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Auditor General’s report shows $3.9 billion in UIA overpayments

Launched during the Great Depression, the unemployment insurance system has seen unprecedented strain during the coronavirus crisis.
Vitalii Vodolazskyi
Adobe Stock
A new report from the Office of the Auditor General finds Michigan’s Unemployment Insurance Agency wrongfully paid out nearly 4-billion-dollars in benefits over the pandemic.

The Michigan Unemployment Insurance Agency (UIA) has overpaid pandemic-related claims by an estimated $3.9 billion according to an audit released Thursday.

The Auditor General’s report states UIA leadership outlined the choice between quickly paying benefits and the risk of overpayment in a presentation to the governor’s office in April of last year.

Rep. Steve Johnson (R-Wayland) chairs the House Oversight Committee.

“What the agency did is they said, ‘We’re not going to verify eligibility. We’re just going to send the money out’ And that’s how they lost $4 billion. We’d like to know who was involved in making that decision and to know was anyone pushing back against that?” Johnson said.

The Auditor General’s report finds the UIA used unauthorized eligibility guidelines and made improper payments for months after the federal government notified it of the issue.

The agency says it has since addressed most of the federal government’s concerns and will resolve the rest next year.

Johnson said he plans to hold hearings on a bill package dealing with the agency in early December.

“This is something that needs to be fixed and the legislature is committed to try and do everything we can to reign in this agency and make sure that the people of Michigan are served properly,” he said.

The Auditor General’s report found the state paid claims to over 347-thousand people who were later deemed ineligible.

Last month, Gov. Gretchen Whitmer announced a new permanent director to lead the UIA, Julia Dale.

“The audit looked back at our operations at a time when, as a consequence of the pandemic, the agency was standing up new and complicated federal programs while processing hundreds of thousands of claims every week, shifting nearly our entire staff to remote operations, and simultaneously responding to unprecedented levels of sophisticated, criminal efforts to defraud the agency,” Dale said in a written statement.

She said her agency is making changes based on the report.

Meanwhile, Johnson said he’s committed to working with the new UIA director on fixing issues within it.

“I want them to succeed. We want to make sure we get this fixed up. But from what I’ve seen in my five years here in the legislature, the unemployment agency has always been a disaster. I am hesitant to ever say that I think it’s going to get fixed,” Johnson said.

Thursday’s report was the first in a four-part series from the Auditor General on the UIA’s handling of the COVID-19 pandemic.

The next will come out early next year.