Feds: Arkansas Pays $161 Million in ‘Improper’ Unemployment Benefits (Updated!)

Wasted unemployment funds in Arkansas
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From the department of waste, fraud and abuse: New data from the U.S. Department of Labor tells the sad tale of how states made some $19 billion in “improper” unemployment benefits over the last three years.

In Arkansas, that total runs to more than $161 million in erroneous payments from 2008-2011, according to DOL. The lion’s share of the erroneous payments, 63 percent, were made to people who continued receiving benefits after they had gone back to work, when they were no longer eligible.

The data was released this week as part of a White House push to cut waste. Good luck with that! And though Arkansas’s $161 million tab is ugly, it’s uglier yet in other states, reports the Wall Street Journal:

The Labor Department launched a plan to crack down on the improper payments, targeting Virginia, Indiana, Colorado, Washington, Louisiana and Arizona in particular for their high error rates. Those states will undergo additional monitoring and technical assistance until their error rates dip below 10% and remain there for at least six months, according to the Labor Department.

We might surmise that much of the waste stems from rapidly increased demand for unemployment benefits from 2008 to 2011, and from the massive influx of dollars into the program via the Obama administration’s 2009 economic stimulus plan (with Arkansas getting more than $807 million in stimulus funds to prop up unemployment insurance, as we learned last month).

The news does little to bolster confidence in Obama’s latest push to tackle the jobs problem through, in part, further extensions of unemployment benefits. But even Democrats in Washington are running pretty cool on that new proposal, aren’t they?

UPDATE: Roby Brock at the indispensable Talk Business has picked up on this story and adds some helpful context to the discussion:

Arkansas’ unemployment trust fund went as deep as $360 million in debt to the federal government as the state borrowed money from the feds to pay for jobless benefits. Arkansas legislators and business leaders changed a number of provisions in the past two sessions to repair the trust fund’s solvency and projected that the state could be debt-free by 2015.

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