ESC paid $147M in benefits last year from wrong account

Staff writerFebruary 3, 2011 

In addition to overpaying millions in unemployment benefits last year, the state's Employment Security Commission also paid $147 million in benefits out of the wrong account, according to an annual audit of the agency's finances.

The $147 million was paid out of the state’s unemployment trust fund when it should have been paid from federal unemployment trust funds.

The error will actually lower the total amount the state owes the federal government, ESC spokesman Larry Parker said.

North Carolina has borrowed about $2.5 billion from the federal government in recent years to pay benefits out of its state trust fund. Payments from the federal trust funds don’t require repayment.

The ESC faced a firestorm of criticism last fall after it began recouping $28 million in overpayments it mistakenly made to about 38,000 unemployed workers.

The agency later reversed course and returned all the deductions it had made from longtime unemployed workers' benefit checks.

Parker said today that the U.S. Department of Labor has since waived the $28 million in overpayments the ESC made.

The agency’s annual audit, released today by the Office of the State Auditor, also identified more than 4,000 instances in which employees got inappropriate access to the ESC’s computer systems.

The access gave those users access to confidential information: the ability to manipulate data impacting employer contribution rates and the amounts of benefits paid.

The audit says the problem was corrected as of Dec. 1.

“We’re looking to improve those controls,” Parker said.

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