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Auditor General announces Labor & Industry audit

David Weissman
505-5431/@DispatchDavid
  • State Auditor General's Office will begin auditing state Department of Labor and Industry's SIIF.
  • Republican-controlled Senate did not hold vote to extend SIIF, and more than 500 layoffs ensued.
  • The issue has become a main point of contention between current Gov. Tom Wolf and Sen. Scott Wagner.

The funding, or current lack thereof, that is at the center of more than 500 state Department of Labor and Industry layoffs will be audited by the state Auditor General's Office.

County residents needing to file for unemployment compensation are facing a long wait at CareerLink, Monday, Jan. 9, 2017. John A. Pavoncello photo

Auditor General Eugene DePasquale announced Thursday that he has instructed his office to immediately begin auditing the department's Unemployment Compensation Service and Infrastructure Improvement Fund.

The fund, which provided more than $178 million to the department since 2013, was not extended — despite requests to do so by Gov. Tom Wolf  — after the Republican-controlled Senate failed to vote on a bill that would have provided an additional $57.5 million in 2017.

The department furloughed 526 employees and closed three unemployment compensation centers in Lancaster, Altoona and Allentown after learning that it would not receive the additional funding.

The reduced staff has led to significantly increased wait times for residents calling into unemployment compensation offices, according to the department.

Unemployed wait two hours to call for help on compensation

State Sen. Scott Wagner, R-Spring Garden Township, has said he led the charge against holding a vote on the bill — which included a stipulation that the Auditor General's Office would complete an audit of the fund — because department officials couldn't fully answer his questions about how the money was spent or when they would stop needing it.

“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 said in a news release.

In this file photo, state Auditor General Eugene DePasquale meets with The York Dispatch editorial board at the Dispatch offices in West Manchester Township on Wednesday, Sept. 30, 2015. (Dawn J. Sagert - dsagert@yorkdispatch.com)

The audit will include: reviewing the department's accounting of expenditures made from the fund each year; validating improvements and efficiencies for the unemployment compensation system; evaluating the department's economic forecast of the potential impact to the system in the future; and reviewing the department's projections for when it can eliminate the need for additional funding.

The audit will review from January 2013 to the conclusion of the audit, which is expected this spring, according to the release.

A spokeswoman for office said it doesn't plan on releasing any information before the audit is complete, but noted there have been times — including during an audit of ChildLine services — where it issues an interim report because its findings demand critical action.

The fund was created in 2013 through Act 34, which allowed the department to use a portion of the state's Unemployment Compensation Fund, which pays unemployment claims, for modernizing its computer system and reducing call wait times to its centers, among other things.

The need for additional funding stemmed from a continuous drop in federal funding, which had already led to a staff reduction of more than 600 employees since 2011 before the most recent furloughs.

Department officials detailed in letters to legislators that the SIIF funding allowed them to prevent further staff reductions while making customer service improvements that brought it above federal requirements.

State Sen. Scott Wagner officially announces his intentions to run for governor in 2018 during a press conference at Penn Waste in East Manchester Township, Wednesday, Jan. 11, 2017. Dawn J. Sagert photo

Sara Goulet, a department spokeswoman, wrote in an email that the department supports and welcomes the Auditor General's announcement.

""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," Goulet wrote. "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."

Wagner, amidst criticism, seeks investigation into call-center layoffs

Wagner, who will run for governor in 2018, has also criticized Wolf for the layoffs, arguing that they were unnecessary and suggesting that they were "purely political."

He filed a Right-to-Know request with the department in December to see all correspondence relating to the layoffs and center closures.

Wagner, who has been the main target of criticism by unions representing the furloughed workers, did not immediately return a request for comment Thursday.

— Reach David Weissman at dweissman@yorkdispatch.com or on Twitter at @DispatchDavid.