South Cook News

State Rep. John Egofske (R-Lemont) has voiced disappointment and concern over a recent audit of the the Illinois Department of Employment Security that revealed more than $5 billion in fraudulent unemployment claims, spanning two years. 

“It’s very, very disheartening to hear that the IDES paid out billions in overpayments, including fraudulent unemployment claims, over the last several years,” Egofske said in a statement. “Illinoisans deserve to know that their hard-earned tax dollars are accurately accounted for and used responsibly. If the IDES does not take action to correct these failings quickly, then the General Assembly needs to take action to ensure that, in the future, taxpayer funds are used in the most efficient and effective ways possible.”

IDES spokeswoman Rebecca Cisco called out the administration of former president Donald Trump whom she said required the state to use “a poorly designed and brand new unemployment insurance program on their own in record time with continuously changing federal guidance," the Chicago Tribune reported. 

The audit places the responsibility on IDES. 

“IDES was not prepared to respond to the needs created by the pandemic,” the report from Auditor General Frank Mautino’s office stated. “IDES did not have a plan for responding to recessions and potential surges in claims.”

The audit reveals issues with overpayments, including fraud and identity theft, totaling $5.24 billion in the Pandemic Unemployment Assistance (PUA) and regular Unemployment Insurance (UI) programs. The report also identifies challenges IDES faced during the pandemic, such as delays in processing claims and susceptibility to fraud due to suspended defenses. The audit report contains seven recommendations for IDES to improve its operations and prevent future issues with unemployment benefits distribution. 

The report’s key findings detail the fraud undertaken.

“Overpayments (which include fraud, non-fraud, and identity theft) were an issue in both the regular UI and PUA programs. IDES reported overpayments for FY20 to FY22 that totaled $5.24 billion; regular UI accounted for $2.04 billion and PUA accounted for $3.20 billion,” the performance audit reads. “Considering gross benefits associated with regular UI claims were 2.5 times higher than gross benefits associated with PUA claims, it shows the magnitude of fraud experienced in the PUA program. IDES noted stopped or recovered payments of $150.36 million and $361.34 million for the regular UI and PUA programs respectively.”

The audit found IDES failed to maintain accurate and complete accounting records and supporting documents for the Trust Fund, raising concerns about the internal controls safeguarding Trust Fund assets. As a result, auditors were unable to determine the opening net position and activity for the year ended June 30, 2022, impacting the statements of revenues, expenses, and changes in net position and cash flows. The audit also highlighted the Department's mishandling of Pandemic Unemployment Assistance (PUA) claimant data, leading to challenges in assessing claimants' eligibility. Additionally, improper recording of receivables and mismanagement of overpayment receivables were noted, prompting the need for better financial reporting controls, according to the summary report digest from the Office of the Auditor General. 

Read the Auditor General’s audit, report, and findings here.