President Biden’s labor head could be forcing US taxpayers to foot the bill for roughly $32 billion in unemployment fraud she caused when serving during the COVID-19 pandemic as California’s top labor official, Republican senators wrote in a Wednesday letter.
Sens. Bill Cassidy and Mike Crapo expressed concerns in a letter to Labor Secretary Julie Su about December Labor Department guidelines that may “allow California to shift the consequences of a still unknown amount of federal funds that was lost” by its Employment Development Department (EDD) during her tenure.
The $32.6 billion in COVID relief to fraudsters amounts to as much as one third of the total erroneous unemployment insurance payments, according to a Government Accountability Office report last September.
That’s more than double the annual budget of the US Department of Labor, the senators noted.
A California State Controller report also found that the state “had inadequate control over its financial reporting for federally funded unemployment insurance benefits,” making it difficult to determine the extent of the fraud.
The guidelines let states determine the extent to which funds lost to fraud are paid back — or waived entirely.
Cassidy (R-La.) and Crapo (R-Idaho) said in May 1 testimony before the House Education and Workforce Committee that Su claimed states could only “waive non-fraudulent overpayments.”
“While serving as Secretary for the California Labor & Workforce Development Agency (LWDA), you waived basic fact-checking and fraud prevention requirements for federal pandemic-related unemployment insurance (UI) payments,” the senators wrote.
That decision contradicted US Labor Department guidance, they said, and California’s auditor added that it had made “repeated warnings” to EDD — but the department “did not bolster its fraud detection efforts until months into the pandemic, and it suspended a critical safeguard.”
EDD ruled that it has taken all “reasonably necessary” steps to recoup the lost funds, making them all but forgiven if the new Labor Department guidelines are approved.
Cassidy and Crapo have demanded Su answer more than a dozen questions related to California’s process for determining its liability.
The Post has reached out to the Labor Department for comment.
