Audit of the Department of Unemployment Assistance

This is a 2018 Massachusetts State Auditor performance audit of the Department of Unemployment Assistance, covering July 1, 2013 through December 31, 2016.

“In this performance audit, we examined DUA’s process for maximizing the collection of delinquent unemployment insurance (UI) contributions due from businesses with employees working full time, temporarily, or part time on one or more days in any 13 weeks during a calendar year and businesses that pay wages of $1,500 or more in any calendar quarter.”

Auditors wanted to see whether DUA was doing all it reasonably could to collect overdue unemployment insurance money from employers.

“DID DUA maximize its collection efforts for delinquent unemployment insurance (UI) contributions due from employers?”

When overdue employer payments are not collected, the state loses money that could help pay unemployment benefits.

“As a result, the Commonwealth is losing the opportunity to receive significant revenue that could be used to fund unemployment benefits.”

If you live or work in Massachusetts, this matters because unemployment insurance is the program that helps eligible people financially while they are out of work and looking for a job.

“It provides financial assistance and transitional services to unemployed Massachusetts citizens who are able to work, available to work, and looking for employment, with the goal of helping them become re-employed.”

The auditor concluded that DUA did not properly manage major parts of its debt collection work and missed opportunities to collect overdue money.

“DUA did not intercept over $18 million in payments made by the Commonwealth to state contractors who had delinquent UI contributions.”

The auditor recommended that DUA create formal collection rules, monitor whether staff follow them, and connect with the state payment intercept system so overdue employers cannot keep receiving state payments without the debt being addressed.

“DUA should engage with the Payment Intercept Program and put in place an interface with that program to ensure that employers with delinquent UI contributions owed to DUA cannot receive funds from the Commonwealth via approved contracts.”

This was not a small paperwork issue: auditors estimated hundreds of millions of dollars in overdue employer unemployment insurance contributions and interest, with more than $170 million not referred for collection.

“Specifically, according to its records, DUA did not refer for collection to the Revenue Enforcement Department over $170 million of the $284,453,4209 in delinquent UI payments and interest owed to it as of the end of our audit period, as detailed below.”

“UI contributions” means unemployment insurance payments employers owe to the state; “delinquent” means overdue; a “payment intercept” means the state holds back money it would otherwise pay someone and uses it to cover debt.

“Another recovery option available to DUA and other state agencies is the Payment Intercept Program, whereby state payments due the employer, including tax refunds, are intercepted and transferred to DUA to pay off delinquent accounts.”