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Who audits the Nebraska State Auditor?

On Wednesday, Nebraska State Auditor Charlie Janssen released a 27-page report detailing an audit his office conducted of unemployment benefits (including extra pandemic relief) and cases of fraud in Nebraska from March 1st, 2020 to June 30 2020.  This is a preliminary report sent to the Nebraska Department of Labor as an “early communication of audit findings due to their significance and the urgent need for corrective action.”

Chris Dunker dutifully reported these early findings here.  At face value, it is news, and it does suck that some assholes are total freeloaders.  But let’s be clear, none of these folks/individuals are billionaires regularly raiding public coffers to line their own pockets like our own Governor or the entire GOP at the state and federal level. 

In reality, Janssen is a partisan hack sucking on the government teat himself while he guzzles pitchers of beer down the street at Brewsky’s during very, very long lunches.  To do this, he is paid no less than $85,000 a year.  His office employed over 40 full-time folks with an average salary of $67,000 a year, and reported close to $4,000,000 worth of expenditures in FY 2019 as reported here.

Now, I am not a CPA, I don’t much care for money or I wouldn’t have gotten a PhD in the social sciences.  What I am is a statistician, and often in my work, when we are writing up an analysis a common peer reviewer question might be: So what?  What is the actual significance (not statistical significance) of these findings in the grand scheme of say, government waste, or in particular, overall fraud in unemployment?

The answers are right there in the numbers, and all we need to in order to understand the extent of the “problem” that the state auditor spent a lot of time and money investigating, is some context.  First, let’s look at total unemployment benefit expenditures during this time frame.  More than $770 million was paid out to 119,945 claimants over the audited time period.  Because of the pandemic, some restrictions were loosened in order to get people their damn money, and Janssen thinks this is bad because he wishes nobody qualified for unemployment because it is a social safety net that Republicans would prefer destroyed.   

Now, let’s look at their methods.  Through searches of IP addresses and some routing numbers and truly a bunch of selection criteria not clearly defined, they chose to investigate a sample of 496.  Yes, .4% of total claims.  As a statistician, I would probably go about this differently, especially if I wanted to understand the extent of the problem.  For starters, I would have conducted a stratified random sample of all cases so that I could generalize my findings to the population of all claimants, again, so I could understand the extent of this problem.  They go about it in a way so that they can find the most likely cases.  Fine, good.  But let’s remember we can’t extrapolate these findings to the larger population in any way. 

So let’s examine these 496.  The audit’s report indicates that when contacted, 315 either never responded or mail was returned (a 36% response rate).  Yikes.  Not terrible if they weren’t a public agency who should be able to follow-up with folks a lot better than survey researchers.  Of the 496, when surveyed, 157 responded accurately about the benefits they received.  So for the vast majority of actual respondents (157/180 respondents = 86%).  Now, 26 of these respondents did not report accurately about their benefits (14%).  So only 14% of the sample of “high risk” for fraud cases were fraud, and it we did a random survey of all claimants this number would likely be far less than .1%.

What does this mean as far as money lost?  Well these 26 cases represent $185,000 in wrongfully paid claims.  In other words, out of $770 million dollars, this represents .023% of dollars spent.  So, yes, this entire report does not pass the “so what?” test in any meaningful way statistically, and given the context of a pandemic and a no-bid contract to train Nelnet workers to work through the huge influx of claims at the time, I’d say the labor department did a pretty fucking good job. 

To put this in even broader context, I would be curious to know how many hours and expenditures Charlie Janssen’s staff of CPA’s spent on this audit?  I bet it was more that $185,000.  Furthermore, what about the fraud by our Department of Labor, when their policies and restrictions result in people never receiving benefits they have earned?  Case in point, my hairdresser and many of her colleagues were never able to receive benefits, they were repeatedly denied despite the fact they were unemployed due to the shut down and DHM restrictions.  Maybe the auditors office should look into this? 

Truly, this report vindicates the Department of Labor, shows how wasteful and vindictive it is to go after poor working-class folks instead of after the billionaires, churches, hate groups and non-profits who are profiting from our tax dollars through “public/private partnerships” all the goddamn time.