Delaware’s Unemployment Insurance (UI) Trust Fund remains unauditable for another year, but the new Secretary of Labor says improvements are underway.
Independent accounting firm CliftonLarsonAllen (CLA) completed its fiscal year 24 audit of the state’s basic financial statements, except for the UI Trust Fund for which it issued a disclaimer of opinion.
CLA says the Department of Labor’s (DOL) Division of Unemployment Insurance was "unable to overcome significant employee turnover, internal control deficiencies and its antiquated financial system," leading to incomplete financial statements.
These same deficiencies were reported last year by the State Auditor’s Office, on top of just over $180,000 being embezzled from the UI Trust Fund by a former state employee in 2023.
On March 31, 2023, a staff member notified DOL Human Resources of suspicious activity from said unemployment insurance administrator, and later that day, the Director of Unemployment Insurance confirmed that two checks had been issued in January and March 2023 to a business account at the the suspected employee's home address.
That suspected employee denied all allegations of theft and was immediately suspended pending a full investigation — he took his life later that day.
A report issued by the department noted the total assets documented in the former employee's estate were around 56% of the stolen funds, but any recoverable amount would be placed back into the UI Trust Fund.
New Secretary of Labor LaKresha Moultrie says efforts to clawback those stolen funds are still in progress, but she is working on implementing safeguards to reduce the potential for future incidents and improve financial reporting.
“There have been several consecutive audits issued by CLA, and they've been consistent — they've been the same. But what we're doing, and I'm really excited to report, is implementing new processes to actually address that.”Sec. Moultrie said.
Moultrie says the Department of Labor is working on improving business operations, bolstering internal controls and undergoing employee training to correct these deficiencies.
"I've been at [the Department of Labor] for a total of two months, and what I immediately observed is that we had an incredibly, hard working staff who's committed to providing quality customer service to the public and employers throughout the state, but they just didn't have the resources to make meaningful progress on all of the improvements that have been recommended. So the recommendations have been outlined, they just need a plan to get it done, and that's what we're moving forward with."
The state has already allocated $60 million in federal funds from the American Rescue Plan Act (ARPA) to modernize the UI Trust Fund’s reporting system. That process started in February 2024, but it isn't expected to be completed until late 2026 or early 2027.
"It's not just a focus on process and procedure — customer service is a big piece of that as well. What I'll be doing is doing quarterly reports, just so that we can be very transparent with the public and make sure that they're clear on what progress we're making and what's coming next," Sec. Moultrie added.
“While these problems may have started before our time in office, our goal is not just to fix the past, but to build a stronger, more accountable future,” said Gov. Matt Meyer in a statement. “We’re committed to doing the hard work to regain the trust of those we serve.”
Sec. Moultrie is also preparing for potential federal funding cuts under President Donald Trump, who just announced the cancellation of $12 billion public health grants across the U.S. effective March 24 — Delaware stands to lose more than $38 million from these cancellations.
Delaware Attorney General Kathy Jennings and a coalition of attorneys general promptly filed a lawsuit against the U.S. Department of Health and Human Services, arguing the terminations violate the Administrative Procedure Act.
"There's always concerns. On the federal level, we never know what we're going to see day to day. I'm primarily concerned because [the Department of Labor] is 70% federally funded. Any changes on the federal level could have significant impacts on the work that we do here in labor. So we're just paying attention very closely, and we'll adjust as necessary," Sec. Moultrie said.
An additional audit of the UI Trust Fund is expected from the Delaware Auditor of Accounts, which Sec. Moultrie says identifies the same issues outlined in the CLA report.
