As unemployment claims soared during the COVID-19 pandemic and New Mexico struggled to meet the rising demand, the state paid out millions of dollars in fraudulent claims, according to a recent report by the Program Evaluation Unit of the state's Legislative Finance Committee.
“With the onset of the pandemic and public-health orders restricting economic activity, the unemployment rate in New Mexico rose to a peak of 12.5% in July 2020, and a record 197,000 New Mexicans filed for unemployment insurance benefits,” the committee's May 2021 report stated.
With unemployment claims jumping 900% percent in just five weeks, the state diverted staff members to handle the increased number of claims, the report said. In doing so, it has fewer people to investigate improper payments, according to the report.
An estimated $250 million in improper payments were issued, of which $133 million were fraudulent, the report said. It recommended hiring more contract staff members to crack down on fraud.
Meanwhile, state residents have also been receiving unemployment debit cards in the mail that they never applied for, KRQE reported. The station profiled a man in Artesia, Larry Wood, who is retired and works part-time at a bus company to stay busy.
Wood filed a police report after receiving a debit card for unemployment benefits when he had never applied for them.
“They sent an officer to my house,” Wood told the station. “The officer said they were getting approximately 10 of those [calls] a day.”
New Mexico's unemployment insurance fund was broke by September 2020, forcing the state to borrow from the federal government to keep benefits flowing.
“As of May 2021, New Mexico had borrowed $278 million from the federal government to pay claims,” the state said.
The report recommends using federal stimulus funds to repay the loans and replenish the unemployment fund.