Colorado’s Department of Labor and Employment failed to meet accounting and federal requirements in two key programs, according to the state auditor.
An annual audit of the accounting, financial reporting, and compliance of Colorado state government and public higher education institutions found “material weakness” in the administration of Family and Medical Leave Insurance, or FAMLI, and Unemployment Insurance, the Office of the State Auditor said in a statement.
The findings were presented this week in a public hearing to the Legislative Audit Committee. Material weakness is the most serious type of audit finding.
The problems uncovered with the labor department’s two largest programs were numerous. For instance, the department didn’t ensure that all employers required to register for FAMLI did so. On top of that, the labor department didn’t properly track and document $127 million that it owed employers that were exempted from the program.
FAMLI is a program that gives Coloradans paid leave to care for a loved one or themselves. The program, approved by voters, partially replaces lost wages. It’s funded by a fee on workers and employers.
“These problems happened because CDLE lacked processes to follow state regulations,” the audit committee said in the statement.
Colorado’s labor department also miscalculated what employers owed toward funding unemployment insurance, setting incorrect rates for roughly 30,000 businesses. The errors resulted in some employers overpaying by about $5 million, while others underpaid.
“These problems violated federal requirements,” the state auditor said.
The problems with unemployment insurance stemmed from a botched rollout of a new computer system, according to CPR’s earlier reporting. Business owners in June told CPR they were being charged penalties and interest they didn’t owe for unemployment insurance taxes. At the time, companies couldn’t get an answer from the state’s labor department about what was going on.
The audit committee directed the labor department to develop procedures to comply with state rules and regulations; enforce compliance with the requirement that employers register for FAMLI; identify employers that were affected by poor tracking and calculation errors, and make the necessary adjustments; implement processes to ensure employers pay the correct insurance premiums, rates, and fines; and correct and improve its accounting processes and unemployment insurance system.
“The Colorado Department of Labor and Employment takes any findings from the Office of the State Auditor seriously and is committed to continuous process improvement across all of the agency’s divisions and programs,” a spokesperson for Colorado's labor department said in an emailed statement. “The Unemployment Insurance and the Family and Medical Leave Insurance divisions have already taken steps to address the issues identified by the Office of the State Auditor.”
