State Cash For Inmates: $23M Error Included Unemployment, Welfare

The Record ( — Thursday, May 30, 2013

The Record

Thirteen incarcerated state employees received sick leave payments.

Another inmate received nearly $40,000 in unemployment over more than a year while incarcerated on a drug-related offense.

And another person imprisoned for the sexual assault of a minor received more than $37,000 in state pension payments in prison.

A patchwork system of verifying benefit eligibility among state agencies allowed thousands of inmates to inappropriately receive more than $23 million in unemployment benefits and other government assistance over the course of 22 months from July 2009 to April 2011, according to an audit released Wednesday by the Office of the State Comptroller.

And at a time of increasing poverty and high unemployment, inmates received benefits including food stamps, cash welfare payments and Medicaid coverage, the report said.

The Department of Treasury, for instance, searched news clippings — not official prison records — to determine whether retired state employees should have their pension payments halted because of an arrest.

Public sector retirees can lose part or all of their pensions if they're found guilty of committing certain crimes.

"Suffice it to say that when thousands of inmates are collecting unemployment checks from behind bars, there is a serious gap in program oversight," Comptroller Matt Boxer said in a statement. "These are vitally important social programs."

In some cases, inmates received government payments into bank accounts that could be accessed by friends and relatives, Boxer said.

Prison inmates are ineligible for a host of government programs ranging from Medicaid to unemployment to food stamps and receive most services — like health care and food — for free.

More than 20,000 incarcerated individuals received some type of improper payments during the audit period. Boxer's office drafted a series of recommendations to be followed by the agencies.

State agencies are in the process of "scrubbing" their programs to ensure no inmate inappropriately receives benefits in the future, he added.

Many of the problems, the audit said, stemmed from the failure of several state agencies — including the Department of Labor — to identify inmates improperly receiving government benefits using county incarceration data.

For instance, though the Department of Human Services can check Medicaid recipients against prisoners incarcerated at state prisons, it didn't have an agreement with the state's court systems to access similar data for county inmates.

"The implementation of adequate controls would limit or eliminate improper and unnecessary benefit payments, thereby saving taxpayer funds," the audit said.

At the same time, state government has long operated with antiquated computer infrastructure, some as much as 40 years old, that makes information sharing between agencies difficult.

"I think that played a large role," Boxer said in an interview. "The IT issues here made it more difficult for these agencies to use this data."

Democrats in the Legislature and Governor Christie sparred over funding to pay for technology upgrades in 2011 after a series of high-profile computer crashes at the state Motor Vehicle Commission.

Much of the allegedly misspent money, about $10 million, came in the form of unemployment benefits — even though inmates are ineligible to receive such assistance, Boxer said. About 7,600 inmates received unemployment benefits during the audit period.

During the period covered by the audit, the state paid out more than $13 billion in unemployment claims. About 250,000 people are currently receiving unemployment benefits.

The audit also detected $7.1 million in improper Medicaid payments, with some apparently going to individuals using an inmate's Medicaid card. Cases remain under investigation and may be referred to prosecutors, according to the audit.

About $5 million improperly went to health insurers to provide coverage for low-income residents who were in jail at the time, the audit said.

Brian T. Murray, a spokesman for the New Jersey Department of Labor and Workforce Development, said the Christie administration had already implemented many of the reforms and has made a major push against welfare fraud.

"We're glad the comptroller pointed out another area" where the state can improve, he said. "Fraud has been a major focus of this administration."

Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, which advocates for the unemployed, said it didn't make sense for inmates to receive unemployment benefits. "If he's in jail, to me, he's not legally entitled to collect unemployment," she said. "You have to be ready and available to be seeking work."

And Cecilia Zalkind, executive director of Advocates for Children of New Jersey, said in a statement that it was "encouraging" that the comptroller has identified money that may have been misspent.

But she called on Christie to funnel any savings back into social programs.

"This found money should be used to address the unmet needs of children," said Zalkind, who advocates for low-income residents who receive benefits from the some of the programs that were cited in the report. "With state agencies implementing new efficiencies, this should free up funds to expand preschool, which we know gives children the foundation they need to succeed."

Staff Writer John Reitmeyer contributed to this article.

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