Audit Blasts Labor Department Management

NASHVILLE, Tenn. -- Dead people and state employees were among those who wrongly received unemployment benefits in Tennessee, according to a newly released audit.

The state Comptroller's Office released its annual single audit report of state agencies Thursday and blasted management at the Tennessee Department of Labor.

Commissioner Karla Davis was appointed by Gov. Bill Haslam in 2011 as a reformer.  She suddenly resigned ten days ago citing "family reasons."

But the audit suggests the department was grossly mismanaged.

Auditors took the unusual step of directly criticizing management, stating that "management has threatened the integrity of the Unemployment Insurance Program by failing to provide sufficient internal controls and oversight."

The state Department of Labor is responsible for more than $1.2 billion dollars of mostly federal money designed to help people recently laid off from their jobs.

The audit found that the department wrongly paid out more than $73 million in benefits due to fraud and error over the last six years.

The department paid more than $138,000 to dead people and to state workers who claimed they were unemployed.

And, when the department spent $800,000 on a computer system to improve response to people filing unemployment claims, the system was never implemented.

"Management of the department needs to step up," said Deborah Loveless, director of the Division of State Audit. "It needs to do more in order to improve the Department of Labor."

The audit also found that thousands of unemployed Tennesseans were unable to get the benefits they deserved in a timely manner.

Kristine Bolden told NewsChannel 5 last year she couldn't understand why it was taking so long for her to get her first unemployment check.

"When we did take our letters into the career center they told us that it may be as much as eight weeks before we receive our first check because of the backlog," Bolden said.

Federal regulators set a goal of two weeks for processing unemployment claims, according to auditors.

But thousands of Tennesseans didn't have their benefits after three months, and some were delayed six months.

"They are in need of those benefits and they are entitled to those benefits," Loveless said.

The audit also indicated the department didn't have enough operators to handle calls from people filing unemployment claims.

The average wait time was two hours and, when auditors tried to call, they were hung up on or disconnected half the time, according to the report.

The interim Department of Labor Commissioner is Burns Phillips.