers that provide services for all of the core programs in Titles I through IV at each location
and (2) affiliate sites that provide services for 1 or more of the core programs in a community or
social service office.3,4 The Department uses both Arizona@Work Job Centers and affiliate sites
to provide various Title III employment services to members of the public, including UI claimants
and employers.5 Examples of these services include providing no-cost assistance with creating
a resume and preparing for job interviews, helping with job postings and searches, researching
labor market information, and providing career assessments. See Figure 8, page a-3, for a
map of all Arizona@Work offices where the Department provides Title III employment services,
including Arizona@Work Job Centers and affiliate sites.
Although some UI claimants may visit Arizona@Work offices to receive assistance with
reemployment or to use computers or phones to file UI claims or contact the Department’s call
centers, the Department does not provide any UI Program services or assistance at these offices,
including any customer service related to individual claims or overpayments, and UI Program staff
are not present at these offices (see Finding 1, pages 22, 32, 36, and 37, for more information).
3 Arizona@Work also operates specialized centers that provide programs to address specific needs and demographics, which may include
vocational rehabilitation, education, and youth services, among others. For example, in Pima County, Arizona@Work operates a specialized job
center for veterans, active duty military personnel, and their spouses. However, the Department does not provide Title III employment services at
any Arizona@Work specialized centers.
4 WIOA authorizes the establishment of local workforce development boards, which are certified by state governors. These local workforce
development boards are responsible for overseeing the delivery of workforce development programs in their respective local areas, including
overseeing the state’s centralized delivery system for providing the WIOA core programs within the local area. According to the Workforce
Arizona Council’s policies, Arizona’s Governor is responsible for designating local areas through consultation with the Workforce Arizona
Council and the local area’s chief elected executive official from a unit of general local government, such as a city mayor. Each local workforce
development board is responsible for designating and certifying the operators who provide the WIOA core programs in their respective local
area.
5 The Department refers to these affiliate sites as “DES Employment Services” offices.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
a-3
Phoenix
Glendale
Tucson
Flagstaff
Page
Mesa
Yuma
Payson
Parker
Bullhead
City
Globe
Winslow
Pinetop-
Lakeside
Safford
Casa
Grande
Douglas
Nogales
Sierra Vista
Kayenta
Cottonwood
Prescott
Kingman
APACHE
NAVAJO
COCONINO
MOHAVE
LA PAZ
YUMA
PIMA
PINAL
MARICOPA
YAVAPAI
GILA
GRAHAM
COCHISE
SANTA
CRUZ
G
R
E
E
N
L
E
E
Arizona@Work office1
UTAH
COLORADO
NEW MEXICO
Figure 8
Department provides WIOA Title III employment services in 27 Arizona@Work
offices across the State
1 The Arizona@Work network includes affiliate sites that provide services for 1 or more of the WIOA core programs. As such, Arizona@Work may
have more offices than shown in this figure since it may have affiliate sites at which the Department does not provide Title III employment
services and thus is not present at those locations.
Source: Auditor General staff review of Department-provided list of Arizona@Work offices with Title III employment services.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
b-1
Scope and methodology
The Arizona Auditor General has conducted this performance audit of the Department pursuant
to a November 21, 2022, resolution of the Joint Legislative Audit Committee. This audit was
conducted as part of the sunset review process prescribed in A.R.S. §41-2951 et seq.
We used various methods to address the audit’s objectives. These methods included reviewing
applicable State statutes and rules; federal laws, regulations, guidelines, and reports; the
Department’s website, policies, procedures, standard work documents, guidance, grant
agreements, training materials, UI application and informational materials, and various reports;
and interviewing Department staff.
Additionally, we used the following specific methods to meet the audit objectives:
X To determine whether the Department provided timely and accurate customer service for
accessing its UI Program in calendar year 2023, we:
y Evaluated the Department’s provision of customer service provided through its UI and
BPC call centers by:
Z Reviewing call center routing flowcharts from calendar years 2023 and 2024.
Z Listening to a sample of 61 of approximately 214,349 recorded phone calls that
Department staff handled through the UI call center in calendar year 2023 and
assessing if staff followed UI Program call center and customer service procedures
and assessed the amount of time callers waited on hold after being transferred
from 1 queue to another.1 This review included a stratified random sample of
50 calls—35 general inquiry and 15 adjudication—and a judgmental sample of
11 calls—8 general inquiry and 3 adjudication—which were associated with the
sample of 50. Our judgmental sample of 11 calls included all instances in which
callers had called in multiple times on the same day because this could be an
indication that the caller’s questions or concerns were not being fully addressed or
resolved within their first call.
Z Listening to a sample of 19 of approximately 10,732 recorded phone calls with a
call duration of 2 minutes or longer that Department staff answered through the
BPC call center in calendar year 2023 and assessing if staff followed BPC call
1 The Department’s call center system tracks the total number of calls handled by the UI call center, including inbound and outbound calls. Our
review of the data identified some calls that disconnected midconversation where Department staff called the caller back. Because our review
was intended to assess how Department staff handled a single interaction, we matched calls occurring on the same date by call number and
staff member to identify and remove from the population the callbacks associated with disconnected calls. Additionally, we excluded calls
without a measured talk time because these callers never connected with UI call center staff. Due to these adjustments, the population figure
we report is approximate.
APPENDIX B
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
b-2
center procedures and UI Program customer service procedures.2 This review
included a stratified random sample of 14 calls—8 overpayment and 6 PUA—and a
judgmental sample of 5 calls—3 overpayment and 2 PUA—which were associated
with the sample of 14. Our judgmental sample of 5 calls included all instances in
which callers had called in multiple times on the same day because this could be
an indication that the caller’s questions or concerns were not being fully addressed
or resolved within their first call.
Z Listening to a random sample of UI call center phone calls transferred from
the general inquiry queue to the adjudication queue in April and May 2024 to
identify reasons why some callers were transferred between the queues after
the Department made changes to its call-routing system. This review included
2 random samples—2 of 284 calls transferred in April 2024 and 2 of 305 calls
transferred in May 2024.
Z Reviewing BPC supervisor call quality review documentation from calendar year
2023 to assess if customer service issues identified during the reviews were
corrected. Additionally, we reviewed written procedures for BPC supervisors to
perform call monitoring the Department revised during the audit in October 2024,
and BPC call quality written procedures it developed in response to our audit in
April 2025.
Z Reviewing and analyzing Department-reported call center metrics to identify daily
averages, such as maximum daily wait time and average daily number of calls
received/answered for calendar years 2023 and 2024.
Z Reviewing and analyzing Department call center data to identify the average
number of calls transferred from the general inquiry queue to the adjudication
queue for a 2-month period—April and May—in calendar years 2023 and 2024.
y Reviewed UI program information on the Department’s website and other UI Program
informational materials, including documents and notices sent to claimants, to
determine if they provided claimants with clear and accurate information.
X To identify potential UI Program access barriers and associated impacts that could be
indications of discrimination, we:
y Interviewed staff from a stratified sample of 7 of 27 Arizona@Work locations in the
State to identify the types of UI Program customer service assistance individuals seek
at these offices. This review included a random sample of 3 Arizona@Work offices
located in urban counties—counties with a population greater than 1 million according
to U.S. Census data—and a judgmental sample of 4 Arizona@Work offices located in
2 The Department’s call center system tracks the total number of calls handled by the BPC call center, including inbound and outbound calls. We
excluded outbound calls from our analysis because part of our review assessed the reasons why individuals called the BPC call center.
Additionally, we excluded calls that had a call duration of less than 2 minutes to ensure we reviewed calls that were long enough in duration to
assess the Department’s provision of customer service. Due to these adjustments, the population figure we report is approximate.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
b-3
rural counties.3,4 Our judgmental sample considered county unemployment rates for
calendar year 2023 and the geographic location and number of Arizona@Work offices
in the county.
y Compared Spanish and English language versions of the UI Program initial and weekly
claim applications and other informational materials for differences that could impact
a claimant’s ability to understand program requirements and guidelines for accessing
the UI Program.
y Reviewed Department data on the timeliness of nonmonetary adjudications for initial
and weekly claims from calendar year 2023 and April through September 2024.
y Reviewed the UI Client Advocate’s complaint tracker for UI complaints the Department
received in calendar year 2023.
y Reviewed Department PUA IT system portal data to identify the frequency of unread
PUA overpayment determination letters.
X To provide information in the Introduction and Questions and Answers about the
Department’s processes for processing claims, reviewing claim accuracy, and preventing
and detecting fraud, we:
y Reviewed Department-prepared information regarding staffing and vacancies.
y Analyzed financial and statistical information from the State of Arizona annual
comprehensive financial reports for fiscal years 2017 through 2023.
y Analyzed information from the Arizona Auditor General State of Arizona—Single
audit reports for fiscal years 2021 through 2023. This includes information from the
Auditors’ and State sections of the reports. The State section includes State agencies’
information that was compiled by the Arizona Department of Administration.
y Reviewed a wage statement for a claimant who filed an initial UI claim in January 2025.
y Analyzed Department UI Program and PUA program data as of February 2025 and
January 2025, respectively, for overpayments established and waived in calendar year
2023.
y Analyzed Department data on requests for reconsiderations in calendar year 2023 and
the outcomes of those requests.
y Analyzed Department data on appeal decisions filed, issued, and outcomes for the UI
Program and PUA program in calendar year 2023.
3 Urban counties are those with a population greater than 1 million according to U.S. Census data. We reviewed census data from calendar year
2023 to identify urban and rural counties for our review.
4 U.S. Census Bureau. (2023). U.S. Census Bureau QuickFacts: Arizona. Retrieved 5/31/2024 from https://www.census.gov/quickfacts/fact/table/
AZ/PST045223
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
b-4
y Analyzed Department data on nonmonetary and monetary determinations issued for
the UI Program in calendar year 2023.
y Reviewed DOL data on the results from the Department’s BAM program investigations
for calendar year 2023.
y Reviewed DOL’s March 2025 determination in response to deficiencies we identified in
fiscal year 2023 with the BAM program’s testing of a minimum percentage of paid and
denied claims.
y Analyzed Department data from new hire and wage crossmatches performed in and
for calendar year 2023 claims, including data on overpayments established as a result
of the crossmatches and wage audit notices sent to and returned by employers.
y Reviewed Department data on fraud referrals received in calendar year 2023 and
cases submitted to the Arizona Attorney General’s Office for fraud prosecution.
X To obtain information for Appendix A, we reviewed State guidance for implementing federal
law and a Department listing of Arizona@Work office locations with Title III employment
services.5
Our work on internal controls, including information system controls, included, where applicable,
reviewing the Department’s policies and procedures and testing Department compliance with
these policies and procedures, and assessing compliance with State statutes and federal
regulations. We reported our conclusions on applicable internal controls in Findings 1 and 2.
We selected our audit sample(s) to provide sufficient evidence to support our findings,
conclusions, and recommendations. Unless otherwise noted, the results of our testing using
these samples were not intended to be projected to the entire population.
We conducted this performance audit of the Department in accordance with generally accepted
government auditing standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit objectives.
We express our appreciation to the Department Director and staff for their cooperation and
assistance throughout the audit.
5 29 USC 3101 et seq.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
c-1
The Joint Legislative Audit Committee requires all agencies to respond to whether they agree
with our findings and plan to implement the recommendations. We appreciate the Department’s
response, including its agreement with all findings and its willingness to work collaboratively with
our Office to continue to improve its provision of UI Program customer service and access to
the UI Program. However, the Department has included certain statements in its response that
necessitate the following clarification.
Issue
Department’s response
In its responses to Findings 1 and 2, the Department stated that the audit period was nearly 18
months prior to our report’s publication and that most of our recommendations were related to
continuing and/or supplementing the Department’s existing efforts, actions, and processes.
Auditor General’s comments
The time frame for our audit spanned calendar years 2023 through early 2025. Our initial focus
on the Department’s provision of customer service in calendar year 2023 was based on several
factors, including our risk assessment, stakeholder feedback indicating that members of the
public had experienced multiple issues with the Department’s UI Program customer service
during that time frame, and the goal of providing the Department with useful information to inform
its ongoing UI program modernization efforts.
Our audit also included a significant amount of work to assess the Department’s provision of
UI Program customer service during calendar year 2024 and early 2025, and this work was
particularly important for assessing the impact of various changes the Department made or
reported it made during the audit (see pages 32, 37 through 42, 46 through 48, 50, and 51).
Although this work identified that the Department had improved its provision of UI Program
customer service in several areas (see pages 32, 37 through 41, and 48), we also identified
additional customer service issues and potential barriers for accessing the UI Program, and
we made several recommendations to address these issues (see pages 32 through 33,
38, 41 through 42, and 48 through 52 for the issues we identified; and pages 43 and 44,
recommendations 1 through 4, 10, and 11, and page 55, recommendations 14 through 20 for the
associated recommendations we made).
Finally, although some of our work did assess Department processes and efforts that were
already in place at the beginning of our audit, most of our recommendations that direct the
Department to continue its efforts are related to actions it took during the audit, and in many
cases, these actions were in response to our work (see pages 32, 38, 41, 48, and 52). We
appreciate the Department’s responsiveness during the audit to start addressing these issues,
and we look forward to continuing to work with the Department to address all outstanding issues
during our followup process.
AUDITOR GENERAL’S COMMENTS ON THE DEPARTMENT’S
RESPONSE
Department RESPONSE
The subsequent pages were written by the Department to
provide a response to each of the findings and to indicate
its intention regarding implementation of each of the
recommendations resulting from the audit conducted by the
Arizona Auditor General.
Arizona Auditor General
Arizona Department of Economic Security—Unemployment Insurance Program | June 2025 | Report 25-101
Katie Hobbs
Governor
Michael Wisehart
Director
May 27, 2025
Ms. Lindsey Perry, CPA, CFE
Auditor General
Arizona Office of the Auditor General
2910 North 44th Street, Suite 410
Phoenix, Arizona 85018
RE: Auditor General’s report, Arizona Unemployment Insurance Program, Sunset Review
Dear Ms. Perry:
The Arizona Department of Economic Security (Department) has conducted a thorough review
of the Auditor General’s report and will be implementing the recommendations as documented
in the attachment.
The Department is dedicated to cultivating a culture of excellence, accountability, and
innovation. Our commitment to continuous improvement is integral to our operations, guiding us
in the refinement of internal processes and the enhancement of service quality. The Department
will persist in evaluating its performance, soliciting feedback, and implementing modifications
that advance our mission to better serve the citizens of Arizona.
The Department acknowledges and appreciates the diligence and collaboration demonstrated
by the staff of the Office of the Auditor General throughout the Sunset Review process.
If you have any questions, please contact Bryce A. Barraza, Deputy Assistant Director, Division
of Employment and Rehabilitation Services, at (602) 542-4910 or bbarraza@azdes.gov.
Sincerely,
Michael Wisehart
Director
Attachment
1789 W. Jefferson, Mail Drop 1111, Phoenix, AZ 85007 ∙ P.O. Box 6123, Mail Drop 1111, Phoenix, AZ 85005
Telephone (602) 542-5757 ∙ Fax (602) 542-5339 ∙ https://des.az.gov/
Finding 1: Department provided quality customer service to some Unemployment Insurance
(UI) claimants, but service quality, accuracy, and timeliness problems exist, potentially causing
claimant hardships and frustration, and increasing staff workload.
Department response: The Auditor General’s finding is agreed to.
Response explanation: The Arizona Department of Economic Security (DES) strives to
serve clients and employers in the most efficient and effective manner, and is committed to
the continuous improvement of operations.
It is important to note that the audit period for this report is Calendar Year (CY) 2023, which
is less than 15 months after the expiration of the federal COVID-19 Pandemic
unemployment programs in September 2021, and nearly 18 months from the publication of
this report in Summer 2025.
As documented in this report, the national and state UI systems experienced constraints in
their effort to meet the unprecedented demand of the COVID-19 Pandemic, primarily
stemming from a historical lack of federal investment, antiquated technologies, and complex
regulations. In 2020, DES worked expeditiously to meet an unprecedented demand for
services and administered critical benefits to over 600,000 Arizonans impacted by the
COVID-19 Pandemic.
Since then, DES’ efforts to improve operations and best serve clients include enhancements
to technology, incorporation of best practices in business processes, and improved
communications. Many of DES’ improvement initiatives were initiated prior to the
engagement of these audit activities, and were either implemented prior to the completion of
the audit or will be implemented in the latter part of 2025.
For context, of the report’s 11 recommendations for the first finding: all 11 of the
recommendations include actions taken by DES that were already initiated prior to the
conclusion of the audit; and six recommendations include language for DES to continue its
already existing efforts dedicated to improving operations.
DES is prudently working toward the implementation of a new and modernized UI case
management system, which is expected to be available in September 2025. The new and
modernized UI case management system will replace antiquated technology and:
● Increase availability: The modernized system will be web-based and available 24/7,
allowing clients to submit an application and access the client portal any time of day and
on any computer, smartphone or tablet.
● Improve communication: Clients may opt-in for electronic communication about their
case via the client portal. Clients will have the ability to respond to questionnaires and
upload other necessary information directly in the client portal via any smart device.
● Improve access to case information: Clients will have access to dashboards showing
claim status.
● Simplify navigation: Clients will not have to use multiple systems. Clients can apply for
benefits, submit their weekly certifications and go through the appeal process in one
system.
The competitive procurement process to support the development and implementation of a
modernized UI case management system was initiated in December 2021, the contract was
awarded in November 2022, and the development of the system started in February 2023.
Page 1
In addition to ensuring the UI Program operates with a modernized case management
system, DES enhanced the call center infrastructure serving clients. In January 2024, DES
implemented:
● Automated and self-service access to personalized claim information and frequently
asked questions: When a client calls with a question, their question can be automatically
answered without having to wait on hold to speak to someone.
● Requested Call Back: Clients, once in queue, can request a call back from a team
member, as opposed to waiting on-hold.
As a result, the quantity of calls served increased. Over 230,000 calls were served via the
automated and self-service functions in CY 2024. Additionally, the quantity of calls received
by the UI call center decreased from CY 2023 to 2024, indicating that the quantity of times a
client must call to receive information about their claim has also decreased due to the
automated and self-service functionality implemented. In 2023, the UI call center received
over 814,000 phone calls, whereas in 2024, the quantity of calls decreased to 367,000 calls.
Additionally, the average wait time for clients to speak to a team member decreased five
minutes, from approximately 39 minutes to 34 minutes.
DES continues to explore additional opportunities to enhance technology and improve call
center operations to ensure a more efficient and effective experience for clients.
Further, DES actively engages its federal partners to increase investment in Arizona to
improve operations. In 2022 and 2023, DES applied for and was awarded two federal
discretionary grants in the amount of $10.5 million to support specific improvement activities
and integrity functions, such as the modernization of the UI case management system and
enhancements to call center operations.
From the client perspective, filing a claim for UI can be challenging. The UI Program can be
complex, and federally required communications and terms can be confusing. Therefore, the
UI Program is conducting a ‘plain language’ review of critical communications between DES
and clients. The goal is that individuals understand communication from DES the first time
the document is read. This review includes creating new video tutorials and other
communication assisting clients with submitting an initial application, submitting weekly
certification and important information about how to satisfy the work search requirements.
Revised communications will be implemented in conjunction with the modernized case
management system.
DES will continue to evaluate how best to serve clients and work to improve operations.
DES appreciates constructive feedback from stakeholders and those that engage the
Department for services and support. DES is committed to transparency in its actions and
working to strengthen individuals, families, and communities for a better quality of life.
Recommendation 1: Develop or continue to develop and implement written policies and
procedures that outline the number of calls UI call center and Benefit Payment Control
(BPC) supervisors should review each month, including time frames for completing the
reviews.
Department response: The audit recommendation will be implemented.
Response explanation: It is important to note that both call centers already have
established quality review requirements and processes. These expectations have been
Page 2
communicated, as demonstrated in the existing practice of call performance reviews.
The requirements have been established since the fourth quarter of 2023 for the UI call
center and since October 2024 for the BPC call center.
DES will develop more-explicit written procedures to outline the number of calls the UI
call center and BPC supervisors are required to review each month, along with the time
frames for completing these reviews.
Recommendation 2: Develop or continue to develop and implement written policies and
procedures that outline methods for selecting staff calls for review, such as randomly
selecting calls, using a risk-based and/or judgmental selection, or using a combination of
selection methods.
Department response: The audit recommendation will be implemented.
Response explanation: It is important to note that both call centers already have
established quality review requirements and processes. These expectations have been
communicated, as demonstrated in the existing practice of call performance reviews.
The requirements have been established since the fourth quarter of 2023 for the UI call
center and since October 2024 for the BPC call center.
DES will develop more-explicit written procedures to document the methodology for
conducting quality reviews.
Recommendation 3: Develop or continue to develop and implement written policies and
procedures that outline requirements and time frames for following up with staff to correct
identified deficiencies, including guidance for when to provide coaching, additional training,
and/or discipline, as appropriate.
Department response: The audit recommendation will be implemented.
Response explanation: It is important to note that DES regularly reviews performance for
both the UI and BPC call centers, including the evaluation of metrics, and adherence to
established procedures.
DES will continue to update existing procedures to include coaching guidelines and
steps for progressive discipline.
Recommendation 4: Develop or continue to develop and implement written policies and
procedures that outline requirements, timeframes, and guidance for UI and BPC call center
staff to perform callbacks, including when calls disconnect mid-conversation and when
callers request a callback.
Department response: The audit recommendation will be implemented.
Response explanation: DES has implemented written procedures that include
requirements, timeframes, and guidance for team members supporting both the UI and
BPC call centers to perform callbacks, including when calls get disconnected and when
callers request a callback.
Page 3
Recommendation 5: Develop or continue to develop and implement written policies and
procedures that outline customer service steps and guidance for BPC call center staff when
answering BPC calls that are consistent with UI Program customer service procedures.
Department response: The audit recommendation will be implemented.
Response explanation: In November 2024, DES implemented revisions to written
procedures for the BPC call center that include customer service and call handling
guidance, aligning with the procedures of the UI call center.
Recommendation 6: Evaluate customer service quality by continuing to review, analyze,
and take steps to improve its call center customer service metrics, such as call wait times
and the number of calls answered or transferred, including investigating and correcting
issues that are hindering improvement.
Department response: The audit recommendation will be implemented.
Response explanation: DES is committed to the continuous improvement of operations,
and as such, maintains artifacts to monitor call center performance. It is important to note
that DES’ existing performance monitoring for the unemployment call center includes
industry best practices and United States Department of Labor (U.S. DOL)
recommended metric categories such as: first call resolution; service level response
time; adherence to schedule; self-service; and call quality.
DES will continue to collect data and review call center performance to identify
opportunities to improve operations. DES will revise and implement call center
performance monitoring artifacts for the BPC call center. DES will also, when
appropriate, continue to revise the artifacts used to monitor call center performance to
better support problem-solving.
Recommendation 7: Evaluate customer service quality by continuing to identify, revise, and
implement UI call center routing system changes for reducing caller wait times and assisting
more callers.
Department response: The audit recommendation will be implemented.
Response explanation: DES will continue to evaluate how best to serve clients and work
to improve operations, including enhancements to the call center infrastructure. In
January 2024, DES implemented enhancements to the UI call center that increased
capacity to serve more calls. Enhancements included the implementation of:
● Automated and self-service access to personalized claim information and
frequently asked questions: When a client calls with a question, their question
can be automatically answered without having to wait on hold to speak to
someone.
● Requested Call Back: Clients, once in queue, can request a call back from a
team member, as opposed to waiting on-hold.
As a result, the quantity of calls served increased. Over 230,000 calls were served via
the automated and self-service functions in CY 2024. Additionally, the quantity of calls
received by the UI call center decreased from CY 2023 to 2024, indicating that the
quantity of times a client must call to receive information about their claim has also
Page 4
decreased due to the automated and self-service functionality implemented. In 2023,
the UI call center received over 814,000 phone calls, whereas in 2024, the quantity of
calls decreased to 367,000 calls. Additionally, the average wait time for clients to speak
to a team member decreased five minutes, from approximately 39 minutes to 34
minutes.
Recommendation 8: Evaluate customer service quality by continuing to revise and
implement BPC call center staff training to include new staff listening to recorded inbound
phone calls independently and shadowing experienced BPC call center staff as the answer
phone calls, and requiring BPC supervisors to listen to calls that new call center staff answer
during their first two weeks of taking calls.
Department response: The audit recommendation will be implemented.
Response explanation: DES implemented a customer service training program for the
BPC call center in October 2024. As part of the onboarding process, staff are provided
examples of effective and ineffective call recordings to support their learning and
reinforce
best
practices.
In
addition,
staff shadow experienced call center
representatives. Supervisors are now required to monitor live calls and provide feedback
during the deputy’s first two weeks of taking calls.
Recommendation 9: Develop and implement a documented process, including written
policies, procedures and/or guidance, for analyzing data to inform staff-allocation decisions,
such as analyzing data on staff experience levels and number of vacancies, to help ensure
the UI call center maintains sufficient experience and staffing levels.
Department response: The audit recommendation will be implemented in a different
manner.
Response explanation: It is important to note that DES has existing methods in place to
assess and inform staff allocation decisions. Methods include, but are not limited to,
management review meetings and the use of performance monitoring artifacts, of which
the Audit team observed during the audit field work.
DES will supplement existing methods with written elements and guidelines for
consideration.
Recommendation 10: Continue to revise the Department website, UI Program materials,
and other relevant information to use consistent terminology when directing claimants to
Arizona@Work offices and clearly explain the types of assistance available at the
Arizona@Work offices, including explaining that Arizona@Work office staff do not provide
assistance with UI Program questions or concerns.
Department response: The audit recommendation will be implemented.
Response
explanation:
The
Arizona
Department
of
Economic
Security
(DES/Department) initiated prior to the audit field work, and will continue, efforts to
ensure the alignment of the Unemployment Insurance (UI) Program website, materials,
and other information as part of system modernization efforts. Additionally, to better
assist clients, DES will ensure that updates related to ARIZONA@WORK offices reflect
the types of services available.
Page 5
Recommendation 11: Revise the Department website and wage statements to provide
consistent information and direction to claimants about the time frames for submitting a
wage protest.
Department response: The audit recommendation will be implemented.
Response explanation: DES initiated prior to the audit field work, and will continue,
efforts to ensure the alignment of the UI Program website, materials, and other
information as part of system modernization efforts. DES will ensure information related
to the wage statement is consistent in all communication artifacts.
Finding 2: Inconsistent with federal regulation and recommendations, the Department has not
analyzed UI Program data and information to identify potential access barriers and
discrimination, impacting its ability to implement UI Program improvements, including planned
modernization, and increasing risk to claimants
Department response: The Auditor General’s finding is agreed to.
Response explanation: DES expects that clients are served with dignity and respect, and
treats every individual equally. It is important to note that there is no evidence or indication of
any discriminatory practices.
DES strives to serve clients in the most efficient and effective manner, and is committed to
the continuous improvement of operations. For context, of the report’s 11 recommendations
for the second finding, 10 of the recommendations include supplementing existing DES
actions and processes.
The audit report references federal regulations distributed to states by the U.S. DOL via
Unemployment Insurance Program Letter (UIPL) 11-14. DES will work to fulfill its obligations
under UIPL 11-14. It is also important to note that the audit recommendations include
activities that are not specifically required by federal regulation.
Recommendation 12: Analyze claimant demographic data to identify and investigate
possible indications of systemic discrimination, as required by federal regulation, and take
action to address any deficiencies identified by such analysis.
Department response: The audit recommendation will be implemented.
Response explanation: DES will work to fulfill its obligations under UIPL 11-14.
DES expects that clients are served with dignity and respect and treats every individual
equally. It is important to note that there is no evidence or indication of any discriminatory
practices.
Recommendation 13: Conduct the required assessment of the UI Program to identify
existing access barriers or systemic discrimination and incorporate corrective actions to
address any identified deficiencies into Department modernization efforts, including the
development of the new UI Program Information Technology (IT) system, as required by the
federal grant award received in 2022.
Department response: The audit recommendation will be implemented.
Page 6
Response explanation: DES will work to fulfill its obligations under UIPL 11-14.
Recommendation 14: To identify existing access barriers or systemic discrimination when
implementing recommendation 13, review and evaluate various areas of the UI Program
including, but not limited to continuing to evaluate the number and characteristics of
individuals who seek in-person assistance with various aspects of the UI Program at
ARIZONA@WORK offices to identify and implement corrective actions necessary to
address potential UI Program access barriers that these individuals experience.
Department response: The audit recommendation will be implemented in a different
manner.
Response explanation: DES initiated, prior to this audit report, an assessment of UI
clients’ engagement with ARIZONA@WORK local offices. In 2024, a survey was
conducted to identify the frequency in which, and for what reasons, UI clients were
entering ARIZONA@WORK offices. Information gathered during the assessment period
resulted in the implementation of process improvements to better support clients
completing required identity verification and submitting information related to their claims
when entering a local ARIZONA@WORK office.
ARIZONA@WORK provides no-cost employment services to job-seekers, such as
resume writing assistance, interview skill building and job-search and referral services.
UI clients are required to seek employment and conduct work search activities by state
and federal law. ARIZONA@WORK is an appropriate and effective resource to provide
no-cost support to UI clients in their work search efforts.
DES continues to explore additional opportunities to effectively serve clients. DES will
work to fulfill its obligations under UIPL 11-14.
Recommendation 15: To identify existing access barriers or systemic discrimination when
implementing recommendation 13, review and evaluate various areas of the UI Program
including, but not limited to evaluating translated documents and information, including
Spanish-translated materials and planned work for translating documents and information
into the top five languages spoken in Arizona, to ensure that translated materials are
accurate and clear.
Department response: The audit recommendation will be implemented.
Response explanation: DES will work to fulfill its obligations under UIPL 11-14.
DES initiated prior to the audit field work, and will continue, efforts to ensure the
alignment of the UI Program website, materials, and other information as part of system
modernization efforts. DES will ensure already planned translations are accurate.
Recommendation 16: To identify existing access barriers or systemic discrimination when
implementing recommendation 13, review and evaluate various areas of the UI Program
including, but not limited to evaluating the timeliness of UI benefit eligibility determinations,
in particular the reasons for untimely eligibility issue adjudication, to identify and implement
corrective actions.
Page 7
Department response: The audit recommendation will be implemented in a different
manner.
Response explanation: DES will work to fulfill its obligations under UIPL 11-14.
DES continues to work to improve timeliness of application processing for all UI clients.
Arizona, and all states that administer an UI Program, provide quarterly updates on
timeliness and improvement activities to the U.S. DOL via the State Quality Service Plan.
Recommendation 17: To identify existing access barriers or systemic discrimination when
implementing recommendation 13, review and evaluate various areas of the UI Program
including, but not limited to developing and implementing a documented process, including
written policies, procedures, and/or guidance, for systematically tracking UI Client Advocate
complaint data, including receipt and resolution dates, complaint source, complaint topics
and/or categories, and action(s) taken to resolve complaints, in a format that facilitates
analysis.
Department response: The audit recommendation will be implemented in a different
manner.
Response explanation: It is important to note that DES has existing processes to engage
and support clients throughout the benefit claim process and address any communicated
concerns. Additionally, information collated from the existing processes is evaluated to
identify areas of improvement.
DES maintains multiple methods for which clients may contact specific personnel, via
dedicated communication channels, to request assistance and communicate concerns
–including the UI Client Advocate and DES Ombudsman units.
DES will supplement existing methods with written elements and guidelines for
consideration. DES will work to fulfill its obligations under UIPL 11-14.
Recommendation 18: To identify existing access barriers or systemic discrimination when
implementing recommendation 13, review and evaluate various areas of the UI Program
including, but not limited to developing and implementing a documented process, including
written policies, procedures and/or guidance, for regularly and systematically analyzing UI
Client Advocate complaint data to identify and address potential UI Program access barriers
or potential discrimination.
Department response: The audit recommendation will be implemented in a different
manner.
Response explanation: DES has existing processes to engage and support clients
throughout the benefit claim process and address any communicated concerns.
Additionally, information collated from the existing processes is evaluated to identify
areas of improvement.
DES maintains multiple methods for which clients may contact specific personnel, via
dedicated communication channels, to request assistance and communicate concerns
–including the UI Client Advocate and DES Ombudsman units.
Page 8
DES will supplement existing methods with written elements and guidelines for
consideration. DES will work to fulfill its obligations under UIPL 11-14.
Recommendation 19: To identify existing access barriers or systemic discrimination when
implementing recommendation 13, review and evaluate various areas of the UI Program
including, but not limited to evaluating methods for collecting UI call center data to identify
and implement performance metrics necessary for assessing the extent of UI Program
access barriers within the UI call center, such as tracking and analyzing data on the
frequency and prevalence of callers experiencing long call wait times.
Department response: The audit recommendation will be implemented in a different
manner.
Response explanation: DES will work to fulfill its obligations under UIPL 11-14. It is
important to note that DES’ existing performance monitoring for the unemployment call
center includes industry best practices and U.S. DOL recommended metric categories
such as: first call resolution; service level response time; adherence to schedule;
self-service; and call quality.
DES will continue to collect data and review call center performance to identify
opportunities to improve operations. DES will, where appropriate, continue to revise the
artifacts used to monitor call center performance to better support problem-solving.
Recommendation 20: To identify existing access barriers or systemic discrimination when
implementing recommendation 13, review and evaluate various areas of the UI Program
including,
but
not
limited
to
evaluating
planned
methods
for
communicating
important/time-sensitive UI Program information to claimants and incorporate necessary
corrective actions when implementing the new UI Program IT system to ensure that
claimants receive information timely, such as requiring claimants to select a secondary
preferred notification method in alignment with U.S. DOL recommendations for using
multiple methods for corresponding with claimants.
Department response: The audit recommendation will be implemented in a different
manner.
Response explanation: It is important to note that DES’ existing methods of
communication for the UI Program comply with federal rule. DES is leveraging
technology to improve the client experience. Due to constraints with antiquated
technology, the current primary method clients receive information from the UI Program
is on paper, via mail.
With the planned implementation of a modernized case management in September
2025, clients will receive immediate communications electronically via their client portal.
Clients will also maintain the option to receive communications from the UI Program via
mail. Clients will have the ability to respond to questionnaires and upload other
necessary information directly in the client portal via any smart device.
Recommendation 21: Conduct a review of relevant federal and State laws and regulations
impacting the UI Program to ensure that all UI Program requirements have been identified.
Department response: The audit recommendation will be implemented.
Page 9
Response explanation: DES has a robust process to review all relevant state and federal
laws and regulations to identify all applicable requirements for the UI Program.
Requirements stemming from new legislation impacting the UI Program are implemented
through a comprehensive impact assessment of programmatic policies and procedures,
as well as program operations, which inform the revisions and changes required for
compliance. Additionally, DES closely monitors and assesses federal guidance as it is
issued, outlining necessary actions required for compliance, including implementation
requirements for program operations, revisions needed for policies and procedures, and
conducts reviews to ensure alignment with federal regulations.
Recommendation 22: Develop and implement processes to comply with all UI Program
requirements, including any requirements it identifies when implementing recommendation
21.
Department response: The audit recommendation will be implemented.
Response explanation: DES has a robust process to review all relevant state and federal
laws and regulations to identify all applicable requirements for the UI Program.
Requirements stemming from new legislation impacting the UI Program are implemented
through a comprehensive impact assessment of programmatic policies and procedures,
as well as program operations, which inform the revisions and changes required for
compliance. Additionally, DES closely monitors and assesses federal guidance as it is
issued, outlining necessary actions required for compliance, including implementation
requirements for program operations, revisions needed for policies and procedures, and
conducts reviews to ensure alignment with federal regulations.
Page 10File and source
- File
- REPORT_AZ-Auditor-General_DES-UI-program_25-101_2025-06.pdf
- Size
- 1,693,421 bytes
- SHA-256
- aee5512e43ef67a32148c4afc135dd23865ce45987adc0328329e26bc071cee1
- Original
- www.azauditor.gov