(The Center Square) – While state officials say employers won’t have to cover unemployment benefits paid to fraudsters, taxpayers will still be on the hook for unrecovered funds.

More hearings are expected to further delve into the myriad problems at the Illinois Department of Employment Security. A hearing Thursday touched the surface.

As of December, IDES said it’s paid out $19 billion to cover the costs of unemployment since government-imposed COVID-19 restrictions forced businesses to close, reduce hours or limit customers. The department said it’s stopped 1.5 million fraudulent claims to date, but didn’t put a value on how much money in fraudulent claims has been paid out.

State Rep. Dan Ugaste, R-Geneva, asked whether employers would have to cover for the fraud.

The answer provided was “no,” employers won’t be on the hook.

State Rep. Fred Crespo, D-Hoffman Estates, followed up with IDES Chief Legal Counsel Kevin Lovellette.

“So who is [on the hook]?” Crespo asked.

“If it is a federally funded program, then the money is federal funds,” Lovellette said.

Lovellette said there are task forces across the country and around the world working to recover fraudulently paid funds.

“But the state does not have any exposure, correct?” Crespo asked.

“No, because with [Pandemic Unemployment Assistance, Pandemic Unemployment Compensation,] those programs, all of those programs are federally funded,” Lovellette said.

Federal unemployment funds are covered by state and federal unemployment insurance taxes that employers pay.

The state showed lawmakers data Thursday indicating it stopped 262,437 PUA fraud claims in 2020 and 110,842 in 2021. For Unemployment Insurance fraud, the state says it stopped 490,735 cases in 2020 and 664,460 cases in 2021.

Other issues lawmakers are dealing with include unemployed Illinoisans who months ago were asked by the state to pay back overpayments. State officials say those claimants must apply for a federally approved waiver from the state.

Lovellette said recent federal law allows waivers for overpayments, but claimants must submit a form expressing no fault and indicating if reimbursing for an overpayment would be a hardship. State Rep. Lindsey LaPointe, D-Chicago, questioned why the state is making claimants take the steps to get the waiver.

“Why are we creating yet another layer and another way for people either claimaints or IDES staff to make mistakes and just add to the giant pile of work that you all and we all are dealing with,” LaPointe said.

State Rep. Janet Yang Rohr, D-Naperville, said she has constituents having trouble getting their 1099-G form with the tax filing deadline approaching.

“We’re having to help them jump through a few hoops to change from requesting those forms electronically to getting a mailed statement,” Rohr said.

More hearings about the state’s unemployment system are expected, but not yet scheduled.

Staff Reporter

Greg Bishop reports on Illinois government and other issues for The Center Square. Bishop has years of award-winning broadcast experience and hosts the WMAY Morning Newsfeed out of Springfield.