The program also serves to stabilize the economy in times of economic recession. In contrast, the states reported that $650 million in overpayments were made in 2001, of which $370 million was actually recovered. 2.) For example, some states may include overpayments resulting from unreported earnings as fraud, while other states do not. Overpayments Caused by Management and Operational Practices at the State and Federal Level

We identified various management and operational practices at both the state and federal level that contribute to UI overpayments. In addition, while some of the states we visited use automated data sources to determine if claimants are working or obtaining other benefits while receiving UI, others rely heavily on self-reported information from claimants to make payment decisions. States also tend to establish UI program policies and priorities in response to direction from the Department of Labor, which in some instances may contribute to overpayments. The NDNH is a comprehensive source of unemployment insurance, wage, and new hires data for the whole nation. The vulnerabilities that we have identified are partly attributable to a management approach in Labor and many states that does not adequately balance the need to quickly process and pay UI claims with the need to control program payments.
What GAO Found

The Unemployment Insurance (UI) program is a federal-state partnership to help replace the lost earnings of unemployed persons and to stabilize the economy during a recession. The Department of Labor estimates that $2.4 billion in overpayments were made in 2001, including $577 million attributed to fraud or abuse. Overpayments in the UI program result from management and operational practices at the state and federal level. At the state level, many states do not sufficiently balance the need to quickly process and pay UI claims with the need to control program payments. Moreover, states rely heavily on self-reported information from claimants for other important data, such as a claimant's receipt of other federal or state program benefits and whether they are citizens of the United States. At the federal level, policies and directives from the Department of Labor affect states' priorities and procedures in a manner that makes overpayments more likely.