Delaware's Unemployment Fund Is Unauditable for a Third Straight Year
Summary
Delaware's independent auditors have refused to certify the state's unemployment insurance trust fund three fiscal years running, FY2023 through FY2025, because the Department of Labor could not produce the records to prove the balance is accurate. The fund reported approximately $390 million in cash in 2023 and $313.8 million in 2025. The underlying material weakness traces back to 2022, a 2021 corrective action plan that was supposed to fix it did not, and the official named responsible for a second fix committed to a June 30, 2025 deadline that passed with a third straight disclaimer instead of a clean opinion.
The failure has a paper trail back to 2020
The disclaimer didn't come out of nowhere. Delaware's special report on the fund⧉, released alongside the first disclaimer in March 2024, traces findings against the Department of Labor's Division of Unemployment Insurance (DOLUI) back to fiscal 2020: an audit-adjustments material weakness that year, a cash-reconciliation gap the following two years, and by 2022 a material weakness because accounts simply weren't being reconciled on any schedule. The state wrote a Corrective Action Plan targeting a fix by June 30, 2021. It didn't work -- the Auditor's own inquiry found the plan "ultimately did not rectify the root causes." By calendar 2023, DOLUI had stopped recording journal entries for the fund in any database at all, even as tens of millions of dollars a month kept moving through it in employer taxes, benefit claims and refunds.
A second promise, missed on schedule
The state tried again. Delaware's FY2024 internal-control report⧉ names a responsible official for the finding -- Darryl Scott, Director of the Division of Unemployment Insurance -- and records his committed fix date: June 30, 2025. That report traces the finding's own paper trail across four straight years of renumbering (2022-001, 2022-002, 2023-001, 2024-001) and attributes the cause to staff turnover, lost institutional knowledge, and an accounting system old enough that the employees who remain don't know how to pull reports from it. June 30, 2025 came and went; the ACFR covering exactly that fiscal year-end disclaimed the fund's opinion a third time.
View data as table
| FY2023 | $390.0M (approx.) | cash assets; first ACFR disclaimer of opinion on this fund |
|---|---|---|
| FY2025 | $313.8M | cash and cash equivalents; third straight ACFR disclaimer |
What the state's own unaudited numbers show
Disclaimed doesn't mean the state stopped publishing numbers -- it means nobody has checked them. The FY2025 ACFR's own financial statements⧉ show the fund's net position fell from $290.1 million to $256.3 million over the year, a $33.8 million decline, as benefits paid ($90.2 million, nearly all of it state-funded) ran well ahead of unemployment taxes collected ($45.6 million). The same statements record something else: a $9.7 million correction to the fund's own previously reported FY2024 ending balance -- restated as the FY2025 opening balance -- because of "overstated employer overpayment accounts" discovered after the fact. The state's own opening number for the year it was trying to close out was wrong by nearly $10 million -- caught only because someone eventually reconciled it, the exact step the auditors say hasn't reliably been happening.
A federal audit finds the same break
The ACFR disclaimer isn't the only place this shows up. Delaware's separate FY2025 federal compliance Single Audit⧉ -- the review of how the state spends federal grant money -- issued its own disclaimer specifically on the Unemployment Insurance program, one of 18 major federal programs tested that year. That audit logged 26 findings statewide, and the Department of Labor alone carried 8 of them, 7 repeated from the year before. The two disclaimers describe the same broken accounting from two different angles: one on the trust fund's own financial statements, one on the $66.4 million in federal grant dollars that flow through it annually -- a small slice of the roughly $4.17 billion Delaware administered in federal awards statewide in FY2025.
The fix, still in progress
Delaware has committed real money to a rebuild. Delaware Public Media reported the state allocated $60 million in federal ARPA funds toward modernizing the UI Trust Fund's reporting system -- a project that started in February 2024 and, as of that reporting, wasn't expected to finish until late 2026 or early 2027. If that timeline holds, the earliest a clean opinion becomes plausible is the audit covering fiscal 2027, meaning a fourth or fifth straight disclaimed year is still ahead of the state in the meantime.
- Three straight ACFRs, three straight disclaimers. Delaware's independent auditors could not certify the unemployment fund's books for FY2023, FY2024 or FY2025 -- the most severe finding an audit can produce, meaning nobody outside the state can confirm the fund's reported $313.8 million cash balance is accurate.
- Two fix attempts have already failed on their own terms. A 2021 Corrective Action Plan didn't resolve the root cause, and the official named responsible for the FY2024 finding committed to a June 30, 2025 implementation date that passed with a third disclaimer, not a clean opinion.
- Even the state's own numbers needed a $9.7 million after-the-fact fix. The fund's FY2025 statements restate its own previously reported FY2024 ending balance upward by $9.7 million, for overstated employer overpayment accounts -- the same kind of error the disclaimer exists to warn readers about.
The FY2023 and FY2025 cash figures in the chart above come from different report formats (a special-report narrative figure vs. an audited-but-disclaimed balance-sheet line) and aren't adjusted for comparability; both are the state's own presented numbers, not certified totals. The $66.4 million Department of Labor federal-award figure is a federal grant expenditure for one fiscal year, not part of the roughly $390 million-to-$313.8 million fund balance, which is funded mostly by employer taxes -- the two shouldn't be added together. The $60 million ARPA modernization figure and its 2026-2027 completion window come from Delaware Public Media's reporting, not from an AOA or CLA audit document; this outlet could not locate a state budget document stating the same figure directly.
This outlet's own arithmetic on the state's figures -- the cash decline between years and the net-position percentage changes -- is disclosed with methods and caveats in analysis.json. A blind adversarial verifier, working from the primary documents alone with no access to this draft, independently checked every itemized fact; see verification.json.
Sources(7) ▾
- Delaware Office of Auditor of Accounts, Special Report: Delaware Unemployment Compensation Fund -- Financial Management Within the Delaware Department of Labor, Division of Unemployment Insurance (2024-03-26) — AOA's special inquiry report accompanying the FY2023 Annual Comprehensive Financial Report (ACFR), released the same day the ACFR's first-ever disclaimer of opinion on the Delaware Unemployment Compensation Fund (DUCF) was issued. Covers the fund's $390 million cash-asset base as of June 30, 2023, the basis for the disclaimer, the finding history back to fiscal 2020, the failed 2021 Corrective Action Plan, the halt in journal-entry recording through the end of calendar 2023, and the $500,000 purchase order for outside accounting help. auditor.delaware.gov · original document
- Delaware Office of Auditor of Accounts / CliftonLarsonAllen LLP, State of Delaware Uniform Guidance Single Audit Report Summary -- Fiscal Year Ended June 30, 2024 (2025-04-07) — The federal-compliance Single Audit covering FY2024. CLA issued a disclaimer opinion specifically on the Unemployment Insurance program (one of only 17 major federal programs tested that year) because it could not obtain evidence of compliance; finding 2024-001 is flagged as having persisted three consecutive years. Source for the FY24 findings totals (15 material weaknesses, 12 significant deficiencies, 26 compliance-related observations across 5 state programs) and the Department of Labor's own finding count that year. auditor.delaware.gov · original document
- Delaware Office of Auditor of Accounts / CliftonLarsonAllen LLP, Annual Comprehensive Financial Report Internal Controls -- ACFR Fiscal Year Ended June 30, 2024 (Schedule of Findings and Management Response) (2025-02-24) — The internal-control companion report to the FY2024 ACFR, containing Finding 2024-001's full write-up: condition, criteria, effect, cause, recommendation, and management's response. States plainly this is the second consecutive year of an ACFR disclaimer of opinion on the fund, traces the finding's lineage back through 2022-001, 2022-002 and 2023-001, names the responsible official (Darryl Scott, Director, Division of Unemployment Insurance) and records his committed implementation date of June 30, 2025 -- the very fiscal year-end the FY2025 ACFR would go on to disclaim a third time. auditor.delaware.gov · original document
- Delaware Office of Auditor of Accounts / CliftonLarsonAllen LLP, State of Delaware Uniform Guidance Single Audit Report Summary -- Fiscal Year Ended June 30, 2025 (2026-04-16) — The federal-compliance Single Audit covering FY2025: 26 total findings statewide (11 material weaknesses, 15 significant deficiencies) across 12 of 18 major programs, 15 repeat from FY24; the Department of Labor logged 3 material weaknesses, 5 significant deficiencies and $66.4 million in federal UI-program expenditures. Confirms the disclaimer of opinion on the Department of Labor's Unemployment Insurance Fund is a repeat finding since FY2022. Source for the six-year statewide federal-award total table (FY2020-FY2025). auditor.delaware.gov · original document
- Delaware Office of Auditor of Accounts / CliftonLarsonAllen LLP, State of Delaware Annual Comprehensive Financial Report (ACFR) -- Fiscal Year Ended June 30, 2025 (2025-12-29) — The state's full audited (here, disclaimed) financial statements for FY2025. States outright that this is the third straight year of a disclaimer of opinion tied to the Unemployment Insurance Trust Fund. Source for the fund's own reported Statement of Net Position as of June 30, 2025 (cash and cash equivalents, total assets, total liabilities, net position), the Statement of Revenues/Expenses (UI taxes collected, benefits paid, the year's $33.8 million net-position decline), and Note 24, which records a $9.7 million prior-period correction to the fund's own previously reported FY2024 ending balance due to overstated employer-overpayment accounts. auditor.delaware.gov · original document
- Delaware Public Media, Delaware Unemployment Insurance Fund remains unauditable, system improvements underway (2025-04-02) — Delaware's NPR-affiliate public-radio newsroom, reporting on the fund's modernization effort. Used only for the ARPA modernization-funding figure and timeline, which do not appear in any of the AOA/CLA audit documents themselves -- a pointer to context, not a load-bearing audit fact. delawarepublic.org · original document
- Delaware Office of Auditor of Accounts, Contact -- Delaware State Auditor, Lydia E. York (2026-07-19) — AOA's own published contact details -- source for cta.json's address, phone, and public fraud-reporting portal. auditor.delaware.gov · original document
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For three straight fiscal years, Delaware's independent auditors have refused to certify the books of the state's unemployment insurance trust fund. The FY2025 Annual Comprehensive Financial Report⧉ states plainly that this is "the third straight year" CliftonLarsonAllen has issued a disclaimer of opinion tied to the fund -- auditor language for "we cannot verify these numbers are accurate," the most severe finding an audit can produce. The fund held approximately $390 million in cash⧉ when the disclaimers began in fiscal 2023; by fiscal 2025 it reported $313.8 million -- itself just a number the state prints, not one anyone outside the state has confirmed.