Audit Report - Executive Office of Labor and Workforce Development - Department of Unemployment Assistance
- Document type
- Report
- Date
- 2024-12-12
Summary
An official performance audit report of the Massachusetts Office of the State Auditor, Audit No. 2022-0221-3S, issued December 12, 2024, on the Executive Office of Labor and Workforce Development and its Department of Unemployment Assistance for the period March 12, 2020 through December 31, 2021. The audit examined controls to identify potential fraud in pandemic-related programs. It reports four findings: Pandemic Unemployment Assistance benefits were incorrectly paid on behalf of incarcerated individuals and on behalf of then-current Commonwealth employees, overpayments to incarcerated individuals were not reported to the DOL Office of the Inspector General, and not all Unemployment Insurance Trust Fund reports were submitted or submitted on time. The report notes an estimated $2.5 billion overdrawn from the fund and includes the agency's responses and the auditor's replies.
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Full text
Official Audit Report – Issued December 12, 2024
Executive Office of Labor and Workforce
Development—Department of Unemployment
Assistance
For the period March 12, 2020 through December 31, 2021
State House Room 230 Boston, MA 02133 auditor@massauditor.gov www.mass.gov/auditor
December 12, 2024
Lauren Jones, Secretary
Executive Office of Labor and Workforce Development
1 Ashburton Place, Suite 2112
Boston, MA 02108
Dear Secretary Jones:
I am pleased to provide to you the results of the enclosed performance audit of the Executive Office of
Labor and Workforce Development. As is typically the case, this report details the audit objectives, scope,
methodology, findings, and recommendations for the audit period, March 12, 2020 through December
31, 2021. As you know, my audit team discussed the contents of this report with agency managers. This
report reflects those comments.
I appreciate you and all your efforts at the Executive Office of Labor and Workforce Development. The
cooperation and assistance provided to my staff during the audit went a long way toward a smooth
process. Thank you for encouraging and making available your team. I am available to discuss this audit if
you or your team have any questions.
Best regards,
Diana DiZoglio
Auditor of the Commonwealth
cc: Katie Dishnica, Director of the Department of Unemployment Assistance
Audit No. 2022-0221-3S Executive Office of Labor and Workforce Development
Table of Contents
TABLE OF CONTENTS
EXECUTIVE SUMMARY ........................................................................................................................................... 1
OVERVIEW OF AUDITED ENTITY ............................................................................................................................. 3
AUDIT OBJECTIVES, SCOPE, AND METHODOLOGY ................................................................................................. 6
DETAILED AUDIT FINDINGS WITH AUDITEE’S RESPONSE ...................................................................................... 11
1. The Department of Unemployment Assistance incorrectly paid Pandemic Unemployment Assistance
benefits on behalf of individuals while they were incarcerated. ............................................................... 11
2. The Department of Unemployment Assistance incorrectly paid Pandemic Unemployment Assistance
benefits on behalf of then-current Commonwealth of Massachusetts employees. ................................... 13
3. The Department of Unemployment Assistance did not report overpayments made to incarcerated
individuals to the US Department of Labor Office of the Inspector General for further investigation. ...... 15
4. The Executive Office of Labor and Workforce Development’s Department of Economic Research did not
submit all Unemployment Insurance Trust Fund reports or ensure that they were submitted by required
due dates. ................................................................................................................................................. 16
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Audit No. 2022-0221-3S Executive Office of Labor and Workforce Development
List of Abbreviations
LIST OF ABBREVIATIONS
CARES Coronavirus Aid, Relief, and Economic Security
CTR Office of the Comptroller of the Commonwealth
DOL US Department of Labor
DUA Department of Unemployment Assistance
EOLWD Executive Office of Labor and Workforce Development
ETA Employment and Training Administration
OIG Office of the Inspector General
PUA Pandemic Unemployment Assistance
UI unemployment insurance
UITF Unemployment Insurance Trust Fund
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Audit No. 2022-0221-3S Executive Office of Labor and Workforce Development
Executive Summary
EXECUTIVE SUMMARY
In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State
Auditor has conducted a performance audit of the Executive Office of Labor and Workforce Development
(EOLWD) for the period of March 12, 2020, through December 31, 2021.
The purpose of the audit was to determine what type of system controls the Department of
Unemployment Assistance (DUA) had in place to identify potential fraud within expanded programs
related to the COVID-19 pandemic. We looked at certain areas where we believed it would be easier for
DUA to determine whether fraud occurred—areas where state government already has sufficient data in
its possession to identify potential fraud—and whether DUA used this information to look for and identify
such activity. In order do to this, we examined the following:
whether DUA ensured that incarcerated individuals did not receive Pandemic Unemployment
Assistance (PUA) benefits in accordance with the US Department of Labor’s (DOL’s) Employment
and Training Administration’s (ETA’s) Unemployment Insurance Program Letter No. 23–20, dated
May 11, 2020;
whether DUA ensured that Commonwealth of Massachusetts employees did not receive PUA
benefits in accordance with DOL’s ETA’s Unemployment Insurance Program Letter No. 23–20,
dated May 11, 2020;
whether DUA investigated and reported all overpayments over $10,000 to the DOL Office of the
Inspector General (OIG) in accordance with DOL’s ETA’s Unemployment Insurance Program Letter
No. 04–17 (Change 1);
whether DUA updated its internal control plan to address the COVID-19 pandemic in accordance
with the Office of the Comptroller of the Commonwealth’s (CTR’s) “COVID-19 Pandemic Response
Guidance,” dated September 30, 2020;
whether DUA submitted annual, quarterly, and monthly Unemployment Insurance Trust Fund
(UITF) reports to the Legislature in accordance with Section 14F of Chapter 151A of the General
Laws.
Below is a summary of our findings, the effects of those findings, and our recommendations, with links to
each page listed.
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Audit No. 2022-0221-3S Executive Office of Labor and Workforce Development
Executive Summary
Finding 1 DUA incorrectly paid PUA benefits on behalf of individuals while they were incarcerated.
Page 11
Effect If DUA does not perform its due diligence to ensure that all benefit recipients are eligible, DUA
may not be managing taxpayer funds effectively, which may result in less money being
available for other services and programs and the premature exhaustion of money from the
UITF.
Recommendation DUA should review the design of its incarceration crossmatch process to detect all instances
Page 12 of incarcerated individuals applying for unemployment insurance (UI) benefits (or their
identifications being used by others to do so) to ensure that those ineligible individuals do
not receive UI benefits from the Commonwealth.
Finding 2 DUA incorrectly paid PUA benefits on behalf of then-current Commonwealth of
Page 13 Massachusetts employees who were not eligible to receive these benefits.
Effect If DUA does not perform its due diligence to ensure that all benefit recipients are eligible,
DUA may not be managing taxpayer funds effectively, which may result in less money being
available for other services and programs and the premature exhaustion of money from
the UITF.
Recommendations 1. DUA should implement an effective crossmatch process to detect all instances of
Page 14 Commonwealth employees applying for UI benefits.
2. DUA should coordinate with CTR to gain access to an up-to-date list of Commonwealth
employees.
Finding 3 DUA did not report overpayments made to incarcerated individuals to DOL OIG for further
Page 15 investigation.
Effect Because DUA did not report the overpayments to DOL OIG, DOL OIG was not able to
investigate the causes of these overpayments and potentially prosecute any offenders.
Recommendations 1. DUA should develop and implement effective policies and procedures to ensure that it
Page 16 investigates overpayments over the $10,000 threshold to determine whether any of
these claims are fraudulent.
2. DUA should ensure that it reports overpayments to DOL OIG where it determines fault
that meets required reporting thresholds.
Finding 4 EOLWD’s Department of Economic Research did not submit all UITF reports or ensure that
Page 16 they were submitted by required due dates.
Effect Untimely or missing UITF reports can delay legislative oversight, accountability and
decisions related to the UITF. In this instance, the failure to issue timely UITF reports
coincided with an estimated $2.5 billion in being overdrawn by the Commonwealth from
the UITF. These overpayments may need to be repaid by businesses, taxpayers, and state
government. Failure to submit these reports in a timely manner also prevented
policymakers, including the Legislature, from participating in the process of identifying and
implementing solutions to this issue, potentially resulting in a larger overspending than
otherwise would have occurred.
Recommendations 1. EOLWD should determine the causes of and address the inconsistencies in its
Page 17 accounting system.
2. EOLWD should submit UITF reports to the Legislature by required due dates.
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Audit No. 2022-0221-3S Executive Office of Labor and Workforce Development
Overview of Audited Entity
OVERVIEW OF AUDITED ENTITY
The Executive Office of Labor and Workforce Development (EOLWD) is authorized by Section 1 of Chapter
23 of the Massachusetts General Laws and operates under the direction of the Secretary of Labor and
Workforce Development, who is appointed by the Governor. EOLWD comprises six departments and three
organizations that offer a wide range of programs and resources for employers and job seekers: the
Department of Unemployment Assistance (DUA), the Department of Labor Standards, the Department of
Industrial Accidents, the Department of Economic Research, the Department of Family and Medical Leave,
the Department of Labor Relations, the Division of Apprentice Standards, the MassHire Department of
Career Services, and the Council on the Underground Economy. EOLWD also oversees Commonwealth
Corporation, which offers programs and services to help citizens of the Commonwealth secure
employment.
The federal Social Security Act of 1935 created the unemployment insurance (UI) program as a joint
federal-state partnership, with each state responsible for designing its own program within broad federal
guidelines. The US Department of Labor (DOL) oversees the federal program, and DUA administers the
Commonwealth’s UI program. The UI program provides temporary income assistance to eligible workers
in Massachusetts and determines and collects employer contributions to the UI program. The
Commonwealth provides up to 30 weeks of UI benefits to individuals who meet the initial and ongoing
eligibility requirements during a period when they are unemployed.
DUA’s federally funded budget for its UI program was $62.9 million in fiscal year 2020, $62.0 million in
fiscal year 2021, and $62.0 million in fiscal year 2022. As of January 2022, Massachusetts had received
over $26.5 billion in pandemic-related unemployment funds to administer from the Families First
Coronavirus Response Act and the Coronavirus, Aid, Relief, and Economic Security (CARES) Act.
DUA told us that it had approximately 200 employees before the start of the COVID-19 pandemic, but this
number fluctuated throughout the audit period, with the ebb and flow of benefit claims—with the highest
staffing level exceeding 2,000 individuals. These individuals consisted of DUA employees, employees from
other Massachusetts agencies who were loaned to DUA, and third-party call center employees.
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Audit No. 2022-0221-3S Executive Office of Labor and Workforce Development
Overview of Audited Entity
Pandemic Unemployment Assistance Program
The CARES Act was enacted on March 27, 2020, and the American Rescue Plan Act was enacted on March
11, 2021. These laws created numerous federal unemployment benefit programs to combat the
historically high number of individuals who were unemployed because of the COVID-19 pandemic.
Following the passage of the CARES Act and the American Rescue Plan Act, DUA implemented three new
federally funded programs: the Federal Pandemic Unemployment Compensation program, the Pandemic
Emergency Unemployment Compensation program, and the Pandemic Unemployment Assistance (PUA)
program.
The PUA program was available to individuals whose incomes were affected by the COVID-19 pandemic
and who were self-employed, seeking part-time employment, or otherwise would not qualify for UI
benefits or qualify for extended benefits under state or federal law. Through multiple extensions, and the
ability for individuals to submit benefit claims retroactive to February 2, 2020, the PUA program provided
up to 79 weeks of benefits before being officially terminated September 4, 2021.
There were limitations within the system DUA used to administer UI benefits. Because of these
limitations, DUA worked with a third-party contractor to implement a new system specifically designed to
administer the PUA program. DUA used this PUA claim system to process PUA claims and document which
individuals requested, received, and were denied PUA benefits.
Unemployment Insurance Trust Fund
According to Section 904(a) of the Social Security Act of 1935, the Secretary of the Treasury receives UI
funds from states and holds these funds in the federal Unemployment Trust Fund. The funds, collected
and deposited by states, come from employer contributions under the Federal Unemployment Tax Act
and the State Unemployment Tax Act. Massachusetts collects these funds in the Unemployment
Insurance Trust Fund (UITF). The UITF funds UI benefits paid by the state, while DUA’s administrative costs
are paid directly by the federal government from Federal Unemployment Tax Act contributions.
Public and private for-profit employers in Massachusetts are subject to a contributory funding method
where DUA calculates each employer’s contribution rate using factors such as whether it is a new or
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Audit No. 2022-0221-3S Executive Office of Labor and Workforce Development
Overview of Audited Entity
established employer,1 the employer’s account balances and activity over the previous 12 months,
employee wages, and more. These employers make their contributions quarterly.
Government and nonprofit employers in Massachusetts may choose to reimburse DUA for the full amount
of UI benefits paid to their former employees instead of making quarterly contributions using the above
contributory method. Under the reimbursement method, DUA sends an employer a bill for any month in
which there were charges to their account from unemployment benefit claims from former employees.
1. Employers pay the new employer rate for three years before being considered established employers.
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Audit No. 2022-0221-3S Executive Office of Labor and Workforce Development
Audit Objectives, Scope, and Methodology
AUDIT OBJECTIVES, SCOPE, AND METHODOLOGY
In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State
Auditor has conducted a performance audit of certain activities of the Executive Office of Labor and
Workforce Development (EOLWD) for the period March 12, 2020 through December 31, 2021.
We conducted this performance audit 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.
Below is a list of our audit objectives, indicating each question we intended our audit to answer; the
conclusion we reached regarding each objective; and, if applicable, where each objective is discussed in
the audit findings.
Objective Conclusion
1. Did the Department of Unemployment Assistance (DUA) ensure that incarcerated No; see Finding 1
individuals did not receive Pandemic Unemployment Assistance (PUA) benefits in
accordance with the US Department of Labor’s (DOL’s) Employment and Training
Administration’s (ETA’s) Unemployment Insurance Program Letter No. 23–20, dated
May 11, 2020?
2. Did DUA ensure that Commonwealth of Massachusetts employees did not receive PUA No; see Finding 2
benefits in accordance with DOL’s ETA’s Unemployment Insurance Program Letter No.
23–20, dated May 11, 2020?
3. Did DUA investigate and report all overpayments over $10,000 to the DOL Office of the No; see Finding 3
Inspector General (OIG) in accordance with DOL’s ETA’s Unemployment Insurance
Program Letter No. 04–17 (Change 1)?
4. Did DUA update its internal control plan to address the COVID-19 pandemic in Yes
accordance with the Office of the Comptroller of the Commonwealth’s (CTR’s) “COVID-
19 Pandemic Response Guidance,” dated September 30, 2020?
5. Did DUA submit annual, quarterly, and monthly Unemployment Insurance Trust Fund No; see Finding 4
(UITF) reports to the Legislature in accordance with Section 14F of Chapter 151A of the
General Laws?
To accomplish our audit objectives, we gained an understanding of the aspects of DUA’s internal controls
that we deemed relevant to our objectives by reviewing agency policies and procedures and by
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Audit No. 2022-0221-3S Executive Office of Labor and Workforce Development
Audit Objectives, Scope, and Methodology
interviewing DUA staff members and management responsible for the administration and management
of the areas under audit.
To obtain sufficient, appropriate evidence to address our audit objectives, we performed the procedures
described below.
Benefits Paid to Incarcerated Individuals
To confirm that DUA ensured that incarcerated individuals did not receive PUA benefits in accordance
with the requirements of DOL’s ETA’s Unemployment Insurance Program Letter No. 23–20, dated May
11, 2020, we took the following actions:
DUA provided us with a list from its PUA system, with data originating from the Massachusetts
Parole Board, of individuals incarcerated in Massachusetts during the audit period. We also
reviewed DUA’s PUA claim system.
We selected a random, statistical2 sample of 103 from the population of 7,102 claims filed for PUA
benefits by individuals who were identified by the Massachusetts Parole Board as having been
incarcerated during the audit period, using a 95% confidence level,3 a 50% expected error rate,4
and a 20% desired precision range.5
Using DUA’s PUA claim system, we identified, for each of the 103 sampled claims, each filing
individual’s claim status for each week that they filed for PUA benefits, the date each claim week
(which is a week for which a claimant requested benefits) was filed, the amount paid and the
payment date, and the dates of their incarceration and release. For each claim in our sample, we
compared the filing individual’s identified dates of incarceration, according to data from the
Massachusetts Parole Board, to the dates that they received PUA benefits to determine whether
DUA made any payments to individuals who were incarcerated four or more days during the week
for which they received benefits.
For each claim in our sample, we compared the dates the filing individual was incarcerated to the
weeks they submitted claims for PUA benefits. We also reviewed the Benefits Issues tab within
DUA’s PUA claim system to determine whether the claim had an incarceration issue noted in the
2. Auditors use statistical sampling to select items for audit testing when a population is large (usually over 1,000) and contains
similar items. Auditors generally use a statistics software program to choose a random sample when statistical sampling is
used. The results of testing using statistical sampling, unlike those from judgmental sampling, can usually be used to make
conclusions or projections about entire populations.
3. Confidence level is a mathematically based measure of the auditor’s assurance that the sample results (statistic) are
representative of the population (parameter), expressed as a percentage.
4. Expected error rate is the number of errors that are expected in the population, expressed as a percentage. It is based on the
auditor’s knowledge of factors such as prior year results, the understanding of controls gained in planning, or a probe sample.
5. Desired precision range is the range of likely values within which the true population value should lie; also called confidence
interval. For example, if the interval is 90%, the auditor will set an upper confidence limit and a lower confidence where 90%
of transactions fall within those limits.
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Audit Objectives, Scope, and Methodology
system and, if so, the date documented within the system that the incarceration was initially
detected.
We reviewed the detailed information within DUA’s PUA system for weeks that each individual
claimed PUA while they were reported by the Massachusetts Parole Board as incarcerated to
determine whether DUA paid PUA benefits while each individual was incarcerated.
See Finding 1 for issues we identified with DUA paying incarcerated individuals PUA benefits.
Benefits Paid to Commonwealth Employees
To confirm that DUA ensured that Commonwealth of Massachusetts employees did not receive PUA
benefits in accordance with DOL’s ETA’s Unemployment Insurance Program Letter No. 23–20, dated May
11, 2020, we took the following actions:
DUA provided us with the list of Commonwealth employees during May 2020 that it originally
received from CTR. We also reviewed DUA’s PUA claim system.
We selected a random, statistical sample of 80 from a population of 5,488 claims filed for PUA
benefits by individuals who were reported by CTR as having been Commonwealth employees at
that time, using a 95% confidence level, a 25% expected error rate, and a 20% desired precision
range.
Using DUA’s PUA claim system, we identified, for each sampled claim, the filing individual’s claim
status for each week they filed, the date each claim week was filed, the amount paid and the
payment date, and the dates between the payment and the date a denial was assessed by DUA,
if any. We also reviewed the CTHRU website, the Commonwealth’s statewide payroll open
records system, to determine whether the claimant was listed on the website as having earnings
from the Commonwealth of Massachusetts in 2019, 2020, or 2021.
For each claim sampled, we determined whether there were any instances where an active
Commonwealth employee was paid a claim for PUA benefits.
See Finding 2 for issues we identified with DUA paying PUA benefits on behalf of Commonwealth
employees.
Reporting of Overpayments
To determine whether DUA investigated and reported all overpayments over $10,000 to DOL OIG in
accordance with DOL’s ETA’s Unemployment Insurance Program Letter No. 04–17 (Change 1), we took
the following actions:
We exported from the DUA’s PUA claim system a report of all existing overpayments with an
account type of “PUA—Massachusetts,” a receivable type (in this case, the specific pandemic
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Audit Objectives, Scope, and Methodology
unemployment program) of “Pandemic Unemployment Assistance,” and an impact type (in this
case, the reason the claim was denied) of “Incarceration Denial.”
Overpayments in excess of $10,000 must be reported to DOL. To determine whether DUA
reported overpayments to DOL, we requested, from DUA, evidence for the entire population of
50 existing PUA overpayments in excess of $10,000 that were related to an incarceration denial.
See Finding 3 for issues we identified with DUA reporting overpayments exceeding $10,000 to DOL.
Internal Control Plan Updates
To determine whether DUA updated its internal control plan to address the COVID-19 pandemic in
accordance with CTR’s “COVID-19 Pandemic Response Guidance,” dated September 30, 2020, we took
the following actions:
We requested, and DUA provided us with, its internal control plan that was in effect during the
audit period.
We reviewed this plan and its attachments and inspected each to determine whether it was
updated to reflect the impact of the COVID-19 pandemic on DUA’s business and operating
processes.
Based on our testing, DUA prepared an internal control plan that reflected the impact of the COVID-19
pandemic on its business and operating process.
UITF Reporting
To determine whether DUA submitted annual, quarterly, and monthly UITF reports to the Legislature in
accordance with Section 14F of Chapter 151A of the General Laws, we took the following actions:
We received from EOLWD’s Department of Economic Research 15 UITF reports generated during
the audit period and the associated emails for the submission of each to the Legislature.
We inspected the dates and recipients of each email to determine whether EOLWD submitted
each UITF report to the Legislature by the required due date.
See Finding 4 for issues we identified with DUA’s UITF reports.
We used statistical sampling methods for testing; however, we did not project the results of our testing
to any population.
Data Reliability Assessment
To determine the reliability of the data from DAU’s PUA system, we took the following actions:
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Audit No. 2022-0221-3S Executive Office of Labor and Workforce Development
Audit Objectives, Scope, and Methodology
We interviewed DUA employees and Massachusetts Parole Board employees who were
knowledgeable about the data. We also reviewed DUA policies over its information system
controls.
We reviewed the System and Organization Control reports6 that covered the periods November
1, 2019 through April 30, 2020; May 1, 2020 through April 30, 2021; and May 1, 2021 through
April 30, 2022. We verified that the System and Organization Control reports described testing of
certain information system general controls (access controls, configuration management,
contingency planning, and segregation of duties) and that they were tested without exceptions.
We performed electronic testing by reviewing the data for blank fields and duplicate entries, and
we ensured that all required fields contained appropriate information (for example, date fields
reported valid dates).
To verify that the first names, last names, Social Security numbers, dates of birth, commitment
numbers, and commitment dates matched the information recorded in DUA’s PUA claim system,
we traced this information from a random sample of 35 individuals from each of the nine
incarceration batch files,7 which were provided to us by DUA but originated from the
Massachusetts Parole Board.
Based on the results of the data reliability assessment procedures described above, we determined that
the information we obtained was sufficiently reliable for the purposes of our audit.
6. A System and Organization Control report is a report, issued by an independent contractor, on controls about a service
organization’s systems relevant to security, availability, processing integrity, confidentiality, or privacy.
7. DUA provided us with nine separate files, which we used to compile our list of individuals who were reported by the
Massachusetts Parole Board as being incarcerated in Massachusetts during the audit period.
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Audit No. 2022-0221-3S Executive Office of Labor and Workforce Development
Detailed Findings with Auditee’s Response
DETAILED AUDIT FINDINGS WITH AUDITEE’S RESPONSE
1. The Department of Unemployment Assistance incorrectly paid Pandemic
Unemployment Assistance benefits on behalf of individuals while they were
incarcerated.
The Department of Unemployment Assistance (DUA) paid Pandemic Unemployment Assistance (PUA)
benefits, totaling $155,903, to 32 of the 103 incarcerated individuals in our sample. We noted the
following:
DUA paid PUA benefits to 28 of the 32 incarcerated individuals in our sample whose claims for
benefits were labeled with incarceration denials for the weeks that they claimed benefits. The
other 4 of these 32 incarcerated individuals in this sample did not have an incarcerated denial
recorded; which is why, DUA paid the PUA benefits.
We found that DUA did not record incarceration denials for 19 of the 103 incarcerated individuals
in our sample for weeks that the individual was incarcerated while applying for PUA benefits. Of
these 19 incarcerated individuals, 15 had their benefits denied for other reasons, and 4 received
PUA benefits.
If DUA does not perform its due diligence to ensure that all benefit recipients are eligible, DUA may not be
managing taxpayer funds effectively, which may result in less money being available for other services and
programs and the premature exhaustion of money from the Unemployment Insurance Trust Fund (UITF).
Authoritative Guidance
Authoritative guidance on this issue is set forth in the US Department of Labor’s (DOL’s) Employment and
Training Administration’s (ETA’s) Unemployment Insurance Program Letter No. 23–20, which states, “The
temporary programs enacted by the [Coronavirus Aid, Relief, and Economic Security] Act operate in
tandem with the fundamental eligibility requirements of the federal-state [unemployment insurance]
program.”
These “fundamental eligibility requirements” include the following:
Section 6 of Chapter 151A of the Massachusetts General Laws, which states, “The term
‘employment’ shall not include: . . . (v) Service performed in a custodial or penal institution by an
inmate of said custodial or penal institution.”
Section 24 of Chapter 151A of the General Laws, which states, “An individual, in order to be
eligible for benefits under this chapter shall . . . (b) Be capable of, available, and actively seeking
work in his usual occupation or any other occupation for which he is reasonably fitted.”
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Detailed Findings with Auditee’s Response
Section 25 of Chapter 151A of the General Laws, which states,
No benefits shall be paid to an individual under this chapter for . . .
(e) The period of unemployment next ensuing and until the individual has had at
least eight weeks of work and has earned an amount equivalent to or in excess
of 8 times the individual’s weekly benefit amount after the individual has left
work. . . (3) because of conviction of a felony or misdemeanor.
Reasons for Issue
DUA officials told us that the manual process to crossmatch claims for PUA benefits against the list of
incarcerated individuals was introduced in June 2020, and an automated process was introduced February
2021. Incarceration denials were noted in DUA’s PUA claim system. In some instances, PUA benefits were
already paid out to individuals before DUA received data on these incarcerated individuals from the
Massachusetts Parole Board and ran the crossmatch on incarcerated individuals.
Recommendation
DUA should review the design of its incarceration crossmatch process to detect all instances of
incarcerated individuals applying for unemployment insurance (UI) benefits (or their identifications being
used by others to do so) to ensure that those ineligible individuals do not receive UI benefits from the
Commonwealth.
Auditee’s Response
On 6/02/2020, the Department of Unemployment Assistance (DUA) introduced a process to
manually create availability issues on claims when DUA received notification from law enforcement
agencies about a claimant’s incarceration. An availability issue would stop payment on a claim while
DUA contacted the claimant via fact finding for the purposes of investigating the issue. Once the
problem was discovered regarding incarcerated individuals filing for benefits, it took several months
to determine which law enforcement agency would best be able to provide us with the most
accurate and complete prisoner data.
Development of an incarcerated prisoner crossmatch process began in December of 2020 and went
into production on 02/02/2021. This automated process involved crossmatching claimant records
against data provided by the Parole Department. The automated crossmatch ran daily with the
nightly batch process and a new parole file was received and processed every Monday from
02/02/2021 until 3/18/2022 when the Pandemic Unemployment Assistance (PUA) program sunset.
Overpayments related to Incarceration denials currently make up .69% of the existing PUA
overpayments. The automated process placed incarceration issues on claims that DUA received
matches for via the crossmatch process. An Incarceration benefit issue prevented payment while
DUA gave the claimant the opportunity to respond to DUA’s findings. When the PUA program
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Detailed Findings with Auditee’s Response
sunset, claimants were no longer filing new PUA claims or filing weekly certifications for benefits
so there was no need to continue the automated incarcerated prisoner crossmatch.
Auditor’s Reply
Based on its response, there was no preexisting system at DUA to ensure that incarcerated individuals did
not receive benefits from any type of UI programs prior to the pandemic. While we applaud the efforts
detailed in its response to set up this automated crossmatch, it did take DUA almost a year into the
pandemic to develop and implement it. Benefit payments were already made during this time period,
improperly, on behalf of individuals who were incarcerated. It also did not appear to catch all instances of
an incarcerated individual claiming UI benefits, as our audit noted in four instances.
We reiterate our recommendation that DUA should review the design of its incarceration crossmatch
process to detect all instances of incarcerated individuals applying for UI benefits (or their identifications
being used by others to do so) to ensure that those ineligible individuals do not receive UI benefits from
the Commonwealth. Although this audit was of the PUA program, DUA could also apply this
recommendation to current UI programs it operates.
2. The Department of Unemployment Assistance incorrectly paid Pandemic
Unemployment Assistance benefits on behalf of then-current
Commonwealth of Massachusetts employees.
DUA made PUA benefit payments totaling $315,340 on behalf of 22 of the 80 sampled individuals who,
during our audit period, were reported by the Office of the Comptroller of the Commonwealth (CTR) as
Commonwealth employees at the time they received unemployment benefits.
If DUA does not perform its due diligence to ensure that all benefit recipients are eligible, DUA may not
be managing taxpayer funds effectively, which may result in less money being available for other services
and programs and the premature exhaustion of money from the UITF.
Authoritative Guidance
Authoritative guidance on this issue is set forth in DOL’s ETA’s Unemployment Insurance Program Letter
No. 23–20, which states, “The temporary programs enacted by the CARES Act operate in tandem with the
fundamental eligibility requirements of the federal-state UI program.”
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Audit No. 2022-0221-3S Executive Office of Labor and Workforce Development
Detailed Findings with Auditee’s Response
These “fundamental eligibility requirements” include the following:
Section 25 of Chapter 151A of the General Laws, which states, “No benefits shall be paid to an
individual under this chapter for . . . (j) Any week in which the individual fraudulently collects
benefits while not in total or partial unemployment.”
DOL’s ETA’s Unemployment Insurance Program Letter No. 23–20 referenced Unemployment
Insurance Program Letter No. 16–20, which states,
Individuals who meet the following criteria are not eligible for PUA:
a. Individuals who have the ability to telework with pay. When addressing issues
about the availability of paid telework, the state must determine whether the
claimant has been offered the option of continuing to work for pay by
teleworking. If so, and claimants were offered to continue to work the same
number of hours, claimants are not eligible for PUA.
Reasons for Issue
DUA did not implement a process to crossmatch the names of Commonwealth employees with CTR data
until May 21, 2020. DUA paid PUA benefits that were submitted before it implemented the crossmatch
process.
Additionally, DUA used the same list of Commonwealth employees provided to them by CTR for the entire
duration of the program. DUA did not update this list of Commonwealth employees to ensure that it had
been crossmatched against current lists of Commonwealth employees.
Recommendations
DUA should implement an effective crossmatch process to detect all instances of Commonwealth
employees applying for UI benefits.
DUA should coordinate with CTR to gain access to an up-to-date list of Commonwealth employees.
Auditee’s Response
The PUA system was introduced in Massachusetts on 4/21/2020. DUA received a list of state
employees by the Comptroller’s Office and loaded that data into the PUA system on 6/21/2020.
Thereafter, Identity Verification issues were added to claims when there was a crossmatch with
the state employees list, triggering further review of initial claims to confirm valid identity. Any
instance of a crossmatch with then-current Commonwealth of Massachusetts employees was
flagged and benefits were not issued.
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Audit No. 2022-0221-3S Executive Office of Labor and Workforce Development
Detailed Findings with Auditee’s Response
Auditor’s Reply
While DUA did get the state employee crossmatch implemented two months into the PUA program,
improper payments were already paid on behalf of current state employees, as noted in the above finding.
We reiterate our recommendation that an effective crossmatch should be implemented to detect
instances when the identity of a current state employee is being used to claim benefits for any UI program.
We also reiterate our recommendation that DUA should use an up-to-date list of Commonwealth
employees to do this crossmatch to capture changes in employment over time.
3. The Department of Unemployment Assistance did not report overpayments
made to incarcerated individuals to the US Department of Labor Office of
the Inspector General for further investigation.
DUA did not investigate any of the 50 overpayments that were over $10,000 that were made to
incarcerated individuals, totaling approximately $604,000. DUA also did not report these improper
payments to the DOL Office of the Inspector General (OIG) for further investigation.
Because DUA did not report the overpayments to DOL OIG, DOL OIG was not able to investigate the causes
of these overpayments and potentially prosecute any offenders.
Authoritative Guidance
DOL’s ETA’s Unemployment Insurance Program Letter No. 04–17 (Change 1) states,
Administrators or their designees report the following to the DOL-OIG:
A. Suspected or alleged illegal or fraudulent activity with a loss in excess of $10,000 from the
following categories will be reported to the DOL-OIG . . . Disaster Unemployment
Assistance (DUA); and Any temporary UC program enacted by Congress.
Reasons for Issue
DUA officials told us in an email on June 7, 2023, “Because the total number of overpayments was so
large, we did not make an effort to refer overpayments that would have only consisted of approximately
10 weeks of paid benefits.” Additionally, DUA officials told us that DOL would not have been interested in
the claims because DUA did not denote overpayments made to incarcerated individuals as “at fault” or
fraudulent. DUA did not conduct investigations to determine fault because of a lack of staff members
available to conduct a proper investigation.
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Audit No. 2022-0221-3S Executive Office of Labor and Workforce Development
Detailed Findings with Auditee’s Response
Recommendations
DUA should develop and implement effective policies and procedures to ensure that it investigates
overpayments over the $10,000 threshold to determine whether any of these claims are fraudulent.
DUA should ensure that it reports overpayments to DOL OIG where it determines fault that meets
required reporting thresholds.
Auditee’s Response
DUA provides the US Department of Labor Office of the Inspector General (OIG) a list of every
claim filed with associated social security numbers, quarterly.
Specific to federal incarceration data, DUA now receives Prisoner Update Processing System (PUPS)
data. DUA Program Integrity Staff review PUPS data and where necessary create an availability
issue where there is a match with claimant information in the UI Online system.
Auditor’s Reply
As noted above in the above finding, we were told by a DUA official that “because the total number of
overpayments was so large, [DUA] did not make an effort to refer overpayments that would have only
consisted of approximately 10 weeks of paid benefits.”
DUA officials did not make us aware of, or provide us with, the quarterly reports filed with DOL OIG in
connection with the PUA program. Therefore, we cannot comment on whether this quarterly report
includes any of the 50 overpayments of PUA claims exceeding $10,000, which DUA insinuates with its
response to this finding. Therefore, we reiterate our recommendations regarding this finding.
4. The Executive Office of Labor and Workforce Development’s Department of
Economic Research did not submit all Unemployment Insurance Trust Fund
reports or ensure that they were submitted by required due dates.
The Executive Office of Labor and Workforce Development’s (EOLWD) Department of Economic Research
did not ensure that all UITF reports due to the Legislature during the audit period were submitted on time,
or at all in some cases. Five reports were not transmitted at all, and four reports were submitted after the
due date. For two of the reports, we were not provided support to determine when they were submitted.
Untimely or missing UITF reports can delay legislative oversight, accountability and decisions related to
the UITF. In this instance, the failure to issue timely UITF reports coincided with an estimated $2.5 billion
in being overdrawn by the Commonwealth from the UITF. These overpayments may need to be repaid by
businesses, taxpayers, and state government. Failure to submit these reports in a timely manner also
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Audit No. 2022-0221-3S Executive Office of Labor and Workforce Development
Detailed Findings with Auditee’s Response
prevented policymakers, including the Legislature, from participating in the process of identifying and
implementing solutions to this issue, potentially resulting in a larger overspending than otherwise would
have occurred.
Authoritative Guidance
Section 14F of Chapter 151A of the General Laws states the following:
On or before the fifteenth day of October of each year, the commissioner is hereby authorized and
directed to file with the house and senate committees on ways and means and the clerks of the
house of representatives and the senate and the joint committee on commerce and labor a report
which contains a proposal of an adequate and proper average balance to be maintained and
credited to the commonwealth’s account in the Unemployment Trust Fund during the ensuing
calendar year and a statement of the actual balance then projected to be credited to the
commonwealth’s account during such year. . . .
On or before the fifteenth day of every month of the calendar year next following the submission
of the report required by the first sentence hereof, the commissioner is hereby further authorized
and directed to file with the chairman of said committees an updated report detailing the most
recently available statement of the actual balance then credited to the commonwealth’s account in
the Unemployment Insurance Trust Fund together with a revised statement of the actual balance
then projected to be credited to the commonwealth’s account during such year.
Reasons for Issue
EOLWD officials told us there were inconsistencies in the accounting system and they found it necessary
to temporarily suspend UITF reporting to effectively address these inconsistencies and undertake
reconciliation efforts during the audit period.
Recommendations
EOLWD should determine the causes of and address the inconsistencies in its accounting system.
EOLWD should submit UITF reports to the Legislature by required due dates.
Auditee’s Response
In 2021, the Executive Office of Labor and Workforce Development (EOLWD) identified
inconsistencies with the Unemployment Insurance Trust Fund (UITF) which prompted the agency
to conduct a full reconciliation of the UITF. To ensure accurate reporting for these months, the
Department of Economic Research (DER) and EOLWD determined that it would be most prudent
to temporarily suspend/pause reporting while reconciliation efforts remained ongoing.
Subsequently, it was determined that it would not be feasible to go back and supply the missing
reports because it is not possible to project against future risk; as a result, reports were not filed
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Detailed Findings with Auditee’s Response
between July 2021 to November 2021. Submission of reports was reinstated by the Department of
Economic Research in December 2021.
Auditor’s Reply
EOLWD identified inconsistencies in the UITF that were significant enough to require it to suspend
reporting to the Legislature for a five-month period. EOLWD states in its response that a reconciliation
was performed, and it began filing reports upon its completion, which presumably identified issues in why
they could not provide accurate reports on the activity of the fund. We reiterate our recommendation
that EOLWD should determine the causes of these inconsistencies in their accounting system and address
them.
Based on its response, EOLWD explained why it did not file unsubmitted reports. However, we identified
four reports that were submitted late. We reiterate our recommendation that EOLWD should ensure that
its UITF reports are submitted to the Legislature by required due dates.
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