A review of the Virginia Employment Commission ordered as the agency buckled under a massive backlog of unemployment claims found that the agency was understaffed, underfunded and poorly managed even before the pandemic.

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       Researchers for the Joint Legislative Audit and Review Commission (JLARC), a watchdog for state lawmakers in the General Assembly, began scrutinizing the agency as hundreds of thousands of jobless Virginians first filed for unemployment in the spring of 2020.

       The ensuing 200-page report released last week laid bare circumstances in conflict with the picture painted by the administration of Gov. Ralph Northam (D) and the agency’s leadership, who often minimized issues at the VEC or pointed to outside conditions.

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       “It’s clear that additional oversight and assistance is needed,” Lauren Axselle, a legislative analyst at JLARC, told lawmakers last week.

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       Not only did VEC leaders deflect responsibility for the agency’s problems, the report said, but they also failed to take measures to increase staffing as it was confronted with an unprecedented number of claims.

       The agency’s struggles meant that a flood of residents — as many as 92,000 in June of this year — spent months waiting for their claims to be reviewed. Others were cut off from their unemployment benefits without notice, forcing them to go through a complex adjudication process to confirm that they were eligible to receive unemployment insurance, advocates said.

       As more cases pile up for Virginia’s beleaguered unemployment system, so do frustrations

       The failures were enough for the courts to eventually get involved, ordering the VEC in May to make its way through that massive backlog by the end of the summer.

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       Also last week, the agency temporarily took its unemployment insurance claims processing system offline — the culmination of an effort, more than a decade long, to modernize that system. The system is set to go back online Tuesday, officials said. The whole modernization process, which is already eight years behind schedule, is set to be completed by June of next year.

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       Joyce Fogg, a spokeswoman for the VEC, said in a statement that the agency “is continuing to work with JLARC on the recommendations in the report.” In addition to $14.5 billion already distributed in unemployment benefits, the agency “is committed to continuing to serve those eligible,” she said.

       Megan Healy, the Virginia secretary of labor, thanked JLARC for the report while noting that the VEC had managed to make its way through an unprecedented workload.

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       “The VEC has successfully paid out 10 years worth of claims over the past 20 months — a remarkable achievement for an agency that has long been under-resourced,” she said in a statement. “We will continue to work on the backlog of appeals.”

       But speaking before lawmakers last week, Axselle, of JLARC, said that structural issues within the VEC must also be addressed. While the unprecedented number of claims coming in was part of the problem, JLARC blamed the Northam administration for failing to assist with staffing problems.

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       The VEC had requested that staffers from other state agencies be temporarily assigned to help process unemployment claims, Axselle said. But cabinet officials in Virginia’s executive branch did not require them to do so.

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       State leaders also did not grant the VEC’s requests for an exemption from state hiring requirements and declined to deploy the National Guard or the state’s emergency workforce to fill staffing needs.

       “Given VEC’s critical role during severe increases in unemployment — and the operational challenges that arise from them — future secretaries of labor must effectively fulfill their role to ensure the agency is performing adequately,” the report said.

       Gov.-elect Glenn Youngkin (R) had criticized the VEC on the campaign trail, at times promising that he would launch statewide audits of every Virginia government department.

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       Marty Wegbreit, the litigation director at the Central Virginia Legal Aid Society, said the VEC should have had mechanisms in place to deal with a sharp rise in its workload.

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       “The cyclical nature of unemployment claims is well-known and well-documented,” he said, “and that the VEC didn’t have contingency or resiliency plans to deal with that is inexcusable.”

       The report also said the agency had struggled to hire and staff its call centers, which meant that many unemployed residents dealt with hours-long wait times and had difficulty getting someone to even pick up the phone.

       “VEC’s communications to customers and their own staff has caused significant frustration and confusion,” Axselle said.

       Healy noted that the average phone wait time dropped to 20 minutes last month. According to the report, the limited slice of calls answered has also increased, from 4 to 12 percent.

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       The VEC, which operates with yearly funding of about $4.4 billion, is almost entirely funded by the federal government. The U.S. Labor Department as well as Virginia’s secretary of labor is meant to provide oversight of the agency.

       Axselle said the legislature should expand its role looking after the VEC. State lawmakers should create a subcommittee to monitor the agency, the report said, and require it to develop a resiliency plan in the event of another period of high unemployment.