NC audit finds some NC unemployment issues persist + feds warn of fraud crackdown
AI-generated summary reviewed by our newsroom.
- In 2024 and 2025, NC did not issue 28% of first payments within federal timeliness rules.
- Improper benefits paid out rose to 22% for April 1, 2021 to March 31, 2025.
- US DOL warned states of crackdown on unemployment fraud and mismanagement.
Good morning and welcome to Friday’s Under the Dome newsletter. I’m Luciana Perez Uribe, a politics reporter at The News & Observer.
This week has once more been a busy one, so be sure to check out the links below to get updated on all that’s happened.
In this newsletter, I’m taking a look at two new audits examining North Carolina’s state unemployment insurance program that detail delays in issuing unemployment benefit payments and increasing improper unemployment benefits in the state.
In a news release announcing the audits, Republican State Auditor Dave Boliek said “Losing a job can be a traumatic event that hurts entire families,” and “Slight improvements have been made, but it’s not fair for the government to continually shrug its shoulders at such a longstanding problem.”
On fraud, which has been a focus of North Carolina leaders in recent months, he said “Not only was there a higher rate of improper unemployment benefits, but there was also more than $47 million in fraud overpayments...ignoring problems for years and missing basic public expectation cannot continue to be tolerated.”
In a letter responding to the audits, Commerce Secretary Lee Lilley wrote that “DES agrees with the recommendations outlined in this report, some of which we have already begun discussing. DES also recognizes that successful process improvements require adequate funding, staffing capacity, and technology investments to ensure long-term effectiveness and operational stability.” Antwon Keith, appointed in 2022, is the Assistant Secretary for the Division of Employment Security.
The News & Observer reached out Thursday to the Department of Commerce and the office of Democratic Gov. Josh Stein, who took office in January 2025, for additional comment.
Nan Sanseverino, a Commerce Department spokesperson, said in an email on behalf of the department that DES has already taken steps to strengthen program performance and modernize operations. Those “changes are making an impact,” she wrote, noting that 91% of claims were paid within 21 days in May 2026 and that the improper payment rate for calendar year 2025 was on par with the 10 most populous states.
Acting U.S. Secretary of Labor Keith Sonderling issued letters to the governors of 53 U.S. states and territories on Wednesday announcing the department’s plans to crack down on unemployment insurance fraud and mismanagement. Sonderling notified states’ plans to use available tools, including the withholding of administrative funding from states that don’t comply, according to a news release.
Sonderling is a member of President Donald Trump’s Task Force to Eliminate Fraud, led by Vice President JD Vance.
The issues noted in the audit are not new. Let’s look at the finding in more detail:
Overpayments and late payments
One of the audits, which examined the period between July 1, 2024, and Nov. 30, 2025 — found that DES did not issue 28% of its 111,413 first unemployment benefit payments within the federal timeliness requirement. That requirement calls for 87% of first unemployment benefit payments be made within 14 days of the end of the first week when a claimant is eligible.
That resulted in about $12.2 million in late payments. More than 13,500 first unemployment benefit payments took longer than 35 days to reach claimants.
The 28% rate is an improvement from a 2024 audit, which found 43% of first payments were untimely. Still, DES has not met the federal timeliness standard since 2011, and North Carolina has ranked among the nation’s most untimely states, averaging 41st overall since 2005, says the audit.
The audit did not examine why payments continue to be delayed, but prior audits have pointed to longstanding issues with DES’s claims process, oversight and preparedness for surges in claims. The audit recommends DES continue to work on those areas.
The second audit found that improper unemployment benefits in North Carolina have increased. The rate rose from 18% in a 2022 Office of the State Auditor report covering April 1, 2016, through March 31, 2021, to 22% for the period April 1, 2021, through March 31, 2025, covered in the new audit. Improper payments can be overpayments or underpayments.
North Carolina continues to exceed the U.S. Department of Labor’s 10% improper payment limit and to trail the national average. Over that four-year period, about one-fifth of the roughly $748 million in state unemployment benefits paid out was incorrect, according to estimates from the state auditor’s office. Confirmed overpayments totaled $168.8 million — $121.6 million classified as non-fraud and $47.2 million as fraud, of which DES recovered only $12.1 million.
The audit followed up on five recommendations made in 2022. DES implemented four of the five. The one it failed to complete on time was a work-search repository (an online system where claimants record their required weekly job search activities) recommendation.
To receive unemployment benefits in North Carolina, claimants must actively look for work each week, a requirement temporarily suspended or loosened at various points during the COVID-19 pandemic. Work-search errors were the single largest driver of overpayments, accounting for roughly half.
DES received a $6.8 million federal grant in part to build the repository but did not fully roll it out statewide until December 2025 — more than three years after receiving the funding, says the audit.
Ok let’s get into headlines this week:
Headlines you won’t want to miss
- NC Senate leader Berger, Speaker Hall now in final talks about overdue state budget
- NC Senate moves forward Medicaid bill tightening oversight, restoring some access
- Now two powerful NC politicians say Raleigh would be a good MLB expansion city
- NC has a strict, decades-old ban on coastal seawalls. Will lawmakers repeal it?
- NC Senate bill would grant state auditor access to SBI, prosecutors
- NC state employees’ health plan faces big changes. Here’s what’s coming in July
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