The audit, reported Tuesday by Iowa Auditor Rob Sand's office, said Iowa Workforce Development paid nearly $125,000 to people are dead, and another nearly $114,000 to prisoners who were not eligible for unemployment benefits.
The audit covered the state budget year that ended in June 2020, which included the first four months of the COVID-19 pandemic.
According to the audit, the erroneous payments were made because they were not caught by state fact-finders.
The state workforce department was inundated with unemployment requests during the first months of the pandemic as most businesses were completely or partially closed as part of public health precautions.
The state's jobless rate peaked at 10.5 percent in April 2020, according to state workforce data.
The state audit found that benefits totaling $124,698 were sent to six individuals who are deceased. And eight individuals who were incarcerated and thus ineligible for unemployment benefits received benefits totaling $113,813.
Between March and June 2020, IWD "received an unprecedented and historic number of unemployment claims unlikely to ever be seen again in a similar three-month period" as well as "an unparalleled number of customer service phone calls and email requests for help," the workforce department said in response to the audit.
The department also noted that, at the same time, the federal government created new unemployment programs that states were required to develop, test and implement.
IWD said it followed federal guidelines by prioritizing benefits payments over all other activities, including fact-finding.
"IWD conducted limited fact-finding interviews between March and May 2020. Once we had capacity to do so, we directed an unprecedented number of staff to engage in fact-finding in an effort to reduce the backlog and catch up as quickly as possible," the department's response in the report said.
The department will resume cross-checking claimants' and prisoners' social security numbers, and partner with the state Health and Human Services department and train investigators to spot claimants who use a deceased person's social security number, it said in the report.
The audit does not note whether the state has been able to recoup any of those payments.
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