A federal loan of $278 million that needs to quickly be reimbursed.

An overpayment of $250 million in unemployment claim benefits.

An increase in unemployment fraud and identify theft rates over the past year.

Those are just three of the many problems facing the beleaguered state Department of Workforce Solutions, the agency tasked with dealing with a record number of unemployment claims filed during the coronavirus pandemic.

Department Acting Secretary Ricky Serna pinned much of the blame for Workforce Solutions’ myriad problems on the pandemic during a Legislative Finance Committee presentation Wednesday, eliciting words of concern though little outrage from lawmakers.

Serna said the cascade of unemployment claims stemming from the pandemic overwhelmed the department and prompted the deluge of complaints that have plagued Workforce Solutions though much of 2020 and into 2021.

“A sudden influx of calls and claims hit very quickly, and it was that sudden impact that really did prompt the storm that caused us to be short on a number of fronts,” said Serna, who replaced former department Secretary Bill McCamley a month ago.

Incoming calls swamped the center at an unheard-of rate, Serna told the committee. In February 2020, a month before Gov. Michelle Lujan Grisham declared a state of emergency for New Mexico, Serna said the agency received 7,500 calls. By April, that figure had jumped to 75,000 calls per day.

The sudden climb in claims was steep: In February 2020, the department handled about 14,000 unemployment claims. By June, that number was 200,000, Serna said.

McCamley, who led the department during the pandemic, stepped down in mid-April. He did not return a call seeking comment Wednesday.

Sen. Pat Woods, R-Broadview, said after the presentation he was “very surprised” by some components of the report.

“I knew there had to be something going on when the secretary left, but I didn’t know what it was,” Woods said. “When you start trying to push money out that fast and everybody is telling you to push it out, you’re going to not comply with some of the programs.”

The unsparing 49-page report, written by Legislative Finance Committee analysts, highlighted the many ways the department failed New Mexicans as tens of thousands fell into joblessness.

Among the problems cited in the report:

  • Due to inadequate staffing and noncompliance with state and federal guidelines, the department paid out $250 million more in claims than it needed to — money the state might never get back.
  • $133 million of that money might be related to fraudulent claims.
  • As the department reassigned existing staff to deal with incoming claims, a backlog of potentially fraudulent claims piled up. It could take the state more than a year to address them.
  • In September, the state’s $450 million unemployment insurance fund ran out, prompting the state to borrow $278 million from the federal government to shore it up. The state has until September to pay that loan back.

The report recommends the state utilize incoming American Rescue Plan Act funds to pay off the debt to the federal government. New Mexico is expected to receive $1.75 billion in those funds.

Nora Meyers Sackett, a spokeswoman for Lujan Grisham, wrote in an email Wednesday that “allocating federal funds to replenish and strengthen the state UI fund is a priority.”

Woods and Rep. Ryan Lane, R-Aztec, said the state should do just that.

“We have to,” added Democratic Sen. George Muñoz of Gallup, chairman of the Senate Finance Committee.

Though federal funds may help in filling the financial gap, Workforce Solutions still has much work to do to address the many problems spotlighted in the report.

Catherine Dry, an LFC analyst who worked on the report, said the pandemic changed things “significantly” for the agency.

“Claims spiked, federal programs expanded, fraud risk grew and the trust fund was depleted,” she said.

Both the report and Serna, in his responses to the committee members, said untimely, unclear and ever-changing federal guidelines for implementing federally supported unemployment programs added to the mess.

Serna painted a portrait of those rules being implemented slowly, causing potential recipients anxiety — and then being updated quickly, leading to fast-moving efforts to ensure the department was up to code when it came to reviewing and awarding benefits.

Woods said that when he discovered New Mexicans could apply for several different unemployment programs at once, he recalled thinking, “If you are not compliant with one of those programs, you might not be compliant with the other two.”

Serna said his agency had to balance getting money to needy New Mexicans while adhering to those guidelines. “In some cases, it resulted in overpayment,” he said.

Serna said his department managed to identify and report 4,216 cases of attempted fraud, stopping payouts of nearly $173 million in the process.

Responding to a recommendation in the report, Serna said Workforce Solutions’ staffing has increased from 103 at the start of the pandemic to 270.

Some lawmakers expressed concern the state may never recover overpayments. Serna said it is possible, but added his department, which is still seeking a permanent replacement for McCamley, needs more time to determine how to handle that.

Some on the committee seemed empathetic to the department’s plight. “What you have been through at Workforce Solutions is nothing less than a war,” said Rep. Tara Lujan, D-Santa Fe.

Muñoz said after the presentation he did not want to blame an individual for the agency’s problems.

“You could blame everybody and blame everything, but you can also blame the perfect storm,” he said.

“The key point to me is they thought their system was recession-proof,” he added. “It proved not to be recession-proof during COVID.”

Muñoz said his primary concern is: “How do we fix the system and how do we recover that money? I don’t think we’re going to get a whole lot of it back.”

Other lawmakers asked whether some New Mexicans chose to remain on unemployment because of the many available assistance programs and a state waiver allowing residents to draw unemployment money even if they were not looking for a job.

Serna said that could be the case. He said between state and federal benefits, some low-wage New Mexicans took home almost $1,100 in weekly unemployment funds.

“Divide that by a 40-hour workweek and see how that would compare to earning normal wages if they were employed,” he said.

“I think the big policy question is: Why do individuals make more when they’re unemployed than when they’re employed, especially in critical occupations?” he added.

Rep. Patty Lundstrom, D-Gallup, expressed displeasure upon hearing the bulk of unemployed New Mexicans work in the tourism and hospitality industry.

Noting lawmakers had doubled the Department of Tourism’s budget this year in the hope of wooing back visitors as the pandemic subsides, she said efforts to “market the heck out of this state” could fail because “there’s nobody working.”

General Assignment Reporter

Robert Nott has covered education and youth issues for the Santa Fe New Mexican. He is assigned to The New Mexican's city desk where he covers a general assignment beat.

(7) comments

Michael Kiley

Now the usual GOP opportunist, clueless critics sling mud, what a surprise? There is someone missing from this ignorance barrage, someone who wrecks everything he touches, someone central to US Labor mismanagement during the pandemic, someone ignorant, bombastic, basically insane...what was his name? US Labor runs unemployment and creates the law, not the state governors. Oh! That's right, the guy who killed over 600,000 Americans when China. with a billion population lost only 3,600, THATS RIGHT. 3,600. Oh yes. TRUMP. Blame that.

Mike Johnson

I see, so Trump is actually to blame for what happened here in NM........wow, just,...wow.

Chris Mechels

I would love to know Michelle's role in this disaster. She selected Bill M to head WFS although he had no real management experience, he's a political player. Bad start. Michelle is notorious as a "micro manager" who just can't, and won't, let her Cabinet run their own operations. She insists on Her way. Many competent Cabinet members have left in disgust, and relief to get away from her. She had the same problems back in 2007, which led to her being replaced as Secr of Health.

The biggest "problem" we have in our state, today, and going forward, is the Governor herself. She's pretty good at PR, but deadly as a manager. We need to lock her in a room, and take away her 30 cups of coffee a day.

The second biggest problem is, of course, Brian Egolf, another power junky, with no management background or talent.

After those two, we have rich field of course, including my own little incompetent Representative Andrea Romero, whose background is in pilfering cash, and then shedding tears, at RCLC.

No wonder New Mexico ranks last in everything... with people like this in government.

Mike Johnson

[thumbup][thumbup][thumbup]Incredibly well said, especially about #ResistRomero

Chris Mechels

As in most of the fiasco, it all goes back to the Governor, who doesn't "govern". Now it seems that Nora Sackett is "governing", with no experience except sitting in the Governor's office and telling lies. Like the Governor herself.

The only way to Govern is through a solid Cabinet and Staff, and Michelle has neither, and in fact has driven off the competent ones. We need to learn from this misadventure, but will we??

mark Coble

Clearly the only solution is to lower standards for hiring and education. Then hire based on identity instead of merit and character. This will really help!

Mike Johnson

McCamley left at the right time.......

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