Texas Workforce Commission notifies lawmakers, says foreign governments were part of unemployment fraud activity

TWC Executive Director Ed Serna spoke at an interim hearing about the state’s response to the COVID-19-related job losses and the opportunities available now.

AUSTIN, Texas — Unemployment fraud goes beyond individual crimes. The Texas Workforce Commission has uncovered criminal networks and some foreign governments may be behind the fraud.

TWC Executive Director Ed Serna told Texas lawmakers he would not publicly name governments under investigation for fraudulent unemployment claims.

He said the thieves changed tactics every six days and tried to use bots to hack into the system. The agency caught him.

Serna said the majority of unemployment fraud came from people whose identities were stolen in security breaches, such as Equifax in 2017.

“We calculated that $51.6 million was paid out during this period out of 9,573 claims that have now been confirmed to be identity theft claims. The $51.6 million represents 0.1% of the total $54.3 billion in unemployment benefits paid during this period. We also estimate that TWC prevented the release of approximately $2.6 billion in payments to fraudsters,” Serna wrote in his testimony.

Unemployment in Texas reached 12.6% between March and April 2020 with 1.4 million jobs lost. In March 2022, the rate fell to 4.4% in all of Texas and to less than 3% for the Austin-Round Rock, Amarillo and College Station-Bryan areas.

The lingering effects of rising unemployment can be seen in the appeals process. And TWC needs more lawyers.

“We try to hire from rural Texas, South Texas, for jobs in Austin, because Austin pays better there than Austin pays Austin,” Serna said.

TWC commissioners and the agency are focused on getting employers skilled workers. Commissioners set aside $15 million to develop a health care learning program. The commission also allocated $4 million to expand apprenticeship programs to other jobs.

Over the next two years, nearly $315 million from the expanded Child Care Development Block Grant will go to low-income families in need of child care. This money comes from federal stimulus legislation passed by Congress and will be distributed through local Workforce Solutions offices.

Lawmakers asked Serna if the agency could handle another surge if the United States entered a recession. Serna said the tools implemented to manage the outbreak will remain in place, such as the online chat bot and the cloud-based interactive voice system (IVR).

TWC is updating its computer systems, which have been in use since the early 1980s, Serna said. The agency was in the process of updating its system when the pandemic hit.

“We issued an RFP in July 2019 to (start) the procurement process. In March 2020, we were in the final stages of selecting a supplier when the pandemic hit. I put the process on hold because I needed our UI and IT staff who were working on replacing the system to respond to the pandemic and help keep our current system running and reprogram it for the new ones. federal benefit programs,” Serna wrote in his filed testimony.

The agency began another procurement process in fall 2020 and selected a vendor in January 2021.

“TWC faced challenges, but we were up to the challenge. With our clients always at the center of our concerns, we have changed our processes, created new tools and resources and fought to protect the funds we are responsible for distributing. Although we are hopeful that we will not have another pandemic, I am confident that our team will always respond with the diligence we have shown over the past two years,” Serna’s written testimony showed.

If you need employment assistance, TWC programs are available at your local Workforce Solutions office.


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