Audit of unemployment claims processing ignores context, reforms

• Under new leadership, UIA has cracked down on fraud and improved service in 2022, addressing OAG recommendations in advance of findings.
• Republican and Democratic lawmakers urged agency to rush money to financially strapped Michiganders during height of global pandemic.

The Michigan Unemployment Insurance Agency (UIA) today responded to the Office of Auditor General’s (OAG) latest findings on fraud, technology, financial waivers, and other well-documented issues rooted in the COVID-19 pandemic, characterizing the audit as a “rehashing” of old findings that ignores a flurry of reforms in 2022 to fix those issues.

“While we respect the authority of the OAG and have worked cooperatively with them over 19 months to provide the information they needed, the audit misses the mark in two important areas: It ignores UIA reforms to resolve the issues cited and lacks the context behind what caused these problems,” UIA Director Julia Dale said. “Our agency has cracked down on fraud and dramatically improved service to hard-working Michiganders – and we have the numbers to prove it.”

In the face of the COVID-19 pandemic, Republican and Democratic leaders called on the UIA to quickly get benefits to the millions of Michiganders thrust into unemployment. At its peak, 77 times more claims were filed with the agency than were filed in an average week before the pandemic, stretching the capacity of UIA personnel as they urgently implemented programs created by Congress to buoy out-of-work Americans. Confusing federal guidelines and a dysfunctional technology system implemented under former Gov. Rick Snyder created many of the claims processing issues cited in today’s audit.

The federally funded pandemic assistance programs attracted fraudsters to the UIA system, and they are now facing consequences of the agency’s zero-tolerance policy. Working with the Attorney General’s office as well as state and federal prosecutors, the UIA has helped produce and execute 109 search warrants, charge 90 individuals (of whom 28 have issued pleas, and 15 have been sentenced) and build another 94 pending cases. UIA has sent an unmistakable message to fraudsters: If you steal money meant for deserving Michigan workers, you will be caught and held responsible.

The OAG’s audit recommendations have been implemented or soon will be incorporated into wide-ranging agency reforms, with the cornerstones of providing exemplary customer service, fighting fraud, and improving the user experience in accessing UIA services.

One important reform is the announcement in November that UIA selected Deloitte to replace the agency’s antiquated worker claims filing technology with uFACTS, a $78 million system with an intuitive, human-centered design. Its “open system” gives UIA easier access to its data and provides a better ability to swiftly implement changes in future unemployment crisis.

More than a third of the findings in today’s OAG claims filing audit have been raised previously, with three of them on federal jobless assistance programs that are no longer available. “We share a commitment with the OAG to improve government services, especially when it comes to unemployment insurance,” Dale said. “The rehashing is not a good use of taxpayer resources. But we are closely examining the audit for recommendations that can help us further our quest to make Michigan a national model for fast, fair and fraud-free unemployment benefits.”

 Since Director Dale was named to lead UIA in October 2021, the agency has:

• Partnered with Civilla, a Detroit non-profit, to rethink and update language used in correspondence with the public.
• Reassigned staff and resources to tackle a case backlog.
• Redesigned the agency’s public website at Michigan.gov/UIA for easier use on mobile phones and tablets.
• Identified initiatives and processes that would ease access to jobless benefits for workers in underserved communities under a $6.8 million equity grant from the U.S. Department of Labor (USDOL).
• Approved more than 76,000 overpayment waivers this year of state and federal benefits paid out during the pandemic, worth $555 million.
• Halted overpayment collections on claims filed since March 1, 2020, while the agency addresses pending protests and appeals.
• Implemented new ethics and security clearance policies for employees and contractors.
• Rebuilt to nearly $1.8 billion (and growing) the UI Trust Fund from which weekly benefits are paid to workers who lose their jobs through no fault of their own.

Read Director Dale’s letter to the OAG.

Jobless workers with questions about their claim can go to Michigan.gov/UIA and click on the Schedule an Appointment link to set up an in-person, phone or virtual meeting with a trained staff member. Convenient times and dates are available. Claimants can also call UIA’s Customer Service at 1-866-500-0017.