ESC overpaid benefits for longer than reported

The state Employment Security Commission paid out too much in jobless benefits to thousands of unemployed people in North Carolina for longer than previously thought, according to a report obtained Monday by WRAL News.

Preliminary findings by a team of computer experts from the state budget office say that the overpayments started sometime in 2009 and that former ESC Chairman Moses Carey requested that the U.S. Department of Labor help the agency determine the cause of the problem.

ESC officials previously said a computer programming error led to overpayments to about 38,000 people receiving a second year of benefits. The agency said the mistakes started with checks issued in January.

The Labor Department determined last December that the ESC was improperly processing a 10-year-old requirement for people receiving extended benefits, according to the preliminary findings. The agency began working on reprogramming its computers in January and finished the job in May, the report states.

The problem was aggravated by the fact that ESC's mainframe computer dates to the late 1970s, the agency has few programmers who can work with the older technology and it also lacks written procedures for handling changes to the computer, according to the findings.

A series of extensions of unemployment benefits passed by Congress each called for further programming changes to the mainframe, which also was trying to handle an unprecedented volume of benefits requests because of the state's record unemployment, the findings state.

"It's crazy that something as important as ESC, their computer systems wouldn't be up to date," said Olivia Jacob, who was among those who received extra benefits.

The ESC in September issued a series of letters to people who had been paid too much in benefits to inform them of the error and to detail how much they might owe. The agency also started docking weekly benefit checks to recoup an estimated $28 million in overpayments.

"That was probably the most devastating," Jacob said of finding money taken out of her benefit checks. "If they had just told us from the beginning that this is what's going on, you know, 'You may see some interruption.' I think people would be a lot more understanding."

Gov. Beverly Perdue last month ordered the agency to stop withholding money from the weekly checks and to repay people who had already lost money because of the moves. She then sent the team of outside IT experts in to resolve the computer problem.

The final report from the team of IT experts is expected in two weeks. Perdue is waiting to see the final report before taking any action, a spokesman said.

The governor previously expressed frustration with the ESC and hinted at possible management changes.

Jacob said Perdue should have jumped on the problem sooner, and people now need to be held accountable.

"If it was a regular employer that was playing around with our paychecks, we could sue them," she said.

The ESC has repaid all but about 2,800 people, spokesman Larry Parker said Monday. The agency also is working with the Labor Department to determine how to repay the government for the $28 million in overpayments.

The preliminary findings said the agency should have sent one letter to recipients that covered all of the changes and should have explained the situation in understandable terms instead of the technical jargon and acronyms that were used.

The report notes that North Carolina is among four states working together to develop a new system for handling jobless benefits. A consultant's report on the project is due next August, and North Carolina can tap up to $205 million in federal economic stimulus funds to implement a new system.