LANSING — Findings from the state’s auditor general show that the Whitmer administration made major mistakes that perpetuated confusion and anxiety for many Michigan workers as they sought help from the state unemployment office during the pandemic, State Representative Breonna Kaheli said in a news release.
The audit said deficiencies in the Michigan Unemployment Insurance Agency’s office caused an overpayment of $3.9 billion while processing 5.4 million unemployment claims amid the COVID-19 pandemic.
A report summarizing the findings of Michigan’s auditor general, Doug Ringler, said the review found “a variety of actions and inaction by UIA’s senior leadership during the COVID-19 pandemic that contributed to a weak oversight environment (tone at the top).” Ringler said these actions directly contributed to creating invalid questions to help fight pandemic unemployment (PUA) that ultimately led to nearly 700,000 claimants receiving letters this summer saying they had to requalify to receive benefits.
The review said it appears that at least 347,437 of the 648,100 claimants who received the letter are now classified as ineligible for benefits.
The PUA was launched in March 2020 to extend benefits to workers who would not normally qualify for unemployment benefits, such as contract workers and freelancers. In July, the UIA sent letters to PUA benefit recipients and said they must re-qualify using a new set of criteria. Kaheli’s release said the messages “caused fear and confusion by suggesting the possibility of late payments”.
Although the agency did not make these recipients repay the benefits they had received inappropriately, the letters caused concern for many who were unsure what the letters meant and eventually led to an investigation by the Michigan House Oversight Committee and calls to remove the agency’s acting director .
Leadership at the unemployment agency has changed at times during the pandemic. Former Director Steve Gray resigned in November 2020. He was replaced by Acting Director Lisa Estlund Olsen, and then replaced by current Director Julia Dell.
Kaheli said the House Oversight Committee has held several hearings on the issue.
“The review demonstrated that there is a significant level of avoidance that occurs from top to bottom within portfolio management,” Kaheli said. Michigan workers have had countless problems with the unemployment agency for nearly two years, creating huge obstacles for their families. The governor’s team failed to be open and honest about the situation from the start.”
Dell, who has taken over the agency’s lead in recent weeks, acknowledged the audit findings in an email statement when the audit report was released on November 18, saying the agency was working to implement the proposals, but emphasized that the agency should remain proud of them. the work she did.
“The work that UIA has done this time has supported millions of Michiganders by providing a temporary lifeline to pay for food, housing, prescriptions, and other essential needs. To date, more than $39 billion has been paid out to nearly 3.5 million Michigan residents,” Dale says. She said. “But we must also make sure we learn from this experience so we can do a better job of stopping fraud and paying legitimate claims in a timely manner.”
The audit said that based on a review of internal emails, Gray discussed eligibility criteria for PUA with senior staff at the agency, senior leadership at the Department of Labor and Economic Opportunity and the Governor’s Executive Office as early as April 2020.
PowerPoint Presentation Prepared for the Governor’s Executive Office Pros and Cons of “Pay ASAP and Proof of Eligibility Parallel” vs. “Proof of Eligibility and Delaying Payments Until Eligibility Verified”.
One slide indicated, according to the audit, that any federal benefit the agency mistakenly paid won’t need to be reclaimed, an advantage for paying benefits as quickly as possible.
The review said despite the fact that the agency said there was confusion about how to interpret PUA qualification requirements, the agency did not request clarification from the US Department of Labor, and could not explain its rationale for using the eligibility criteria that had nothing to do with federal guidelines and could not explain why it was not corrected to its standards when the Department of Labor first reported cases to the agency in June 2020.
The unemployment agency has pushed hundreds of millions of fraudulent claims, delayed payments for months to tens of thousands of people who were out of work under pandemic orders from the governor, consistently obstructed legislative oversight and deceived federal regulators by saying the problems had been addressed, Kaheli’s release said.
“What’s worse is that the governor has repeatedly vetoed budget plans to pump additional funding into the unemployment trust fund to offset fraud-related losses,” Kaheli said in the statement. “Leaving Michigan’s small businesses in limbo because of their management error.”
When Whitmer removed funding from the COVID-19 bill in December, she said it would have amounted to a tax credit for large corporations related to unemployment benefits and would not affect the availability of unemployment benefits. The remaining measure, which Whitmer signed into law, included more than $60 million for business grants and $45 million in direct payments to workers.
Typically, companies pay into the unemployment trust, with the money then used to pay unemployment benefits.
“To be very clear, this will not affect individual workers,” Whitmer said at the time. “General Fund money should be used to fund essential services, such as vaccines and personal protective equipment, not to give tax breaks to large corporations at the moment.”
Republicans said the bill is tied to other legislation regarding how long unemployed workers are eligible to receive benefits. The veto ended by reducing the number of weeks from 26 to 20.
Under the administration of former Republican Governor Rick Snyder, benefits have been permanently reduced to 20 weeks. Whitmer reversed that decision, using her emergency powers to temporarily extend benefits to 26 weeks in the early days of the pandemic. With this extension, in addition to the federally funded programs, claimants were eligible for up to 59 weeks of benefits in Michigan.
The Michigan Supreme Court ruling essentially invalidated its executive orders in the fall. The state legislature temporarily continued this extension of benefits, but that extension expired.
In his report, the auditor general also determined that the state agency continued to make improper decisions about eligibility and related overpayments for nine months after the US Department of Labor notified Whitmer’s administration of the problem.
Nearly $4 billion in overpayments were made due to incompatible eligibility criteria, according to the audit. From March 15, 2020, through September 27 of this year, the agency paid out nearly $39 billion in total unemployment insurance from 5.4 million claims and just over 3.4 million claims. PUA claims are included in the total figures.
Kahle said leadership failures within the unemployment agency continue to cause hardship to people across Lenawie County and across Michigan. Over the past two years, she and her crew have worked to correct problems hundreds of local workers have had with the system.
Kahli’s statement said the audit report is the first in a series of anticipated audits of the Whitmer administration’s handling of unemployment claims during the COVID-19 pandemic.
The agency is not required to act on the auditor’s findings or recommendations, but is given an opportunity to respond and detail changes usually to correct the findings and implement the recommendations it agrees with. The Auditor General, who works in the legislative branch of state government, often performs follow-up audits to see if specific problems persist in the executive branch agency.
The Detroit Free Press and The Associated Press contributed to this report.
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