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Final UIA audit finds ineligible payments, undercalculated penalties

Michigan Unemployment Insurance Agency
State of Michigan
Michigan Unemployment Insurance Agency

Michigan’s Unemployment Insurance Agency made more than $245 million worth of payments to ineligible claims between January 2020 and October 2022, according to a final state audit from the state Office of the Auditor General on the UIA’s pandemic-era performance.

The report covered a time span stretching from the beginning of 2020 through the end of 2022, and found recipients of those wrongful payments should have been barred from receiving assistance for a variety of reasons, including being incarcerated, deceased, or above or below typical working age.

In the report, the UIA partially agreed with the OAG’s findings. The unemployment agency argued most of the possible improper payments came early in the COVID-19 pandemic, an assertion the OAG’s office disputed.

Speaking to reporters Wednesday morning, UIA Director Julia Dale said it’s important to learn from pandemic-era mistakes.

“We acknowledge that there were mistakes made and are aggressively looking to either have already corrected those or are in the process of correcting them,” Dale said.

Dale’s office is highlighting various efforts it’s made since she took over as director in October 2021. Those changes include personnel hires, switching its computer system, and creating a new bureau to fight fraud.

The UIA said that work has led to 90 convictions, over 160 people facing charges, and over $90 million recovered.

Despite that progress, the audit found the state could still potentially collect $840 million more in assessed fraud penalties. One finding alleged the state had undercalculated fraud penalties because of issues with its data management system.

Dale noted the state has been going after bad actors and recovering money. But she said the UIA has faced its own challenges.

“Given the large volume of fraud across the country, at both the federal level and the state level, there is a limited number of resources to pursue those bad actors, and that’s a tension that is one we have to manage,” Dale said.

This is the fifth in a series of audits lawmakers had requested into the agency. The first in the series arrived in November 2021.

For years, the UIA has faced troubles and instability.

When Dale arrived as the new director two years ago, she became the 11th person to hold that position in 10 years.

During follow-up hearings for previous audits before state legislative committees, Dale defended progress made under her leadership.

State Representative Tom Kunse (R-Clare) serves as minority vice chair for the Michigan House Ethics and Oversight Committee. He said he acknowledges the unemployment agency has taken strides since the review period.

But Kunse said he wants the timeline sped up.

“Let’s talk about agility, let’s talk about the ability to adapt. That’s who Darwin says is going to survive, is those who have ability to adapt. And here we have this huge bureaucracy and there’s no repercussions for failing,” Kunse said.

The lawmaker said he’d like to see more transparency and accountability from the agency.

Kunse pointed to a bill package, ranging from HB 4370 to HB 4374, as examples of legislation he’d like to see lawmakers work on. But he cast doubt his committee would take up the issue.

“We had six meetings in ’23. We didn’t take anything up. We didn’t do anything in 2023,” Kunse said, referring to his committee’s lack of a hearing for any bill referred to it this year.

But the committee chair, Rep. Erin Byrnes (D-Dearborn), said she is planning on following up to this audit in the coming year.

“Certainly, the UIA report is one that is top of mind for us, so we will look to, again, have the auditor general come in, say the findings of their report to the committee members, so that everyone has a chance to ask questions,” Byrnes said.

She added that she also hopes to hear from UIA leadership to gain more perspective on the agency’s work and needs.

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Colin Jackson is the Capitol reporter for the Michigan Public Radio Network.
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