Republicans want answers to missing $180,000

Senate Republicans are calling for an investigation into Delaware's unemployment trust fund after $180,000 went missing in 2023.

The caucus says it wants answers about how an employee was able to embezzle money from the Department of Labor fund.

“Our caucus recently met with the administrative team at DOL and the Division of Unemployment Insurance to discuss what happened. Outside consultants were hired to analyze the deficiencies in the agency's systems that led to this phenomenon. While we appreciate the department's openness and willingness to meet, we believe, as elected leaders, that we need to conduct a separate investigation to both rectify the problem and restore trust between the department and the public that we serve,” the caucus wrote in a statement.

The Delaware Coalition for Open Government alerted all members of the General Assembly on May 30 about a misappropriation of funds within the Department of Labor's Unemployment Insurance Division and requested a investigation into the Office of the Auditor and the Accounting Division of the Ministry of Finance. failing to disclose the embezzlement issue.

DelCOG's John Flaherty said that so far only Republicans have contacted his group to express interest in finding out how $180,000 disappeared and why it was never reported.

“The General Assembly has an obligation, in the face of such a breach of public trust, to hold hearings and provide some assurance to agencies that have been capricious. The auditor and the Division of Accounting are legally required to report this to the governor and the General Assembly,” he said.

However, Flaherty said, neither the auditor's office nor the Department of Finance mentioned any misappropriation of funds in their state-required reports.

In June 2023, the auditor's office released a single uniform guidance audit report by independent auditing firm CliftonLarsonAllen, and then released its own special report on the Delaware Unemployment Compensation Fund, based on the independent auditor's investigation.

In the special report, State Auditor Lydia York said the independent auditor determined that the Delaware Unemployment Compensation Fund was not auditable for fiscal year 2023 due to poor accounting – a a situation that had never happened before.

“Quite simply, [the Department of Labor’s Division of Unemployment Insurance] was unable to provide detailed accounting records of any kind to enable CliftonLarsonAllen to form an opinion,” she wrote.

York continues to say that the UI Division failed to complete the accounting on time and that the Accounting Division was slow to respond when the extent of the problems with DOLUI became clear, but his report never details what the problems were.

Likewise, the auditor's comprehensive annual financial report mentions CliftonLarson Allen's failure to audit DUCF without providing details of the missing money.

Details of the missing $180,000 are not included in the 2023 Uniform Guidance single audit report, which used the independent auditor's findings.

In this document, the independent auditor notes “a material weakness in internal control over financial reporting” which includes no monthly reconciliation of cash, accounts receivable or accounts payable.

“The results of our audit procedures identified several material misstatements in various accounts and balances that are indicative of systemic accounting and financial reporting deficiencies in internal control, which ultimately led to an inability to express an opinion on the Unemployment Insurance Trust Fund and commercial-type activities,” the report states.

According to the report, high staff turnover, loss of institutional knowledge, lack of adequate staff and an outdated accounting system are all contributing factors to the problem.

The Delaware Department of Finance's 2023 Comprehensive Annual Financial Report also references internal control issues with the unemployment fund, but provides no further details about the missing money or misappropriation of funds.

It does, however, highlight how the fund benefited from multimillion-dollar cash injections from the federal Coronavirus Relief Fund.

“Delaware’s UI trust fund balances currently stand at 140% of the recommended reserve ratios. For comparison, from 2014 to 2019, Delaware’s UI trust fund balances averaged only 43% of recommended reserve ratios,” the report states.

The Department of Finance report states that millions of dollars in American Rescue Plan Act funds were spent on modernizing the Division of Unemployment Insurance's financial systems, and it asserts that “accurate financial reporting and accurate in the years to come” will be assured.

CliftonLarsonAllen also raised issues in the 82-page report regarding Medicaid costs. The independent accountant said in his review that Medicaid costs were indeterminate.

“Due to the lack of information, we were unable to determine whether any unauthorized costs were incurred,” the report said.

He went on to say that a lack of documentation could allow ineligible providers to provide services under the Medicaid program.

Flaherty said the General Assembly should hold oversight hearings to determine how much money was missing.

“When this amount of money is stolen, it's probably not an isolated case, but we don't know. That’s why it’s important that we hold public hearings so we can get to the bottom of this matter and any other issues that arise,” Flaherty said.

Flaherty and his group support a Senate bill introduced in March to create an inspector general's office as well as the inspector general position to investigate and prevent fraud, waste, mismanagement, corruption and other abuses government resources. The bill awaits a decision by the Senate Finance Committee.

Signed into law

HB 336 was signed into law on May 30 by Governor John Carney to amend Delaware's limited liability company law. The bill passed the Senate on May 16 with 19 votes and two absent and in the House with 38 votes and three absent on April 23.

HB 337 was signed into law on May 30 by Governor John Carney to amend the Delaware Revised Uniform Limited Partnership Act. The bill passed the Senate on May 16 with 20 votes and one absent and passed the House with 38 votes and three absent on April 23.

HB 338 was signed into law on May 30 by Governor John Carney to amend the Delaware Statutory Trust Act. The bill passed the Senate on May 16 with 20 votes and one absent and passed the House with 38 votes and three absent on April 23.

HB 339 was signed into law on May 30 by Governor John Carney to amend the Delaware Revised Uniform Partnership Act. The bill passed the Senate on May 16 with 20 votes and one absent and passed the House with 38 votes and three absent on April 23.

HB 271 with HA 1 was signed into law on May 30 by Governor John Carney to eliminate the ban on hunting game birds on Sundays, and it is now law. The bill was unanimously passed by the Senate on March 19 and by the House of Representatives with 37 votes and four absent on January 25.