The Virginia Employment Commission (VEC) is still lagging in processing claims, according to an interim report from the Joint Legislative Audit and Review Commission (JLARC) presented to legislators Monday.
“A theme that you will hear in the presentation is that while the agency could not have been expected to be fully prepared to respond to the pandemic, it could have been better prepared,” JLARC Director Hal Greer said. “As you’ll hear, 18 months into the pandemic, the agency is still overwhelmed by backlogs of claims. Its call center continues to under-perform, and the agency is struggling with how to recoup a significant amount of benefit payments that were incorrectly issued.”
Poor performance in processing disputed unemployment insurance (UI) claims led to a major backlog, triggering a lawsuit against the VEC and an avalanche of complaints to state legislators. The VEC has been hiring more staff and outside contractors, and taking steps to accelerate training of new staff. It has also been working to update outdated technology systems.
But the JLARC report found that the VEC has been slow to hire staff, with high turnover. It also found that there is still a backlog of over 100,000 UI claims requiring adjudication as of August, with VEC staff estimating an additional one million claims could also require adjudication. Additionally, the VEC has taken shortcuts to reduce claimants wait time, but resulted in over-payments on claims estimated at $930 million in 2020.
“The rate and dollar amount of incorrect benefit payments—including to fraudulent actors—increased substantially during COVID-19,” the report states.
The VEC call centers remain overwhelmed as well, according to the JLARC report, which found that only four percent of roughly two million calls were answered in June, with an average 10-hour customer wait time, including callbacks where customers aren’t waiting on the line. Additionally, current IT systems make it difficult for call center staff to answer caller questions. In August, the VEC hired a contractor to manage and staff an expanded call center, with a new software solution scheduled to be in place in October.
Due to the lawsuit, legal counsel recommended that VEC staff not speak to legislators Monday. But Commissioner Ellen Hess and Secretary of Labor Megan Healy wrote letters that were included in the JLARC presentation.
Hess highlighted the additional pressure placed on the VEC by added federal unemployment programs in 2020, and noted that the VEC was underfunded and understaffed.
“The economic impact of the pandemic was felt at a scale and speed never seen before, providing the agency no time to prepare,” she wrote.
She also highlighted the VEC’s response to the crisis.
Hess wrote, “Within weeks, VEC completed the programming to implement the new benefits. At the same time the agency worked to acquire laptops and other technology needed to move staff to telework in order to protect staff and the agency’s processes. Additionally, the agency undertook a herculean effort to increase staffing with mandatory overtime, leased more than a hundred thousand additional square feet of office space, and entered into numerous support and technology contracts. Despite these demands, VEC paid more than $14 billion on 1.9 million initial claims and more than 25 million weekly claims.”
Healy, who was appointed in July, wrote, “It is important to note that at the root of these and other challenges are decades of disinvestment in the agency’s operations — which left the system in a poor position to respond to the impacts of a global pandemic.”
She said that since the VEC budget is based on demand, during prior record-low unemployment, the UI program specifically was underfunded.
“While the VEC is working diligently with their federal counterparts and my new office to address the challenges highlighted in your report, legislative support and other resources will be essential to their success. If we are to see improvements, the agency cannot continue to be under-funded and ill-staffed.”