NC auditor finds $438M in first unemployment payments not issued in a timely manner during COVID

RALEIGH, N.C. (WTVD) -- An audit of the NC unemployment benefits claims process found that hundreds of millions of dollars in first payments were not paid in a timely manner during the COVID-19 pandemic.

According to the audit report, $438 million in first payments did not go out according to federal timeliness guidelines between January 2020 and March 2021.

The report found that the Division of Employment Security, which manages the payments, did not have a claims process that was designed to make timely payments, management did not monitor whether payments were going out on time and DES was not prepared for the economic downturn associated with the COVID-19 pandemic.

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According to the report, North Carolina's unemployment rate rose from 3.6% in February 2020 to 13.5% by April 2020 because of the governor's stay-at-home order and the rapid federal expansion of unemployment benefits.

Through March 2021, DES said it had paid about $11.6 billion in unemployment benefits to 1.5 million claimants since January 2020.

However, the audit found that through March 2021, only about 60% of first payments were issued within the federal standard for timeliness -- 14 days following the claim. Typically, claimants would have to wait an additional week, but because of the pandemic, a waiting week was waived until September 2021.

According to federal laws, at least 87% of first benefit payments must be sent to claimants within 14 days after the waiting week. In fact, DES has failed to meet this federal requirement for the last 10 years, nine of which were before the COVID-19 pandemic.

The report found that most payments took more than 30 days, with the majority coming between 30 and 60 days, but some taking more than a year to arrive.

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The auditor recommended DES reviews its claims process, create policies to monitor all the steps of the payment process and monitor outside contractors for job performance. DES agreed with the findings of the audit and recognized "the importance of issuing benefits as quickly as possible."

The agency said some of its challenges in delivering payments timely included a massive increase in claims, the need to quickly hire new employees and delays in getting necessary information from other agencies. In response to the audit, DES said it will use the recommendations outlined to continue to improve its process.

Last week, the state processed about 17,000 unemployment claims, which is around 40 times fewer than what it processed at the peak of the pandemic, according to data from the Bureau of Labor Statistics.

"We've seen a lot more folks been touched by this. Obviously, a lot of small businesses, entrepreneurs, those folks have been impacted by this greatly and landed here at the Fayetteville Urban Ministry," said Urban Ministry executive director Johnny Wilson.

Organizations such as Fayetteville Urban Ministry are still helping people get back on their feet. Wilson said the people his organization served have doubled to around 20,000 people. The Fayetteville Urban Ministry helps connect people to resources such as housing and food while also offering opportunities to enhance career skills.

"So many folks that were doing so well but because of the pandemic or things happened with their job, realize that 'Wow, you know, you can't prepare for something like this and it can truly flip your life upside down,'" Wilson said.

He encourages people who still need financial assistance to call 211 or reach out to Urban Ministry at (910) 435-5944.

"I think the biggest challenges individuals are having is childcare, transportation, and still wanting to work from home," explained Xavier DeBrough, a manager at the Cumberland County NCWorks Career Center. He said the center is still helping workers navigate the challenges created when the pandemic hit.

"One of the major goals with the Career Center and what we do is just we want to get people back to work. So whether it's through the Career Fair, which I can't wait for it or if it's just through getting services to any of those departments," he explained.

The center is hosting a career fair on Tuesday from 10 a.m. to 2 p.m. at the Smith Recreational Center in Fayetteville. DeBrough said he believes it will continue to take a community effort to get people back in the workforce.

"Just coming together and building those opportunities. You know, one of the great things and I keep talking about the career center and FTCC but as partnering together to provide that education so that people can obtain licensure and certification. So, really focusing on understanding that the community needs us right now," he said.

Female workers are also particularly having a harder time getting back into the workforce. The unemployment rate increased for Black female workers last month, according to the latest U.S. jobs report. It was the only demographic to report an uptick.

"What we found was that women had to take on their priority role of being the family care provider. When schools shut down, and daycare shut down, it became very, very difficult for women in the workforce to continue," said Suzy Hrabovsky, the executive director at the Center for Economic Empowerment & Development in Fayetteville.

She said for women to reenter the workforce fully, employers are going to need to allow flexibility in remote working along with an increase in affordable daycares and support for those businesses.
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