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Auditor General launches Labor and Industry Fund audit

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Auditor General Eugene DePasquale has launched an audit of the state Department of Labor and Industry's Unemployment Compensation Service and Infrastructure Improvement Fund.
Auditor General Eugene DePasquale has launched an audit of the state Department of Labor and Industry's Unemployment Compensation Service and Infrastructure Improvement Fund. - (Photo / )

Pennsylvania Auditor General Eugene DePasquale has launched an audit of the state Department of Labor and Industry's Unemployment Compensation Service and Infrastructure Improvement Fund.

That fund has been at the center of a dispute between Gov. Tom Wolf and legislative leaders, after Republicans raised questions about more than 500 state unemployment center workers receiving layoff notices late last year.

State Sen. Scott Wagner was among several Republicans pushing for more information about unemployment center spending involving the fund, also known by the acronym SIIF.

"I have directed my team to immediately begin an audit to evaluate L&I’s duties and responsibilities related to fulfilling the intent" of the law DePasquale said Thursday.

Under Act 34 of 2013, lawmakers set up the fund as a temporary measure as the department looked to replace aging technology and improve customer service at its unemployment compensation centers.

The state transferred $178.4 million to the fund between 2013 and the end of 2016.

Department officials said the money did help reduce wait times at the eight centers, as well as meeting federal benchmarks where the centers had previously fallen short.

But after the department requested an additional $57.5 million for the coming year, Senate Republicans decided not to bring the funding to a vote, and raised questions about agency spending — including why its budget was still relying on what had been intended to be a temporary fix.

Department officials said the additional money was needed to continue  system improvements as federal funding decreased.

The standoff led the department to lay off workers and close three of the eight centers.

The matter also could become a campaign issue. Wagner earlier this month announced his intent to run for governor in 2018. Wolf, a Democrat elected in 2014, is expected to seek re-election.

The auditor general said he felt it was important to do an independent audit as a means of looking into issues "real and perceived."

DePasquale acknowledged Republican concerns about whether funding amounts were reflective of actual needs, or "just a blank check going forward."

 "I am hopeful that this audit can shed some light on what happened to the funding already provided and help legislators and the governor find the most beneficial path forward that ensures people receive the services they need in the most efficient and effective manner possible," DePasquale added.

His office outlined how auditors will begin the process, saying they will start by:

• Reviewing L&I’s accounting of expenditures made from the Unemployment Compensation Service and Infrastructure Improvement Fund each year,

• Validating improvements and efficiencies for the unemployment compensation system, including any cost savings, achieved by L&I using SIIF money,

• Evaluating the reasonableness of L&I’s economic forecast of the potential impact to the UC system in the future, and

• Reviewing L&I’s economic forecast/projection on how and when the department can eliminate the need for additional SIIF funding; and ensure the implementation of new technologies for the UC system.

The audit period will extend from January 2013 through completion, which is anticipated this spring.

During a conference call with reporters, DePasquale said he doesn't usually set a timeline on audits so as not to "compromise the quality of the work," but he is pushing his team to get this one finished by April so the governor and lawmakers have the information they need in time for budget season.

L&I response

Department of Labor and Industry officials released the following statement in response to the announcement:

"The department supports and welcomes the Auditor General's announcement to conduct a performance audit of the Service and Infrastructure Improvement Fund (SIIF) and ongoing funding needs of the state's unemployment compensation system.

"We have maintained an atmosphere of transparency and cooperation throughout the legislative process that created the SIIF in 2013 and the 2016 legislation that was not voted on by the Senate. In fact, as part of the compromise bill that overwhelmingly passed the House and supported by the administration to keep the centers funded and open, an audit requirement was included.

"We will work with the Auditor General and his staff to provide information towards a thorough and timely completion of this important audit with the ultimate goal of providing an efficient and appropriately funded unemployment system for Pennsylvanians."

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Roger DuPuis

Roger DuPuis

Roger DuPuis covers Cumberland County, health care, transportation, distribution, energy and environment. Have a tip or question for him? Email him at rdupuis@cpbj.com. Follow him on Twitter, @rogerdupuis2.

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