« Artiles pushes for moratorium on red-light cameras | Main | Group inflates cost of noncitizen voter purge in 2012 »

DEO still unclear on why it waited to pay overdue claims


It took two days for the Florida Department of Economic Opportunity to explain why it waited more than three months to pay delinquent unemployment benefits for more than 10,000 Florida residents.

On Thursday, DEO spokeswoman Jessica Sims delivered an answer via e-mail. Here it is:

"In so far as the timing of the payments is inconsistent with past practices of Florida and other states, DEO felt it appropriate to seek authority to move forward with temporarily issuing benefit payment to individuals whose continuing claims have been on hold for adjudication for more than seven days. States do not often take this action because some ineligible claimants may be paid and such overpayments must be recovered by the state. This measure was discussed and agreed upon in partnership with USDOL as the federal agency charged with funding and oversight of state unemployment programs."

What this response seems to be saying is that DEO’s executive director Jesse Panuccio and other officials hesitated in paying a growing backlog because of concerns with paying some claims for people who weren’t eligible. They discussed the decision to pay the overdue claims with U.S. Department of Labor officials, who agreed with it.

That's different than what Panuccio said on Saturday when the DEO first announced that it was going to pay the claims.

“The U.S. Department of Labor today granted DEO the authority to move forward in temporarily issuing benefit payment to individuals whose continuing claims have been on hold for (review) for more than seven days,” a statement issued quoting Panuccio on Saturday said.

That strongly implies the DEO first needed “authority” from the feds before issuing the payments. (It also ignores that federal officials came to Tallahassee at the request of Sen. Bill Nelson, not DEO officials).

The Times/Herald asked Sims on Tuesday if it was indeed “necessary for the USDOL to ‘grant DEO the authority’ to issue these payments.”

From Thursday’s clarification provided by Sims, the DEO only “felt it appropriate to seek authority.” So it wasn’t necessary, then?

Sims also didn’t provide answers to some follow-ups asked by the Times/Herald.

What makes Florida different than California? That state paid overdue claims about three weeks after encountering problems with its website.

“It is unlikely that the claims backlog will be reduced quickly enough to respond to the very real financial hardship now being experienced by too many of our residents relying on timely payment of their benefits,” states a Sept. 24 memo explaining California’s decision to move ahead with payments. “(California) will act to recover any resulting overpayments that might occur.”

As this memo points out, Panuccio’s concern about overpayments wasn’t exceptional. California was worried about this as well. But it went ahead and paid the overdue claims much sooner than Florida.

How’d they do that?

Well, it appears that it was following guidance provided by the U.S. Department of Labor, which instructs states to pay the claim “immediately” if they can’t prove ineligibility and the date “for a timely determination” has passed.

That surely seemed to apply in Florida’s situation. So why did it take more than three months for Florida to follow this guidance from the feds and pay these claims “immediately”?

The Times/Herald asked Sims if the DEO had perhaps made calculations about the amount of ineligible claims it would pay, and that’s not only why they delayed paying them, but it’s also why the agency first chose to spend so much money on extra staff to review claims so that overpayment is avoided.

Think about it: As the backlog of continuing cases grew, why did the DEO first decide that the best solution was to hire more staff, at a cost of $165,000 per week, to help existing employees receiving overtime, to prevent overpayments? The DEO is essentially spending hundreds of thousands of dollars to avoid paying untold amounts in overpayments. It had to have figured that this was a cheaper alternative than just paying the claims immediately and recouping overpayments later, right?

The money spent on staff comes from the federal government. The money on overpayments comes from an unemployment insurance trust fund financed by taxes levied on employers. Rates levied on companies are basically percentages based on employee income, varying between a minimum of $47.20 per employee to $432 per employee, so, in a way, it's the employees who end up paying for what is actually an insurance claim.

But were Florida officials reluctant to tap this trust fund (which fell from $2.1 billion in 2008 to $31 million in 2012 before rising again to $671 million in June) and risk triggering higher tax rates and that’s why they decided to wait until Saturday to pay the overdue claims?

Sims, who is only providing the answers given to her by Panuccio and other upper-level officials at DEO, has yet to clarify.