Feds’ $600 unemployment bonus led to many ineligible claims, S.D. labor secretary says

Capitol News Bureau

PIERRE, S.D. (KELO) — The availability of the $600 federal bonus earlier this year spurred people to make fraudulent claims for unemployment benefits in South Dakota, according to a state government official.

Some days, two-thirds of the applications were found to not be eligible for benefits as people tried to cash in amid the COVID-19 pandemic, state Labor Secretary Marcia Hultman said Wednesday.

“Fraud has been a huge issue with these federal programs,” Hultman told the state Workforce Development Council.

She said the availability of the federal money led people to take chances. The state Department of Labor and Regulation staff determined, for example, that many claims came from people who were deceased. In another instance, a small rural community had 56 applicants using the same address.

Time spent weeding through those claims slowed down processing of legitimate applications, according to Hultman. She said the lure of the $600 led people to play the system. “That’s been a little bit surprising to me,” she said.

The $600 bonus expired at the end of July. President Donald Trump later offered a temporary $300 federal bonus, but Governor Kristi Noem might have been the only leader among the 50 states to refuse it. Noem, a Republican, hosted the Republican president at Mount Rushmore on July 3 and has since campaigned in other states for his re-election.

Ian Fury, the governor’s press secretary, declined to say Wednesday whether fraud was any part of the reason that Noem declined Trump’s $300 offer. “(W)e’ll allow the Governor’s statement on the subject to speak for itself,” Fury said, referring to an August 14 news release under the headline, ‘Governor Noem Grateful for President Trump’s Continued Leadership on COVID-19 Recovery.’

Unemployment continues to run higher than the pre-pandemic normal of recent years in South Dakota. For the most recent week of September 6-12, the department processed 346 initial claims, down from the prior week’s 585, and continued claims were at 6,511 for the week ending Sept. 5, down from the prior week’s 9,165. Latest numbers come out each Thursday.

Hultman told the council that people are returning to work, but the weeks and months ahead will involve sorting through disputes between employers and employees over unresolved claims, looking at facts such as hours worked each week.

“So every single case can change every week literally,” she said. “At the end we will see appeals.” There also will be instances of overpayments, where people have to pay money back to the system. “There’s going to be some pain points there for individuals moving forward,” she added.

The department’s Division of Unemployment Insurance, as it was known until a few years ago, had a staff of 98 during the 2008-2010 recession. It was since reduced to 69 because demand decreased.

Then came the pandemic.

“On March 16, there was a light switch that flipped immediately,” Hultman said about when the pandemic began to shut down lots of jobs in South Dakota. “We didn’t have a crystal ball that could have prepared us for what was to come.”

The Reemployment Assistance Division, as it’s now called, processed a weekly average of 232 initial claims in 2019. Since the pandemic, the staff has averaged nearly 3,000 initial claims per week, including a high of 7,916. Continuing claims for benefits also sky-rocketed, from a weekly average of 1,284 in 2019 to an average of more than 17,000 since March and more than 25,000 one week.

Hultman said it’s been like watching a snake swallow a beach ball. She said they’ll still be dealing with issues two years from now. More than 40,000 South Dakotans have been paid reemployment benefits this year, she said, and they’ve received more than $300 million in state and federal benefits. The $300 million is more than had been paid in the past decade.

The majority of claims have been paid within 21 days, she said. Hiring new staff off the street wasn’t seen as workable because of the complexities of the system, according to Hultman, so 92 of the department’s Job Service staff were reassigned temporarily to the reemployment duties.

Hultman said 11 staff members in the department’s call center had handled about 767 calls a week in 2019. Since March 16, with many more people working the phones, the calls averaged more than 5,000 a week, including a high of more than 17,000.

At times Hultman takes calls. “It’s emotionally very challenging but we realize it’s also very emotional for those claimants as well,” she said.

Council president Lee Anderson of Mitchell praised the department’s staff as “phenomenal” for rising to the workload.

“That has been mind-boggling,” he said. “I can’t even fathom what you guys are doing.” 

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