The COVID-19 crisis has uncovered the inadequacies of Washington’s unemployment system which is badly in need of not just an audit, but significant reform. With long delays in benefit payments, lack of trust fund balance reporting transparency and public confidence quickly deteriorating, its time to look at how Washington has been managing its unemployment programs.

The Federal Government has recently indicated it is concerned about fraudulent unemployment benefit claims made to the Washington Employment Security Department (ESD) and its handling of those claims.

The Federal investigation follows the reports of ESD being unable to handle increased call volumes and the inability to process many legitimate benefit claims made during the COVID-19 crisis. Some claimants have been unable to talk with ESD representatives for weeks and when finally connected, spend unreasonably long amounts of time on hold. These claimants in the meantime, go without benefits with some reporting weeks of delay in receiving benefit payments.

Additionally, ESD has been unable to accurately report on the trust fund balance and weekly claim amounts. This will ultimately result in additional debt burden to the state to bring the fund balance back to solvency when it runs out of money.

ESD needs to resolve its fraud and payment problems and get the benefit payments paid out to the unemployed who desperately need the money, now.

It is obvious ESD needs additional oversight and significant reform to prevent this situation from happening again.

Immediately, ESD needs to engage with either internal or external cyber-security experts to shut down the fraud that is occurring. A new streamlined, properly authenticated system need to be implemented to enable claims to be made efficiently and securely.

Regular audits of the unemployment trust fund and improvements in transparency are needed to restore public trust in the system.

The way the trust fund is managed needs to be reformed to minimize the volatility which has been clearly exposed in the last few months. The state needs to pass legislation to allow the creation of individual unemployment accounts to help resolve this issue.

Under the current system, Washington workers receive no refund or benefit when they retire, and workers who have not been unemployed receive no benefits at all. A system based on individual accounts returns fairness and equity to the system. Personal accounts promote individual responsibility, provide workers with an added financial asset, encourage saving for retirement, and would relieve the state of most of the administrative cost and complication of the current system. Since workers control their own benefits, the system can be used whether they are laid off or chose to leave.

Individual accounts will reduce the cost and fraud of the existing, outdated system.

While events like COVID-19, we hope, are a once in a lifetime event, Washington should have been much better prepared to deal with a long-term unemployment situation.

The longer businesses are forced to remain closed and workers are home, the larger this problem will become.