As unemployment numbers reached unexpected heights in 2020, the New Mexico Department of Workforce Solutions was unable to deal with the demand. Because of that, an estimated $250 million in overpayments were made, including $133 million in money paid to fraudulent claims, according to an investigation by a state legislative group.
Staff members were unprepared for the deluge of claims that came when unemployment spiked to 12.5% during the peak of the COVID-19 pandemic and made mistakes related to federal and local laws, the report states. The report also states staffers were unable to keep up with the number of fraudulent claims, many linked to identity theft.
A May 19 report from the New Mexico Legislative Finance Committee (LFC) said the massive number of claims caused “unprecedented pressure” on the department.
Bill McCamley
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“By September 2020 the unemployment insurance trust fund from which benefits are drawn was insolvent," the report said. "As of May 2021, New Mexico had borrowed $278 million from the federal government to pay claims."
Over the course of the pandemic, the Workforce Solutions Department (WSD) has distributed an estimated $3 billion in unemployment insurance benefits.
“WSD reassigned staff to help address the surge in claims, contributing to backlogs in investigation of potentially fraudulent claims," the report noted. "The surge and staffing reassignments exacerbated already-rising rates of improper payments. New federal benefit programs increased improper payment vulnerabilities due to an inability to verify employment information. LFC staff estimate the state has made $250 million in benefit overpayments since the start of the pandemic.
“Prior to the pandemic, fraud rates were already increasing and are now at the highest level in recent years," it added. "Insufficient staff and training made it challenging for WSD to process claims effectively while also following new federal requirements. Inadequate interpretation of state law and federal guidance led to incorrect calculation of employer taxes and benefits.”
Acting secretary of DWS Ricky Serna said the losses in 2020 were closer to $105 million, and the $250 million figure includes previous overpayments. Serna said the department has recovered $172 million of that money.
New Mexico Department of Workforce Solutions Secretary Bill McCamley resigned April 16.
Thursday, in a lengthy string of posts on Twitter, McCamley said he quit because he perceived threats to his safety and that of his family. He said people he considered dangerous had smashed windows, attempted to fight security guards and bombed a state car. When efforts were made to obtain his home address, he considered that an unacceptable risk and resigned.
McCamley said he remains “immensely proud” of his department’s performance during the pandemic, which he termed “the biggest economic crisis since the Great Depression.”