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Report finds UIA ineffective in processing unemployment claims during pandemic

Bytemarks via Creative Commons

During the COVID-19 pandemic, Michigan’s Unemployment Insurance Agency issued $6.6 billion in overpayments.

That’s noted among the several findings in a new report from the state Auditor General.

It also found the agency was slow to address problems and consistently did not meet federal standards for processing claims. In all, auditors noted 11 "material conditions" — the most severe assessment the auditor general assigns — and four "reportable conditions" — a lower level of deficiency.

Unemployment Agency Director Julia Dale said she recognizes the concerns, but she said the audit ignores fixes made since she took over the office more than a year ago.

“In many instances, what we are seeing with this report is a rehash of issues that have been addressed, addressed, and addressed again. And not only have been addressed in other audits, and in oversight committees but have also been remediated,” Dale said.

This is the fourth audit released in a five-part series on the handling of pandemic-era unemployment claims.

Senator Ed McBroom (R-Waucedah Twp) co-requested the review in 2020 in response to reports he was hearing of widespread issues.

Speaking Friday, McBroom said he hopes it will lead to policy change to address issues at the agency he says span over a decade.

“They have to get us to statutorily correct these problems so they don’t happen again. And they need to partner with us on that and not just tell us, ‘We cross our hearts that we’ll get it right the next time,” he said.

The agency has had several different department heads in a short span of time. Dale, who took over the agency in October 2021, is among the longest to hold her position in the past ten years.

Dale and the Unemployment Insurance Agency are pushing back heavily against the report.

During a media call, Dale told reporters she had initially reached out to the Office of the Auditor General to signal her desire to work with state oversight to better the long-troubled agency.

But she accused the auditor general's office of changing the scope of the audit, penalizing her department for not providing data it was working through, and not giving credit for fixes already made.

A specific point of contention dealt with findings over waivers given for overpayment.

The report found the state couldn’t justify over $10 billion it paid out in claims, the vast majority of which came in the first few months of the pandemic in 2020.

After finding much of the overpayments were not due to false claims but the state’s own troubles, the department began issuing waivers so those wrongly paid wouldn’t be penalized.

The audit found $1.7 billion of those waivers may have been wrongly granted. Meanwhile, it states another $280.7 million in waivers may have been improperly ignored.

Dale said her agency is still processing its waivers and didn’t want to take experts off their job to provide new data to the OAG.

“It’s very hard with the limited resources and the restrictions we have with our current system to be able to get the work out, make the changes in the system, to enact the waivers, to test them, and then to also say, ‘Yes, OAG. Come in and we’ll sit down with you and work through all those,'” Dale said.

While McBroom said he still believes in Dale as a leader for the agency, he indicated he’d like to see a shake up in other organizational leadership to ensure better accountability.

Other legislative Republican leadership joined in the criticism.

“The question still remains as to why the UIA director decided to move the agency’s head of investigations and all 76 members of the investigation staff over to the benefits division to expedite payments and overexpose billions of public dollars to possible fraud, and whether the governor’s office agreed with that decision,” Senate Minority Leader Aric Nesbitt (R-Porter Twp) said in a press release.

The audit covers a period between January 2020 through June 2022.

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