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State Audit Finds $70M-Plus in Unwarranted Unemployment Payouts

Because of errors and fraud, the state of Tennessee issued $73.4 million in overpayments to people drawing unemployment benefits over the past six years, according to a new audit report.

The problems threaten the integrity of the program, the comptroller’s office said in its report, released this week.

Auditors found poor systems for detecting fraud, backlogs in claims handling, and “automated approval of claims” without verifying that employees qualified. They also faulted workers at the Department of Labor and Workforce Development for not taking simple steps, like verifying the Social Security numbers of people drawing unemployment.

Auditors found the department had paid out $135,000 to people who were not eligible because they were gainfully employed by the state – or in some cases dead.

“The Commissioner should take immediate action to implement a strong system of internal controls over the claimant eligibility process for the (unemployment insurance) program. This control system should be designed to prevent and/or detect errors and fraud and mitigate the risk that (unemployment) benefits will be paid to ineligible claimants.”

The commissioner in question, Department of Labor and Workforce Development chief Karla Davis, resigned earlier this month, citing family reasons. The Haslam administration announced that Burns Phillips, a Finance and Administration official, would serve as acting commissioner.

Lt. Gov. Ron Ramsey, R-Blountville, said Thursday that he’d not yet seen the report but was not surprised auditors had uncovered problems at the labor department.

Ramsey has successfully pushed to tighten requirements on unemployment-insurance beneficiaries, and in the process has developed a bad impression of the labor department.

“To say that that department has been unresponsive and hard to work with would be an understatement,” Ramsey said. “You send email after email after email and get no response. We ask for statistic after statistic and get no response.”

Last year the Legislature toughened requirements on beneficiaries, like requiring them to keep a log of their efforts to find work. Some 400 people were kicked off the program in a random check of more than 6,100 claimants during the first seven weeks the law was in place, the Chattanooga Times Free Press reported in December.

Read the audit here.

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Press Releases

TN Labor & Workforce Commissioner Resigns Citing Family Reasons

Press release from the Tennessee Department of Labor & Workforce Development; March 18, 2013:

NASHVILLE – Tennessee Gov. Bill Haslam today announced that Department of Labor and Workforce Development Commissioner Karla Davis is resigning due to family reasons.

“Over the past two years, the department has implemented several key initiatives including a comprehensive online jobs database to better connect job seekers to Tennessee employers and is playing a vital role in our effort to update Tennessee’s worker’s compensation laws,” Haslam said. “I am grateful to Karla for her service and wish her the best.”
Davis has served as commissioner since the beginning of the Haslam administration. Prior to that, she served as director of Urban Strategies Memphis HOPE, managing and overseeing the Community and Supportive Services Program for three U.S. Department of Housing and Urban Development (HUD) HOPE VI public housing redevelopment projects and two HUD ROSS Grant projects in Memphis. Before that she worked at the U.S. Environmental Protection Agency (EPA) for 16 years.

The governor has named Burns Phillips as acting commissioner. Phillips currently serves as managing director in the Department of Finance and Administration (F&A) overseeing customer-focused government initiatives administration wide.

“Burns brings both public and private sector experience to this interim role,” Haslam continued. “I appreciate his willingness to take on these responsibilities as we continue to focus on serving the citizens of Tennessee.

Early in his career, Phillips worked in the Budget Office of F&A before going into the private sector where he worked in medical sales and marketing. In 1991, he founded a surgical instrument company that conducted business in the United States and 30 other countries.

In 2009, he returned to state government to serve as transportation administrative director of the Tennessee Department of Transportation’s Central Services Division.

Phillips has both a bachelor’s and master’s degree from Middle Tennessee State University, and he earned his law degree from the Nashville School of Law.

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Press Releases

Two Anderson Co. Companies Awarded Job Training Grants

Press release from the Tennessee Department of Labor & Workforce Development; March 5, 2013:

NASHVILLE – Governor Bill Haslam and Tennessee Department of Labor & Workforce Development Commissioner Karla Davis have awarded $29,947 to Protomet Corporation in Oak Ridge and $25,000 to Techmer PM in Clinton.

“If Tennessee is going to become the number one location in the Southeast for high-quality jobs, then we must offer a well-trained workforce to employers,” said Governor Haslam. “This kind of training grant not only helps educate workers, but also provides incentive to employers looking to relocate or expand in Tennessee.”

“Both job creation and retention are vital in maintaining a healthy economy in Tennessee, and the Incumbent Worker Training program has played a key role in accomplishing this,” said Commissioner Davis. “Since the program’s inception, Incumbent Worker Training grants have assisted more than 600 businesses by providing $14 million to train approximately 50,000 employees.”

In their application for the grant, Protomet Corporation stated this grant would allow the company to balance capital expenditures with process and organizational improvements to keep cost low and compete in theglobal economy allowing the business to grow and retain employees.

In their application for the grant, Techmer PM stated this grant would develop the skills that will allow the team to identify waste throughout the process. The removal of the waste – time, money, and resources – will keep Techmer PM competitive in the market and assist in growing the business.

“I would like to thank Governor Haslam and Commissioner Davis for their involvement in awarding this grant to the workers of Anderson County,” said Senator Randy McNally.

“By investing in the skills of Tennessee’s workforce, we’re also investing in our future economic success,” said Representative John Ragan.

The East Tennessee Human Resource Agency played a key role in awarding the grant to Protomet Corporation.

The Tennessee Department of Labor and Workforce Development administers the Incumbent Worker Training program. The program has been structured to be flexible to meet the business’s training objectives. The business may use public, private, or its own in-house training provider based on the nature of the training.

The following criteria must be met to qualify for the Incumbent Worker Training Program. Employersmust be in operation in Tennessee for at least one year prior to application date. Employers must have at least five full-time employees, demonstrate financial viability and be current on all state tax obligations. Funding priority is given to businesses whose grant proposals represent a significant layoff avoidance strategy and represent a significant upgrade of skills.

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Business and Economy NewsTracker

Labor Dept.: Nearly 3K Jobless Tennesseans Quit Looking for Work Last Month

The state’s unemployment rate continues to drop, but officials who track workforce trends say some of that decrease can be attributed to thousands of out-of-work Tennesseans who have stopped looking for work.

“I do think there are some folks who have just permanently, or almost permanently, taken themselves out of the job market saying, ‘I have given up,’” Gov. Bill Haslam told reporters after speaking at the American Legion Auxiliary Volunteer Girls State assembly at Lipscomb University Tuesday.

According to Tennessee Department of Labor statistics, almost 3,000 people who were part of the labor force in March stopped looking for work the very next month, joining a category economists call “discouraged workers.”

Over the last few months, the number of discouraged workers has slowly dropped from this year’s high of more than 21,000 people. The figure popped back up to 18,970 in April, a 14 percent increase from March, according to estimates from the monthly Tennessee Labor Force Estimates summary, monthly unemployment insurance claims reports, the 2000 census and national unemployment statistics.

Discouraged workers make up 7.3 percent of the 259,340 out-of-work Tennesseans. In January, the figure was 7 percent.

Workers are classified as discouraged if they have searched for work during the prior year and are explicitly reported as currently available for work, but have stopped looking.

“While Tennessee’s unemployment rate has declined for nine consecutive months, April’s decrease is mostly attributable to a shrinking labor force,” said Karla Davis, Tennessee Department of Labor Commissioner. “This is similar to the monthly change that occurred on the national level.”

The state’s 7.8 percent unemployment rate is the lowest it’s been since November 2008 at the beginning of the recession. It is still below the national average of 8.1 percent.

Tennessee’s unemployment rate ranks just above the bottom third in the nation.

Of the state’s 95 counties, those with the highest unemployment rate are all outside the state’s major metro areas. While their rates are still the highest, they have all dropped in the last month.

Here are the 10 counties with the greatest and smallest share of jobless workers, their unemployment rates and explanations given by the state:

  • Scott, 15.4 percent. Increase in construction, trade, & manufacturing; rate still high from manufacturing layoffs.
  • Obion, 12.7 percent. Transportation reduction ended; rate still high from continuing decreases in manufacturing.
  • Pickett, 12.1 percent. Seasonal increase in trade & leisure; rate still high from manufacturing layoffs.
  • Lauderdale, 11.9 percent. Rate is high from continuing reductions in manufacturing.
  • Perry, 11.6 percent. Rate still high from declines in manufacturing & construction.
  • Marshall, 11.2 percent. Rate remains high due to declines in manufacturing.
  • Hancock, 10.9 percent. Rate remains high due to previous layoffs in manufacturing.
  • Weakley, 10.9 percent. Rate is high from layoffs in administrative support & other services.
  • Haywood, 10.8 percent. Rates still high from declines in manufacturing.
  • Lawrence, 10.6 percent. Rate remains high due to declines in manufacturing.

Counties with the lowest unemployment rate include:

  • Williamson, 5.3 percent. No significant change.
  • Lincoln, 5.5 percent. No significant change.
  • Knox, 5.8 percent. No significant change.
  • Loudon, 6.2 percent. Increases in surrounding counties.
  • Blount, 6.3 percent. Increases in retail trade & leisure/hospitality
  • Wilson, 6.3 percent. No significant change.
  • Washington, 6.4 percent. No significant change.
  • Sullivan, 6.4 percent. Increases in manufacturing, retail trade, & leisure/hospitality.
  • Davidson, 6.5 percent. No significant change.
  • Sumner, 6.6 percent. No significant change.
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Press Releases

State Hands Out $160K in Job-Training Grants

Press Release from the Office of Gov. Bill Haslam, March 29, 2012

Governor Awards More Than $150K In Job Training Grants; Nine Companies Awarded Grants Training 298 Employees

NASHVILLE– Governor Bill Haslam and Tennessee Department of Labor & Workforce Development Commissioner Karla Davis have awarded $159,215 in job training grants to nine companies across the state. Incumbent Worker Training grants assist employers with upgrading skills and avoiding layoffs for their employees.

“If Tennessee is going to become the number one location in the Southeast for high-quality jobs, then we must offer a well-trained workforce to employers,” said Governor Haslam. “This kind of training grant not only helps educate workers, but also provides incentive to employers looking to relocate or expand in Tennessee.”

“Both job creation and retention are vital in maintaining a healthy economy in Tennessee, and the Incumbent Worker Training program has played a key role in accomplishing this,” said Commissioner Davis. “Since the program’s inception, Incumbent Worker Training grants have assisted more than 600 businesses by providing $14 million to train approximately 50,000 employees.”

The Incumbent Worker program has been structured to be flexible to meet the business’s training objectives. The business may use public, private, or its own in-house training provider based on the nature of the training. The following criteria must be met to qualify for the Incumbent Worker Training Program. Employers must be in operation in Tennessee for at least one year prior to application date. Employers must have at least five full-time employees, demonstrate financial viability and be current on all state tax obligations. Funding priority is given to businesses whose grant proposals represent a significant layoff avoidance strategy and represent a significant upgrade of skills.

The Incumbent Worker Training Program is funded by the Federal Workforce Investment Act (WIA) and administered by the Workforce Development division within the Tennessee Department of Labor & Workforce Development, the Local Workforce Investment Area (LWIA contact), and the local career center.

Follow the link below for a list of companies receiving Incumbent Worker Training Grants
http://www.tn.gov/labor-wfd/news/March2012JobTrainingAwards.html.

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Press Releases

TN’s November Unemployment Rate 9.1 Percent

Press Release from the State of Tennessee, Dec. 15, 2011:

Rate Drops 0.4 Percentage Point from October

NASHVILLE – Tennessee Commissioner of Labor & Workforce Development Karla Davis announced today Tennessee’s unemployment rate for November fell to 9.1 percent, down from the October revised rate of 9.5. The national unemployment rate for November 2011 was 8.6 percent, a decrease of 0.4 percentage point from the October rate.

“This is the lowest unemployment rate Tennessee has experienced since January of 2009 at 9.0 percent,” Commissioner Davis said. “After seasonal adjustments were made, nearly 10,000 jobs were created since October with positive job growth in the service sector such as retail trade and temporary jobs.”

The state’s unemployment rate is seasonally adjusted to account for the hiring and layoff patterns that accompany regular events such as the winter holiday season and the summer vacation season. The nonagricultural figures (below) are unadjusted estimates.

Major Changes in Estimated Nonagricultural Employment

October 2011 to November 2011

From October to November, trade/transportation/utilities increased 9,200, of which 8,900 was in retail trade; and professional and business services was up by 7,100, and government increased by1,500 jobs. From October to November, arts, entertainment, and recreation decreased by 1,800 jobs; wholesale trade was down 1,400; and durable goods manufacturing declined by 400 jobs.

Major Changes in Estimated Nonagricultural Employment

November 2010 to November 2011

Year-over-year increases took place in local government education services services, up 12,300 jobs; professional and business services was up 9,000; and manufacturing increased by 5,400. Employment decreases took place in retail trade, which was down by 4,700 jobs; merchant wholesalers of nondurable goods were down 1,600; and hospitals declined by 1,400 jobs.

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Press Releases

Tennessee Unemployment Rate Up Again in June: 9.8 Percent

Press Release from the State of Tennessee, July, 21, 2011:

Gradual Increase in State Rate Mirrors National Trend

NASHVILLE – Tennessee Commissioner of Labor & Workforce Development Karla Davis announced today Tennessee’s unemployment rate for June was 9.8 percent, up slightly from the May revised rate of 9.7. The national unemployment rate for June 2011 was 9.2 percent, up from the May revised rate of 9.1 percent.

“The decline in employment combined with a slight expansion in the labor force explains the higher unemployment rate,” Commissioner Davis said. “This is the third month in a row in which the unemployment rate has slightly increased.”

According to the household survey conducted by the Labor and Workforce Development department, the number of employed Tennesseans decreased by 3,200 from May to June 2011. The civilian labor force increased by 1,800, and at 3,143,900 is the highest on record.

“The increase in employment levels over the last 12 months is still positive with more than 74 thousand jobs gained,” added Davis. “This growth rate of 2.7 percent is much higher than the national employment picture which only grew 0.2 percent from June 2010 to June 2011.”

Major Changes in Estimated Nonagricultural Employment

May 2011 to June 2011

Month-to-month increases occurred in leisure and hospitality, up 4,700 jobs; mining, logging, and construction was up 1,900; and manufacturing increased by 1,600. Government jobs decreased by 30,800 (mostly due to local government educational service declines); educational services were down by 3,000; and administrative, support and waste services declined by 1,700.

Major Changes in Estimated Nonagricultural Employment

June 2010 to June 2011

Year-over-year increases took place in private educational and health services, up 7,100 jobs; transportation and warehousing, up 5,500; and food services and drinking places increased by 5,300.

Employment decreases took place in government, down 11,000; retail trade, down 2,600; and accommodation, down 2,200.

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Press Releases

May Unemployment Rate Up a Hair to 9.7%

State of Tennessee Press Release; June 16, 2011:

Significant Employment Growth Continues

NASHVILLE – Tennessee Commissioner of Labor & Workforce Development Karla Davis announced today Tennessee’s unemployment rate for May was 9.7 percent, up slightly from the April revised rate of 9.6. The national unemployment rate for May 2011 was 9.1 percent, up from the April revised of 9.0 percent.

According to the household survey conducted by the Labor and Workforce Development department, the number of employed Tennesseans also increased by 78,500 from May 2010 to May 2011, or 2.8 percent. The U.S. employment growth rate for the same period was 0.3 percent.

“The slight increase in the unemployment rate is attributed to significant growth in the labor force,” Commissioner Davis said. “It is not uncommon for the jobless rate to increase when an economy is improving. The rate can go up because workers are entering the labor force faster than the economy is creating jobs.”

The labor force is defined as the employed and those unemployed actively looking for a job. It does not include the unemployed not trying to find work. As the economy begins to expand, the labor force begins to expand as previously discouraged workers look for employment.

“For the fifth month in a row, the labor force is at a record level as more and more jobseekers are optimistic about their possibilities for finding work. The number of employed Tennesseans is the highest since September 2008,” Davis added.

Major Changes in Estimated Nonagricultural Employment

April 2011 to May 2011

Month-to-month increases occurred in leisure and hospitality, up 5,700 jobs; manufacturing, up 2,000; and mining, logging, and construction, up 1,900. Declines occurred in private educational and health services, down 3,100; government, down 2,000; and professional, scientific, and technical services, also down 2,000.

Major Changes in Estimated Nonagricultural Employment

May 2010 to May 2011

Year-over-year increases took place in private educational and health services, up 7,700 jobs; transportation and warehousing, up 6,800; and mining, logging, and construction, up 4,700.

Employment decreases were in government, down 17,100 (primarily due to census workers who were employed last year); administrative, support, and waste services, down 3,500; and retail trade, down 2,600.

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Press Releases

March Unemployment Rate Unchanged

Press Release from the State of Tennessee; April 14, 2011:

Seasonally Adjusted Rate Holds Steady

NASHVILLE – Tennessee Commissioner of Labor & Workforce Development Karla Davis announced today that for the second month in a row, Tennessee experienced substantial employment growth.

“Tennessee had 17,400 more people employed in March than in February,” said Commissioner Karla Davis. “The state also saw healthy growth in the number of people joining in the job search. Tennessee’s civilian labor force grew 0.5 percent from February to March as 16,300 more people looked for jobs.”

Tennessee’s unemployment rate for March was 9.5 percent, unchanged from the revised February rate. The national unemployment rate for March 2011 was 8.8 percent, down 0.1 percentage point from the February rate of 8.9 percent.

Major Changes in Estimated Nonagricultural Employment

February 2011 to March 2011

Month-to-month increases occurred in leisure and hospitality, up 7,200 jobs, and trade, transportation, and utilities, up 3,100. Health care/social assistance and durable goods manufacturing both increased by 2,300. Declines took place in private educational services, down 600 jobs, and finance and insurance, down 400. Information, non-store retailers, and health/personal care stores all lost 200.

Major Changes in Estimated Nonagricultural Employment

March 2010 to March 2011

Year-over-year increases took place in educational and health services, up 11,400 jobs; professional and business services, up 6,400; and mining and construction, up 6,000. Transportation and warehousing increased by 4,700, a signal of economic improvement. Durable goods manufacturing was up 3,300 over the year. Employment decreases were in nondurable goods manufacturing, down 2,700 jobs, and retail trade, down 1,700.

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Press Releases

TN Dept of Labor to Give Over $8 Mil to Laid Off GM Workers

Press Release from the Tennessee Department of Labor and Workforce Development and Gov. Bill Haslam; March 23, 2011:

NASHVILLE – Tennessee Gov. Bill Haslam and the Tennessee Department of Labor & Workforce Development Commissioner Karla Davis today announced $8,397,127 to assist General Motors workers affected by layoffs in the automotive industry.

In addition to former General Motors employees in Spring Hill, the U.S. Department of Labor award aids workers at these supplier companies: Johnson Controls, MAPA Spontex, Penske Logistics, and Premier Manufacturing Services.

“The goal of this grant is to provide these workers the necessary training to find other career opportunities that will place them in new and permanent jobs,” said Haslam.

Examples of kinds of training workers can receive through the grant are Solar Photovoltaic (PV) Technology; Green Jobs Technology; several healthcare areas, including Licensed Practical Nursing; Automotive Technology; Heating, Ventilation, Air Conditioning, and Refrigeration (HVAC); Residential Wiring and Plumbing; Electronics; Computer Operation and Networking; and Hospitality Arts. Most of the courses are offered at the Training Center at Northfield.

“The layoffs have been a blow to workers in the ten counties surrounding the Spring Hill plant,” said Commissioner Karla Davis. “This grant allows us to serve more people affected by this closure, continue existing programs, and provide these workers the in-demand skills they need to get back to work.”

The grant is awarded to the Tennessee Department of Labor & Workforce Development and operated by the South Central Tennessee Workforce Board.

Jan McKeel, Executive Director for the South Central Tennessee Workforce Alliance, said the grant will not only focus on classroom training, but also on paid internships and on-the-job training.

“We are thrilled the emergency grant will enable us to offer these dislocated workers specialized training opportunities not currently available,” said Jan. “We will continue the great work we’ve started.”

Affected workers must apply at the Career Center at Northfield or one of the Tennessee Career Centers serving the following counties: Giles, Hickman, Lawrence, Lewis, Marshall, Maury, Perry, Wayne, Rutherford, and Williamson.

A number of the workers covered by the grant also are certified as eligible for Trade Adjustment Assistance. For those workers, this grant will provide access to “wrap-around” and supportive services, such as dependent care and transportation assistance, which are not available through the TAA program. Workers who are not eligible for TAA will have access to the full array of training and employment-related services available under the grant.

Of the $8,397,127 amount of the grant, $4,851,182 will be released initially. Additional funding up to the amount approved will be made available as need is demonstrated.

National Emergency Grants are part of the U.S. Secretary of Labor’s discretionary fund and are awarded based on a state’s ability to meet specific guidelines.