Wisconsin Unemployment Payments Drop By More Than Half
MADISON, Wis. (AP) — Business-friendly changes to Wisconsin's unemployment pay system have helped erase a $1.3 billion deficit in the state fund that supports it, but critics say they have also wrongfully deprived out-of-work people of money they needed while looking for new jobs.
Following the Great Recession, many states had diminished or insolvent unemployment insurance trust funds, according to the National Conference of State Legislatures. The Wisconsin trust fund used to pay unemployment had a $1.3 billion deficit in 2010, and the state paid out nearly that amount in claims that year, according to Department of Workforce Development data.
The situation has changed dramatically since then — the fund had a $743 million balance last year and unemployment benefit payments last year had declined to $535 million, less than half of the 2010 amount.
The improved economy has been the largest factor helping the fund rebound by drastically reducing the number of claims being filed. But efforts to cut down on fraud and tightened eligibility requirements also led to a lower rate of claims being compensated. In 2010, about 91 percent of claims were paid. By 2015, that number had dropped to 82 percent.
The department didn't provide data on why weekly claims were denied, but spokesman Tyler Tichenor said the decrease is likely due to a combination of changes. In 2012, the state implemented a one-week waiting period for benefits to cut down on fraud. In 2013, legislators added a new "substantial fault" threshold for eligibility, barring employees from receiving benefits immediately if they're terminated for acts that violate reasonable employer requirements. The department has also stepped up efforts to recuperate overpayments.
According to a 2014 legislative audit, the state overpaid nearly $168 million in unemployment benefits from 2012 to 2014. The department attributed 85 percent of the overpayments to individuals unintentionally providing inaccurate information and 9.5 percent to individuals doing so intentionally.
"When we were dealing with a lot of claims, it really stressed out the UI system and fraud was running rampant," Tichenor said.
Tichenor said the one-week waiting period and an emphasis from the administration on recovering overpayments has allowed the department to rein in that spending. Fraud overpayments declined by almost 35 percent from 2014 to 2015, about twice the rate that overall payments declined, according to the department.
Critics of the changes say they have deprived people of money they should have otherwise received after losing their jobs, especially with the new substantial fault standard.
Patrick Hickey, director of the Workers' Rights Center in Madison, said that change has tilted the balance in favor of employers, which pay unemployment taxes, giving them more ability to fight claims. Employers save money when claims are blocked because their payment rates are based on the amount collected by their workers.
"It's pulling the rug out from under desperate workers who are losing their jobs at no fault of their own," he said.
Rep. Daniel Knodl, a Republican from Germantown who supports the changes, said he thinks employers are contesting more claims than they used to because they feel more confident that they may have some success.
"In the past, I can tell you that employers were quite up front with me, saying we don't feel it's worth our time and effort to go to a hearing, because we lose," Knodl said.
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