U.S. Labor Department, Pa. at odds over jobless insurance

In a highly critical letter, U.S. Department of Labor officials have rebuked the State of Pennsylvania for "serious compliance issues" in its operation of the unemployment insurance program.

The commonwealth has often underperformed so profoundly in the timely handling of unemployment insurance forms and other matters - many within the last year - that the federal government may consider sanctions that would restrict budget money to the Department of Labor and Industry, according to the letter.

"The lack of timely and approvable forms constitutes a failure to meet the terms and conditions of your federal grant award. . .," said the Dec. 21 letter, obtained by The Inquirer.

The federal government gives the states money to administer their unemployment programs.

A spokeswoman for Labor and Industry Secretary Julia Hearthway, to whom the federal letter was addressed, said Monday in an e-mail response to questions that portions of the letter are "inaccurate and incomplete."

She added that the agency was "not without its problems, but Labor and Industry works daily to be sure that the people who need UI benefits receive them and the program is improving."

Hearthway and her representatives have said repeatedly in hearings and interviews that aging phone and computer systems, as well as a $30 million reduction in federal funding, are the reasons unemployed Pennsylvanians must deal with busy phone lines and long waits for unemployment claims.

In the letter, however, the U.S. Department of Labor strongly disagreed that federal officials cut $30 million from the state's employment insurance program.

"We are . . . concerned about the articles we have seen referencing a $30 million cut in federal assistance to the commonwealth's UI program," wrote Lenita Jacobs-Simmons, regional administrator for the Employment and Training Administration in the letter. "We have been working with your staff to identify the source of this number. . .."

She went on to question the state's accounting practices, adding that "we have not been able to identify the $30 million decrease. . . . We are concerned about whether your accounting system has captured the federal funding accurately."

The Labor and Industry spokeswoman wrote in response that "we stand by the statement" that the federal government reduced Labor and Industry funding by $30 million. Budget documents show that the agency received more than $150 million last year for the unemployment insurance program.

Part of the misunderstanding lies in a miscalculation that the federal government made in determining Labor and Industry funding, the spokeswoman said.

Hearthway wrote in an e-mail to The Inquirer, "It's unfortunate that inaccurate information such as this has been provided to the press and is taking Labor & Industry away from the important task of helping Pennsylvania's unemployed. . .."

Labor and Industry administers benefits to the unemployed and to recipients of workers' compensation.

Independent studies of both the federal and state budgets could not resolve the discrepancy. And a spokeswoman for the U.S. Department of Labor said no official would comment on the letter.

Regardless of which entity is right in the $30 million dispute, Community Legal Services lawyer Sharon Dietrich, an unemployment expert, said, "I'm astonished that the U.S. Department of Labor, which is the source of funding, doesn't agree with the state about the number. Something is very wrong here."

The Democratic leader of the state House, Frank Dermody of Allegheny County, agreed, saying: "The feds know how much they sent us and the state is saying they got cut. Somebody's records are screwed up. But we're looking into it, and we'll find out."

Beyond the disagreement about the $30 million, "we're seeing a full complement of deficiencies" in the commonwealth's unemployment insurance program, said Maurice Emsellem, policy codirector of the National Employment Law Project, who studied a copy of the letter. The project is a national nonprofit research and advocacy organization specializing in unemployment insurance.

"The letter presents serious challenges that show the state is performing below national standards," he said.

Emsellem added that the letter claimed that the state's Department of Labor and Industry "is falling short of federal standards of paying benefits on time. The letter also says a lot of appeals are waiting to be determined."

The state spokeswoman wrote that timeliness issues have plagued Labor and Industry for years. She added that Hearthway, appointed by Gov. Corbett in 2011, had made improvements, and that further improvements "take time."

Asked how unusual a letter of this kind is, Emsellem said, "It's out of the ordinary in our experience for the federal government to threaten formally in writing to restrict a drawdown in funding."

The letter found fault with Labor and Industry's data systems, saying "the integrity of the systems cannot be verified," and, as a result, "reports generated from the commonwealth cannot be verified."

Hearthway has said repeatedly that the data systems problem is being worked on, the spokeswoman said.

Another part of the letter enumerated "substantive errors" in documents sent by Labor and Industry to federal overseers.

The letter further said that "the commonwealth still regularly submits documents that are not complete, accurate, or acceptable."

Responding to the statements about errors and incomplete documents, the spokeswoman said, "Historically, this is partially accurate. But since Secretary Hearthway took office, great strides have been made in improving quality."