MI state audit finds unemployment agency practices made it vulnerable to fraud during pandemic

Practices at the Michigan Unemployment Insurance Agency during the COVID-19 pandemic opened the state up to fraud.

That’s among the findings in the latest audit from the Michigan Auditor General’s Office.

State Representative Steve Johnson (R-Wayland) chairs the House Oversight Committee. He said he’s concerned with a finding that the agency didn’t properly conduct background checks on over 5,500 new employees.

“You’re putting them into a position where they have the name of someone, that person’s social security number, and their date of birth,” Johnson said. “I mean, that’s the jackpot for someone who wants to commit identity theft. And that’s what this agency allowed.”

The state auditor general also found the unemployment agency didn’t immediately remove system access for all departing employees or ensure all new employees finished training.

The report lists the unemployment agency as agreeing with the findings of the audit.

In the period covered by the audit, the agency was rapidly adding new staff to address a record number of claims.

Unemployment Insurance Agency Director Julia Dale said that explains some of the shortcomings identified by the audit.

“The record level of claims coincided with the UIA’s continuous onboarding of new staffing resources and the implementation of many newly created and complex federal pandemic unemployment assistance programs,” said Dale, whose tenure as director didn’t begin until after the period covered by the audit.

“As UIA worked quickly to increase the department’s capacity to address Michiganders’ needs, the execution was far from perfect. The lessons learned and opportunities articulated by the audit serve as the platform to launch an improved Michigan Unemployment Insurance Agency,” Dale said.

The agency said it’s making changes around system access, background checks, and data security. It said some changes are already underway, like ensuring existing policies for enrolling and discharging employees are being followed and implementing a new training management system.

But Johnson, the House Oversight Committee chair, said he’s lost confidence in agency.

“The unemployment agency wasn’t following the law. Now they can come in and they can say, ‘All right, we are going to rewrite this. We are going to put in policies to make sure this doesn’t happen again.’ Well, if you were following your previous policies, this wouldn’t happen,” Johnson said.

He said he plans to hold more hearings involving the agency, and he’d like to see the governor “do a complete overhaul.”

Copyright 2022 Michigan Radio. To see more, visit Michigan Radio.