Dick Armstrong, head of the Idaho Department of Health and Welfare (DHW), told members of the House Health and Welfare Committee Wednesday that as part of 2010′s federal health reforms, the Gem State’s Medicaid system will have to work with the IRS to verify income information of program applicants.

“The IRS connection is really a source verification tool for us,” Armstrong told lawmakers, speaking on how his agency checks income data provided by Medicaid applicants. “It is our job to verify those facts are correct.”

Armstrong told IdahoReporter.com that his agency is “very serious” about delivering the correct benefits to program recipients. He said the federal government will penalize his agency for too many errors, including delivery of benefits either too high or too low.

But that’s not the only state program that will be forced to check data with the IRS. If the state decides to implement an insurance exchange – or if the state opts to forgo the program and let the feds do it – most Idahoans purchasing insurance in the online marketplace will have their incomes verified through the IRS.

That’s because most state residents will qualify for federal health insurance subsidies. In order give proper subsidies, state officials must check with the IRS to ensure the correct amount is being given. Families of four with annual incomes up to $88,000 will qualify for some sort of subsidy.

Armstrong says that if Idahoans don’t want DHW verifying their information through the IRS, they shouldn’t apply for subsidies through the exchange or utilize Medicaid. “It really is the citizen’s choice,” Armstrong said.

Checking data with federal departments isn’t entirely new, however. The state agency has more than 20 databases it checks to document program applicant data, including some federal bureaus.

For example, Homeland Security is on the top of the list for the food stamp program within DHW. If an applicant’s citizenship cannot be verified through Homeland Security, the process is either delayed or halted until documentation is found.

Some state agencies, including the Department of Labor, are also utilized to verify other essential data, including an applicant’s work history.

Wednesday, the Idaho Democratic Party released a statement calling for Madsen to resign, saying he “wants to throw the unemployed in our state to the wolves.”

In response to the demand to resign, Madsen issued the following statement:

“I respect Larry Grant and my many friends in the Democratic Party but we are not Democrats or Republicans at the Idaho Department of Labor. We respect all Idahoans, including the employed, the unemployed and the state’s business owners. Our employees are doing everything they can to help Idaho citizens find meaningful work. As for resigning, I serve at the pleasure of Gov. Otter who has yet to ask for my resignation. Until he does, my goal is to stay on as director and strengthen Idaho’s unemployment insurance program.”

Grant, state chairman for the Idaho Democratic Party, in asking Madsen to resign, said, “Roger Madsen must resign. As head of the Idaho Department of Labor it is Madsen’s job to make sure every unemployed person in Idaho has the help and support they need, not cut the very funding their survival depends on.”

Grant added, “Madsen is advocating for the 1% (as all R’s do). It is actions by the 1%, such as these, that threw workers from the 99% into unemployment in the first place.”

Madsen believes that at some point cuts need to be made because billions of dollars are being added to the national deficit due to benefits being not fully funded and they extend for too long a period of time. In Idaho, for example, unemployment benefits can total 99 weeks, one of the few states with that long a period.

For more information on Madsen’s request to reduce unemployment insurance benefits, click here.

BTOP is described by grants.gov as providing “grants to support the deployment of broadband infrastructure in unserved and underserved areas, to enhance broadband capacity at public computer centers, and to encourage sustainable adoption of broadband service. Through this support, BTOP will also advance the Recovery Act’s objectives to spur job creation and stimulate long-term economic growth and opportunity.”

The federal agency granted the stimulus money, the National Telecommunications and Information Administration (NTIA), saw its budget increased 625 percent due to the stimulus – from $648 million to $4.7 billion. That caught the attention of Citizens Against Government Waste (CAGW), a 1-million member watchdog organization based in Washington, D.C.  In a letter to NTIA, CAGW said, “Taxpayers deserve reassurance that every penny of this massive increase will be spent wisely.” It also described such a large budget increase as “wasteful.”

No state general fund money was spent on the digital learning program this year. In an email to IdahoReporter.com, Georgia Smith, from the Idaho Department of Labor (IDOL), said the budget this year for the program was $100,000. BTOP makes up half of that total. The rest comes from a 15 percent state set-aside of federal Workforce Investment Act dollars. Smith said the set-aside dollars are funds “Idaho receives to develop targeted employment and industry training initiatives that help people find work. Any use of the state set-aside dollars is reviewed and approved by the Workforce Development Council.”

Will the money be there for a program in the future? Smith says “there is a proposal pending before Congress to reduce the state set-aside under the Workforce Investment Act from 15 percent to 5 percent.” She added there are other programs involved including “a partnership with the Northwest Intermountain Manufacturers Association to provide training for employees involved in manufacturing, scholarships for nursing and certified nursing assistants and on-the job training for Idahoans in jobs across industry sectors.”

The digital literacy program was part of Idaho’s Summer Youth Corps, which provided more than 140 jobs this summer, according to IDOL. It was open for those from low-income households. Participants were paid minimum wage.

The digital literacy program was designed to do two things, said IDOL. One, to provide people the help they need to find their way using technology if they don’t possess the necessary skills. Two, to provide jobs for youth, specifically teens having a hard time finding work. The national average for unemployment for those ages 16-19 is 25 percent.

Although the program focused mainly on libraries, workers provided services in other areas as well. These areas include businesses in the private sector, the U.S. Forest Service, state parks, farmers markets, school districts, and others, according to the IDOL.

Libraries participating in the program include Prairie-River District Library, Twin Falls Public Library, Cascade Public Library, Garden City Public Library, Burley Public Library, Caldwell Public Library, Grangeville Centennial Library, DeMary Memorial Public Library, Ada Community Library, Wilder Public Library, East Bonner County Library, and Clearwater County Free Library District.

The information, originally released by the U.S. Department of Labor, said that many of the erroneous payments, 34 percent, were made to recipients who returned to work but continued receiving money. Another 34 percent of payments went to citizens with “work search issues,” meaning that the department was unable “to validate that the individual has met the state’s work search requirements, which disqualifies the claimant from being eligible for benefits.”

Bob Fick, spokesman for IDL, subsequently told IdahoReporter.com that some of the funds have been returned to the state.

Here is a breakdown of the overpayments found by Idaho officials:

• In 2008, of the $5,252,993 in overpayments, $3,777,245 was recovered
• In 2009, of the $8,865,006 in overpayments, $4,181,490 was recovered
• In 2010, of the $14,525,325 in overpayments, $5,547,367 was recovered
• In 2011, of the $11,774,375 in overpayments, $5,148,617 has been recovered through the end of August

Fick explained that a greater number of payments typically increases the number of erroneous payments made. “Overpayments increase just like employer evasion does during times of economic stress,” Fick said. “Recoveries also rise.”

Idaho has 20 staffers dedicated to finding bad payments made by the department.

The numbers offered by Idaho officials and those in the national report may differ due to key differences in reporting methods.  Idaho, in attempting to recover bad payments, keeps track of the real information, while Fick says the national information was formulated using smaller data points.

“These statistics (national data) are based on examination of  one key week during each of 480 paid claims each year and then the findings are extrapolated over the entirety of regular benefit claims, which totaled 3.7 million during the period in question – July 2008 to June 2011,” Fick explained.

Idaho, of course, isn’t the only state with overpayment problems. Across the nation, more than $19 billion in erroneous payments were made in the last three years, according to U.S. Department of Labor data.

Washington leads the Northwest with more than $775 million in bad payments and Oregon takes second with $392 million.  Nevada is next, having made $277 million in erroneous benefits.  Utah follows with $115 million. Below Idaho in bad benefits are Wyoming, $38 million, and Montana, $26 million.

Idaho paid more than $930 million in unemployment benefits in the last three years.

Many of the erroneous payments, 34 percent, were made to recipients who returned to work but continued receiving money. Another 34 percent of payments went to citizens with “work search issues,” meaning that the department was unable “to validate that the individual has met the state’s work search requirements, which disqualifies the claimant from being eligible for benefits.”

Bob Fick, spokesman for the Idaho Department of Labor, told IdahoReporter.com Tuesday that his agency has 20 people on staff constantly working to identify improper payments.

Idaho isn’t the only state that has made improper payments.  The Wall Street Journal reported last week that more than $19 billion in faulty payments have been made across the nation. In fact, the amount paid out by Idaho in the three-year span pales in comparison to some of its neighboring states.

Washington leads the northwest with more than $775 million in bad payments and Oregon takes second with $392 million.  Nevada is next, having made $277 million in erroneous benefits.  Utah follows with $115 million. Below Idaho in bad benefits are Wyoming, $38 million, and Montana, $26 million.

Idaho has an improper payment rate of 9.28 percent.  Louisiana leads the nation with an improper payment rate of 43.63 percent, though Indiana follows it closely with 43.56 percent.

The states with the highest faulty payment rates - Virginia, Indiana, Colorado, Washington, Louisiana and Arizona – will receive special federal oversight until they are below 10 percent for at least six months.

The Wall Street Journal says that “payments most often occur when recipients claim benefits even though they have returned to work; employers or their administrators don’t submit timely or accurate information about worker separations; or recipients don’t correctly register with a state’s employment-service organization.”

Idaho is in the process of bonding more than $202 million to repay the federal government for money borrowed to support unemployment payments.  Idaho has paid $930 million in unemployment in the last three years.

See the data from the U.S. Department of Labor here.

The number of people in the state without jobs in July was 71,300. It was the 14^th straight month that more than 70,000 Idahoans could not find jobs.

IdahoReporter.com has been comparing U3 unemployment numbers, which are calculated by the state, to U6 numbers, which take into account U3 unemployment numbers as well as those who have given up looking for work and those who are employed part time but would rather be full time.

Treasure Valley Community College economics professor Monte Munn believes the U6 number is a better representation of the true unemployment in the state saying, “U6 is a lot more accurate. U3 greatly underestimates, or understates the real unemployment.”

Taking that into consideration, since the latest unemployment numbers are the same as last month, then U6 numbers would also be similar. Last month’s unemployment numbers using the state’s calculation were around 72,000. That means using Munn’s theory that U6 numbers are the best numbers to use, the number for U6 would also be the same. Meaning that the U6 unemployment numbers are closer to 123,000 in the state of Idaho.

But Idaho Department of Labor chief researcher Bob Uhlenkott believes the U3 numbers the state releases are the most accurate, saying “Not only are they different formulas they are different by definition. The U3 is commonly used because those are the folks that are available and looking for work and available to businesses looking to hire.”

U6 numbers are calculated and released at the end of each quarter so the next firm figures will come at the conclusion of the third fiscal quarter in September.

Included in the items found in the IDOL unemployment report for July:

- Some 27,000 jobless workers collected more than $26.6 million in unemployment benefits in July – an almost even split between regular and federal extended benefits. In June, there more than 30,000 unemployed receiving nearly $29 million. Almost 11,000 workers have used up all their benefits – regular and federal extended – without finding a job.

- The Conference Board, a business think tank, found three unemployed workers for every job opening in Idaho in July. That is down from nearly four unemployed workers for every opening two months earlier.

- Of Idaho’s 44 counties, 21 recorded lower rates in July than June while 23 saw rates rise. There were 19 primarily rural counties that posted double-digit unemployment rates in July, up from 18 in June.

- Two major urban counties remained in double digits. Canyon County’s rate held steady at 12 percent, and Kootenai County also remained unchanged at 11.7 percent.

- The five-county metropolitan area including Ada and Canyon counties saw a two-tenths unemployment decline to 9.3 percent. The Pocatello metro area also slipped a notch to 8.6 percent while the Idaho Falls and Lewiston metro areas each rose slightly to 7.5 percent.

- The highest unemployment rate is Valley County’s at 16.6 percent, but that was down three-tenths from June.

- The lowest rate was Owyhee County at 5.2 percent, down a tenth from June.

A researcher for the Idaho Department of Labor responded to that article, defending the use of the U3 number, stating that he feels U3 is a more useful measure of unemployment.

So what does the U6 data say about national and Idaho unemployment? Both are estimated at 16.1 percent, much higher than the federal rate of 9.1 and the Idaho rate of 9.4. In Idaho, for example, the U3 category shows Idaho with more than 72,000 unemployed. U6 has the number at nearly 123,000.

The official unemployment index is partially based on a monthly survey of 60,000 households, and counts only people who reported looking for work in the past four weeks.

In addition, according to Monte Munn, an economics professor at Treasure Valley Community College, there is another element used in the calculation.  “The other part of this thing is that they (federal Bureau of Labor Statistics) have about 50 large companies … they call those companies and ask if they are at full employment, or are they laying people off, or if they plan to hire any new people and they take that and plug into other data, crank out the numbers, and that gives them an estimate of the unemployment numbers and that comes out very quickly after the end of the month.”

The federal government has six categories to measure unemployment. The one that Munn believes is the most accurate is U6, considered the most encompassing category of unemployment. It includes those people counted by U3, plus workers who have quit looking for a job but are available and those employed part time for economic reasons who had to settle for those jobs but really would like to work full time.

Bob Uhlenkott, chief research officer at the Idaho Department of Labor, says he believes U3 is the more accurate representation of unemployment. In addition, the federal government requires the state to produce a U3 number.

“U3 is the actual number in the state. In our cooperative agreement with the federal government, we are paid to and required to produce the U3. The reason is the state has access to claims data that the federal government may or may not have direct access to,” he said. “So we have state data that we are closer to than the feds. So we are kind of the experts in the U3.”

As for the U6 figures, Uhlenkott explained, “The feds attempt to do a U6 because they have some of the other moving parts. The U6 has a lot more moving parts so they typically only produce it on a quarterly basis because there is a lot more volatility in the U6 … The U3 rate is typically most important because it’s the folks that are looking for work, so they are available to the workforce, the labor force. That’s typically the one that’s in most demand and it is the one that comes out of our shop directly.

“However, I know that our economists often quote the actual U6 rate for that quarter in Idaho because it is telling and typically the U6 rate is almost double the U3 rate because it involves people that are frankly discouraged and choosing not to work, or they might look for work if they thought more jobs were available. So we use all six (federal unemployment categories) … it’s just that the U3 is actually produced by our department as with the cooperative agreement we have with the federal government,” said Uhlenkott.

But, according to Munn, U6 is the more accurate number. “U6 is a lot more accurate. U3 greatly underestimates, or understates the real unemployment,” he said.

Uhlenkott disagrees, and says it’s not as if there is something to hide, but rather that each unemployment classification simply uses a different formula. “Not only are they different formulas, they are different by definition.  Nothing to hide, just a different definition. The U3 is commonly used because those are the folks that are available and looking for work and available to businesses looking to hire … I would argue monthly U3 is actually more accurate as that definition and formula have fewer moving parts, larger samples and are not moving averages.  By ‘more accurate’ I think Mr. Munn means his definition of what he calls unemployment.”

The U6 classification began in 1995 after economists lobbied for a method comparable to the way Japan, Canada and Western Europe count their unemployed.

The July unemployment figures are scheduled to be released Aug. 19.

For more information on all six unemployment classifications, click here.

Idaho ranks second in the nation since 1992 in the state coincident index, which measures employment and payroll. The Gem State’s index has grown by 88 percent since then, while the U.S. index increased almost 53 percent. However, Idaho had more than doubled its index four years ago, before the recent recession brought that number down.

Oregon’s index score is less than a tenth of a percentage point above Idaho, according to data for May released Tuesday by the Federal Reserve Bank of Philadelphia. Idaho had led Oregon, and all other states, in April. The factors that go into the coincident index are the unemployment rate, non-farm employment, hours worked in manufacturing and workers’ wages adjusted for inflation.

Idaho Department of Labor economist Will Jensen said in a recent department newsletter that Idaho’s high unemployment rate, at 9.4 percent last month, is hurting the state’s ranking and economic activity. Jensen said data shows Idaho’s following the national in other parts of the coincident index.

Graph courtesy of Idaho Department of Labor

Before the recession, Idaho’s neighbor Nevada was the best-performing state on the economic indicator. Nevada is also the only state that suffered worse during the recent recession.

The recession’s still having an impact on Idaho’s job market. “It’s almost 60,000 fewer jobs since the recession,” Bob Uhlenkott, the Idaho Department of Labor’s chief research officer, said at a roundtable discussion on unemployment Tuesday.

Jensen said unemployment woes are likely a large part of the index score. “All of our other measures showed Idaho doing well, except our unemployment rate going up,” he told IdahoReporter.com.

Western states have had more room for growth in the past two decades. Utah and Oregon are in the top four, and nine of the top 11 states are west of the Mississippi River.

The Federal Reserve Bank also publishes a leading index intended to predict states’ economic growth for the next six months. Idaho ranks 16th in growth prospects, according to the bank.

Below is an interactive visualization showing states’ coincident index scores since 1979, courtesy of ManyEyes.

Idaho’s jobless rate went down a tenth of a percent to 9.6 percent in April from a four-month all-time high of 9.7 percent. Employers added 3,200 jobs to the state, with the number of unemployed dropping 700 to 73,200.

“This is yet another piece of evidence that the economy has bottomed out,” said Bob Fick, the spokesman for the Idaho Department of Labor. He said another positive sign is that the monthly total number of jobs in Idaho has been better than in 2010 for the last four months. A monthly labor department report said high fuel prices could slow the economic recovery.

The labor department reported several times last year that the state’s unemployment rate dropped, but data was adjusted at the start of this year by the federal government’s Bureau of Labor Statistics, which shows a steady rise from 2.7 percent in late 2006, before the recent recession, to 9.7 percent. Idaho’s unemployment remains 0.5 percent worse than last year, which is the second-worst change among U.S. states.

During the economic slowdown, many Idahoans have exhausted their weekly unemployment benefit payments. According to labor department statistics, almost 8,000 Idahoans this year have used up their regular jobless benefits, which can last half a year. More than 2,300 Idahoans in 2011 have exhausted extended federal/state benefits, which can span up to 73 added weeks.

In addition to unemployment, a number of workers are underemployed, which are people who want to be working more than their current jobs allow. According to federal data, an additional 6.1 percent of Idaho workers have been underemployed in the past year. The Idaho Department of Labor measures underemployment differently, including people with college degrees searching on the labor department’s Idaho Works job page, even if they already have a job. According to the state, 12.7 percent of workers were underemployed in 2009.

“This recessions a perfect example of this,” Fick said. “When you have PhD’s working in McDonalds, that’d be considered underemployed.”

Idaho is one of five states, along with the District of Columbia, where anyone can go to the E-Verify website, input some personal information, including a Social Security number, and make sure they come up clean.

Employers can volunarily use E-Verify to check whether their employees can legally work in the U.S. The system checks names and information against Department of Homeland Security and Social Security Administration records. The self-check program could spread to other states, though it’s not clear how popular it will be or why many workers would use the system.

“It puts people on notice if there are mistakes so that they can correct them,” said Idaho Department of Labor spokesman Bob Fick, who issued a news release announcing the program. He said the state labor department didn’t push for Idaho to be one of the first states with the E-Verify Self Check program, which is a federal endeavor. Fick also said the labor department doesn’t use E-Verify when processing claims for unemployment benefits, but rather cross-checks applicants’ Social Security numbers and driver’s licenses.

“It’s more of a PR campaign than it is something that’s actually needed,” said Brent Olmstead, who leads the Idaho Business Coalition for Immigration Reform and is a lobbyist for the Milk Producers of Idaho. He said people in the U.S. on work permits or with other legal issues might use the system. “It would probably behoove you to go through it and make sure there are no problems with your papers, so you can get those fixed before you apply for a job.”

Olmstead’s group opposed efforts by some lawmakers last year to make E-Verify mandatory for all businesses in Idaho. Several states, including Utah and Arizona, have similar laws. Olmstead said his business coalition favors national-level immigration reforms, rather than state reforms. He also said E-Verify could be difficult for some employers.

“Not all businesses in Idaho have computers,” Olmstead said. “Some don’t even have electricity.”

The E-Verify system isn’t foolproof. A 2010 report commissioned by the federal government found that E-Verify was accurate 96 percent of the time, but that more than half of all unauthorized workers are wrongly labeled as authorized. Those errors are primarily due to identity theft.

Leo Morales, the immigration rights policy director for Idaho Community Action Network, said the self-checking system could be useful to people who are changing their legal status, but wouldn’t be of use to most Idahoans. “Individuals that know that they have status, and individuals that know that they don’t have status know that as well,” he said.

E-Verify and other efforts at curbing illegal immigration didn’t see much action during this year’s legislative session. Morales said the federal government has more power and ability to change immigration policy, and that state-level changes, like those passed in Arizona, can get snarled. “Doing this only takes it to court, which ends up costing the taxpayers and doesn’t solve anything,” Morales said.

Idahoans wanting to verify their legal right to work can fill out a form at the E-Verify website, which is run by the U.S. Customs and Immigration Service.