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Pay Back Money, VEC Tells Workers

May 11, 2011

By Tracy Kennedy
Capital News Service

RICHMOND — In January 2010, Danville had an unemployment rate of almost 15 percent – about double the state average. It was the highest level of unemployment the Southside Virginia city had seen to that point.

Around that time, Delegate Donald Merricks, R-Danville, learned about notices the Virginia Employment Commission had sent to some of his constituents.

The VEC is in charge of providing unemployment benefits to jobless Virginians, but the agency had erred in doling out too much assistance. The notices demanded that Danville-area residents pay back the money.

“I knew of several situations where people were overpaid unemployment benefits. And they (the VEC) came back over six months later and said, ‘You owe us $9,000,'” Merricks said. “And it was due to administrative error.”

Shocked by his constituents’ stories, Merricks proposed House Joint Resolution 49 at the start of the General Assembly’s 2010 session. The resolution called on the Joint Legislative Audit and Review Commission, the assembly’s investigative arm, to study the overpayment of unemployment compensation benefits by the VEC. The goal was to determine what caused the problem and to recommend measures to prevent such errors.

Merricks also introduced House Bill 252, which would have prohibited the VEC from demanding repayment of an overpayment after six months had passed.

“What I wanted to do initially was to say that if the VEC did not notify an employee within six months that there was an error, that somebody had to eat it,” Merricks said. “It wasn’t right on the employee to have to pay back if it was an administrative error. I felt like six months was plenty of time to figure out if you made an error or not.”

HJ 49 and HB 252 were sent to the House Committee on Commerce and Labor, where they sat for 10 months while Walter Kucharski, the state auditor of public accounts, compiled a report on the VEC.

The auditor found that as unemployment rose in recent years, so did the distribution of unemployment benefits – and the amount of overpayments.

The total amount of overpayments went up from about $14 million in 2008 to more than $40 million in 2010, Kucharski’s report said. It said the average overpayment in 2010 was $1,165.

The top reasons for overpayment of benefits were employees misrepresenting how they lost their job and workers neglecting to notify the VEC when they got a new job, the audit said.

Legislators did not move forward with HB 252; the bill died in committee.

“There wasn’t enough there to warrant a change in the way we do things in the commonwealth,” Merricks said.

Merricks is hopeful that someday the VEC will have the resources it needs to prevent overpayments.

“Hopefully as money becomes available, [the VEC] can upgrade some of their systems,” Merricks said. “What you had in our area … it was like drinking out of a firehouse. We just had a lot of people, and it just flooded the system. … They tried to gear up for it, but there was no money there to do anything about it.”

Main story: Audit Says VEC Needs More Staff