Jim Dey: Audit reveals unmitigated IDES disaster during pandemic

Jul. 31—Officials at the Illinois Department of Employment Security made a mess of handing out unemployment benefits during the coronavirus pandemic.

How big a mess they made wasn't clear until last week, when the auditor general's office released its examination of expenditures. The finding: Things couldn't have been worse if the program was administered by Larry, Moe and Curly.

Auditors found "overpayments" of $5.24 billion — yes, that's billion with a "b'," for fiscal years 2020 to 2022.

The audit was requested by local state Sen. Chapin Rose, R-Mahomet, who suspected mismanagement was pervasive and, as a result, extraordinarily costly to taxpayers. He said he wanted to "find out how bad it really was."

"This audit has made it crystal clear that the administration's management of the unemployment system during COVID was an unmitigated disaster of historic proportions. More than $5 billion was paid out improperly, and only about a tenth of that was recovered," he said.

People who are dead not only can vote in Chicago but collect unemployment benefits in Illinois. The audit found "481 deceased individuals received 10,527 payments totaling $6 million." The audit also revealed that 3,448 people who were imprisoned received 92,811 payments totaling $40.5 million.

Here's the kicker: The $5.2 billion in overpayments could be on the low side. After all, state bureaucrats are still investigating.

The 156-page audit lays out in detail the extent of the disastrous administration of the program intended to provide emergency financial relief to those thrown out of work by the pandemic. The financial losses once again underscore the cost of Gov. J.B. Pritzker's decision to lock down the economy in part for months.

Despite the overwhelming detail in the audit, IDES' problem was a simple one.

The department was not prepared to administer the emergency programs. The fraudsters were more than prepared to exploit the department's failure to measure up.

One critical error was a managerial decision to pay out benefits as quickly as possible to applicants, a decision that forced employees to skip identification procedures.

"Timely payment of benefits and preventing fraud are competing concepts. Preventing fraud, especially in new programs with evolving guidance and guidelines, likely would require additional processing time and a possible delay in benefit distribution to claimants. Conversely, paying claims quickly, especially when certain cross-matches and controls were suspended, increased IDES' risk of making improper payments," the audit stated.

Rose said he is particularly incensed that the department "failed to follow its own safety protocols" and "is apparently still refusing to follow common-sense guidance from the feds."

All the while, the agency completely dropped the ball on the one thing it said it was focused on, which was getting unemployment benefits in a timely matter to the people who desperately needed them.

"The people of Illinois should be disgusted at how badly their money was handled and how little was done to account for the outright theft and gross incompetence," Rose said.

Auditors said the department "experienced three fraud schemes from March 1, 2020, through September 6, 2021: identity theft, hijacked payments, and fictitious employers."

Given the previous reporting on the debate, a spokesman for the governor said the report came in as "expected," attributing the failures that were disclosed to an "unprecedented crisis."

Auditors made a variety of recommendations to avoid similar problems in the future. They include developing a "recession plan" that includes learning from the mistakes made during the pandemic, researching and implementing new identification and fraud prevention programs.