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A new state auditor’s report found that Labor Department officials lost the state millions of dollars amid the COVID-19 pandemic because they failed to take advantage of their own program.
A report released in late September found that the state could save up to $20.5 million in summer 2020 if thousands of union-eligible state employees were enrolled in New Jersey’s co-working program.
The law, signed into law by Gov. Chris Christie in January 2014, allows workers to receive unemployment benefits if employers reduce overall hours instead of laying off workers. During the COVID-19 pandemic, the program was fully funded through the CARES Act. However, not all relevant employees were enrolled.
David J. Kasczak, the state auditor, said in his report that the state Labor Department oversees 18,245 union members who have received more than $20.5 million in unemployment benefits and are eligible for federal reimbursements. The claims were made in the summer of 2020 after state officials finalized an agreement with workers affiliated with the Communications Workers of America that included furloughs to avoid layoffs.
Records show the state government was not the only entity to miss out on the program.
Through an analysis of unemployment insurance claims from April 2020 to August 2021, the state comptroller found 973 employers who could participate in the program during the pandemic. These employers had 30,280 claims totaling more than $181 million, all of which came from state unemployment compensation funds when they could have been reimbursed from federal government sources.
“If 20% of these employer claims could be converted to the (Joint Work Program), the Unemployment Compensation Fund could save approximately $36.3 million,” the report said.
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Kasczak and New Jersey Department of Labor officials said the setbacks came from a delay in marketing the co-working program when the pandemic began. Records show the promotional videos and webinars weren’t ordered until August 2021 and weren’t posted on the department’s website until October 2022. By then, the program had long since lost full financial support from the federal government.
In addition to the Collaborative Work Program, the audit found several other deficiencies in the state’s management of the unemployment insurance fund during the COVID-19 pandemic. Chief among them was that the unemployment insurance division did not monitor or supervise the unemployment assistance call center it contracted in 2020 to handle the influx of calls.2
The spread of inaccurate information, high call rejection rates and low average response rates were cited. In total, the call center, operated by Navient, cost the state $51.8 million between June 2020 and its closure in June 2022. Records show the center received nearly 8.2 million calls between June 2020 and April 2022. Only 37%, about 3 million calls, were answered.
