Audit pans collections of unemployment overpayments

Friday, May 25, 2001 | 10:48 a.m.

CARSON CITY -- The state Division of Employment does a poor job recovering overpayments it makes to jobless workers and could annually collect an additional $800,000 if it improved its system, a legislative audit says.

The agency collects only about 45 percent of the amount made in overpayments. The national average among states is 65 percent.

Part of the problem is that a new computer system in the division is providing wrong information, legislators were told.

The examination, performed by auditors Richard Pugh, Shannon Ryan, Timothy Brown and Stephen Wood and released Thursday, shows $6.9 million was owed the state as of June 30, 2000. About 60 percent of that amount had been outstanding for more than a year.

Auditors said the division should study how other states collect overpayments.

In 1997 the agency entered into a $4.8 million contract with a software consulting firm to install a new computer system. A dispute arose and the state paid off the contract with $3.6 million. But there were about 240 open system issues when the contractor left in early 1999.

Although the computer has been able to produce a number of reports, the audit said "some reports are unreliable."

The examination found that another unit in the agency that collects money owed by employers to the state was doing a better job. It recovered about 73 percent of the delinquent employer taxes.

Myla Florence, director of the state Department of Employment, Training and Rehabilitation, said her agency concurs with the recommendations and that the division recently began filing court judgments. In three months this year it processed 125 judgments, she said.