Unemployment Insurance:

Administrative Funding Is a Growing Problem for State Programs

HRD-89-72BR: Published: May 24, 1989. Publicly Released: May 24, 1989.

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GAO provided information on states' administration of the Unemployment Insurance Program during this decade, focusing on: (1) trends in federal funding; (2) state management adjustments to funding changes; (3) changes in the number of local program offices and office staffing; and (4) Department of Labor (DOL) oversight.

GAO found that: (1) federal funding peaked at about $1.6 billion in 1983, then dropped 8 percent in 1984, reflecting improvements in the U.S. economy and in employment; (2) federal funding has remained constant since 1984 but continues to be less than DOL estimates of states' needs; (3) states increasingly supplemented programs with their own funds, from 8 states providing an average of $138,000 in 1980 to 21 states providing an average of $1.8 million in 1987; (4) to decrease program costs, states automated claims processing functions and jointly located unemployment insurance and employment service offices, although such changes increased staff training requirements; (5) states generally maintained the same number of permanent claims offices, about 1,850; (6) staffing levels generally fluctuated with the work load, with full-time-equivalent positions declining by about 28 percent since 1983; and (7) states believed that their reduced ability to adequately train staff could result in serious disruptions in service or increased claims processing errors if unemployment rates suddenly increased. GAO also found that DOL lacked an adequate oversight system, since: (1) its decentralization of the unemployment insurance system to states resulted in a reduction in state-reported information on program operations; (2) regional office staffing has declined by 57 percent since 1980; and (3) oversight heavily focused on service promptness, rather than on claims accuracy.

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