Audit finds NC did not issue $438M in unemployment benefits in a timely manner

RALEIGH, N.C. — A state audit of the North Carolina Department of Commerce’s Division of Employment Security (DES) found it did not issue timely unemployment benefits during the beginning of the pandemic.

The 52-page report said unemployed North Carolinians didn’t receive $438 million in unemployment payments in a timely fashion during a period of “tremendous need.”

The DES made three findings during the period of Jan. 1, 2020, through March 31, 2021:

• DES’ unemployment claim process is not designed to make payments timely
• DES management did not monitor payment timeliness, and
• DES was not prepared for economic downturns that will inevitably occur.

In the report, the state auditor said DES did not meet the federal first payment timeliness standard for six of the eight (75%) unemployment benefit programs it administered. During April 4, 2020 through Sept. 4, 2021, the state was required to ensure that at least 87% of first benefit payments were issued within 21 days.

DES management did not monitor claim processing timeliness, according to the report. DES contracted people to help with the workload but did not monitor the effectiveness of the contractors, the audit said.

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“Given the history of economic downturns in the United States and their effects on North Carolina, DES should have been prepared for some anticipated economic downturn and the resulting increased workload that could occur,” the audit said.

Without a plan for an economic downturn, DES spent “critical response time” developing a plan and getting new resources to address the sudden increase in unemployment claims, according to the report.

>> Read the full audit here.

The state auditor made three recommendations:

• It first recommended DES review how its unemployment benefit claims process is designed to ensure that first payments meet federal timeliness standards.
• The auditor recommended the DES create policies to monitor the timeliness of the benefits, and fix when necessary.
• The final recommendation was that DES continually evaluate the risk that unemployment claims could increase due to events such as an economic downturn -- like the COVID-19 pandemic. The DES should have a plan -- updated annually -- that would be put into action in that case, and should address staffing, process changes and adjustments to business practices.

(WATCH BELOW: If state determines it overpaid unemployment benefits, it can garnish your tax refund)

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