Md. Labor Department overpays unemployment claims, auditors find

money stacksThe Maryland Labor Department’s Division of Unemployment Insurance overpaid millions in benefits to people who were actually working and shelled out unemployment benefits to people who were dead or in prison. The division also certified job stimulus tax credits for employers hiring the unemployed for some workers who weren’t actually receiving unemployment benefits.

Those were among the findings of a report released yesterday by the Office of Legislative Audits. Interim Labor Secretary Scott Jensen said the department agreed with the auditors’ findings, and has made a series of changes to correct the problems. (The letter he signed in response to the report misspells his name “Jenson.”)

The report covered the two and half years from June 2008 to January 2011.

Last year, the division paid out $1.6 billion in unemployment benefits to 243,000 claimants, the money coming from state and federal unemployment insurance taxes paid by employers. Apparently overpayments are not uncommon as the department last year recorded cumulative receivables of $150 million it was trying to collect from the formerly unemployed, and it actually recovered $25 million in 2011 in overpayments.

Database checks not comprehensive enough

Auditors said some of the overpayments occurred because the database matches that  the department utilized were not comprehensive enough.

“While [the Division of Unemployment Insurance] matched claimants with the national database of newly hired employees, available wage information for all employees was excluded from the matches,” acting Legislative Auditor Thomas Barnickel told the chairmen of the Joint Audit Committee in a letter. “The use of national wage information would provide more comprehensive match results.”

The division also failed to match its claims payments with Social Security death records, with state incarceration records and with lists of state employees. “For example, for the period from January to June 2011, one claimant received $5,800 in benefits while also receiving wages from one State agency totaling approximately $9,700,” the report said.

The response from Secretary Jensen described in detail all the steps the department had taken to conform to the auditors’ recommendations.

On a positive note, Jensen pointed out that the auditors had no repeat findings from its regular audit three years before. Findings of the same problems in audit after audit have troubled legislators, and some have introduced bills to withhold funding from agencies with repeat findings.

“While we are pleased that the division had no repeat findings,” Jensen said, “the department understands that we still have work to do.”

The department has notified the comptroller to try to collect the tax credits employers received for workers who weren’t eligible.

–Len Lazarick

About The Author

Len Lazarick

Len Lazarick was the founding editor and publisher of and is currently the president of its nonprofit corporation and chairman of its board He was formerly the State House bureau chief of the daily Baltimore Examiner from its start in April 2006 to its demise in February 2009. He was a copy editor on the national desk of the Washington Post for eight years before that, and has spent decades covering Maryland politics and government.


  1. William H. Campbell

    These are $150 million in “Improper Payments”, and are a serious financial stewardship failure. This is just the latest in a continuing litany of management failures by Maryland State Government agencies. Fixing management problems starts at the top of an organization. Until Mary;and’s elected and appointed leaders start holding civil servants accountable it will never improve.

  2. hungrypirana

    The legislative auditors’ report claims (page 13) to confirm with prevailing audit standards promulgated by Government Accountability Office (GAO). However, the audit report does not meet such standards.

    For instance, the audit report under caption “Status of Findings From Preceding Audit Report” states (page 4) that DUI had satisfactorily addressed all seven findings in the previous audit report dated February 27, 2009.

    The older report, however, has two findings that were repeated in the new report.

    Specifically, the Feb 2009 report stated “numerous users had unnecessary and/or unlogged access to several production libraries….” The Sept 2012 report states “User access controls over critical
    production data files were inadequate…16 users had
    unnecessary…access to a number of critical data files in (UITAX and
    MABS.)” Also the Feb 2009 report states “automated match procedures used by DUI…were not always monitored and pursued adequately” and the Sept 2012 report states “quarterly matches that DUI conducted…were not fully investigated.” These clearly are repeat findings.

    Falsely reporting that prior findings were resolved is a serious violation of standards, and not the first I’ve seen in cursory readings of previous audit reports (and covered by Len’s reporting.) It does not appear anyone within the Office of Legislative Audits is performing effective QA or critically reviewing report form and content before publication. GAO Standards also require peer reviews of the Legislative Auditors work. I don’t know if those are being done. if they are being done, they are not serving the intended purpose.

  3. Dale McNamee

    Is anyone surprised ? This is Maryland after all…

    • chrispy

      nope. not one bit.

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