MacIver News Service | June 29, 2011[Madison, Wisc…] Unemployment benefit fraud in Wisconsin has skyrocketed over the past few years. Between 2008 and 2010, the amount of fraudulent payments shot up from $21 million to $78 million. The number of cases increased 130 percent. The amount of overpayments over $1000 that were intentionally concealed went from $9.25 million in 2007 to $40.5 million in 2010, a 338 percent increase.
Even with the cases of fraud increasing, few people have been successfully prosecuted for it. In order to face punitive action, a person must have fraudulently received more than $5000 in benefits and committed 5 acts of concealment. In 2010, 2,169 people met those requirements, yet only 31 of them were prosecuted. That resulted in 11 convictions.
Meanwhile, a state body that recommends unemployment policies in Wisconsin wants to massage the state’s unemployment numbers in order to qualify for an extra $89 million of federal aid.
The additional funding would extend unemployment benefits from 73 to 86 weeks. Up to 11,000 Wisconsinites exhausted their 73 weeks of benefits in April. However, because the unemployment rate in Wisconsin has been dropping, the state does not qualify for the federal money under the feds existing formula.
There is a solution. Currently, Wisconsin assesses its unemployment using an average rate from the previous two years. If the state were to use an average from the previous three years, however, it would meet the federal criteria. The legislature would need to pass a law in order to make the change.
The legislature was awaiting a recommendation from the Unemployment Insurance Advisory Council (UIAC). The council is made up of 10 voting members, 5 from labor and 5 from employers. In February, the Council discussed whether to “reconfigure the triggers which allows [the state] to access federal monies,” but took no action.
At that meeting, Patricia Yunk, AFSCME Council 48 director of public policy, said “It makes no sense to cut off our nose to spite our face and not extend benefits and pour this money into the state’s economy.”
At its June 23 meeting the Council voted unanimously to recommend the changes to the legislature.
James Buchan, member of the Council and vice president of Wisconsin Manufacturers and Commerce, told the MacIver News Service, “It’s federal money that probably comes from borrowing, so you can argue that’s a bad idea, but it is an additional $80 million coming here. And it will get spent. The people receiving it our right now living hand to mouth, so they need it.”
When he signed the state budget law in Green Bay on Sunday, Governor Walker said “I am now calling on lawmakers to act on the council’s recommendation and modify Wisconsin laws to allow the state to take advantage of these additional federal funds.”
A bipartisan group of lawmakers has echoed the call for revising state law to capture the federal funds.
Most of the funding for the extended benefits will come from the federal government, and will not alter the state’s balance sheet with the feds.Wisconsin currently owes the federal government $1.3 billion for unemployment benefits, but the new benefit extension would not add to that debt.
Any costs not bourne by the federal government will be picked up by Wisconsin employers, and therefore will not alter the state’s financial condition.
The federal government’s deficit stands at approximately $14.3 trillion.