Michigan UIA office

A Michigan Unemployment Insurance Agency office in Lansing.

(The Center Square) – When an audit found that Michigan’s Unemployment Insurance Agency (UIA) paid out nearly $4 billion in ineligible claims, the agency acknowledged “some errors were made.”

The passive blame for a $4 billion mistake shows the extent to which the UIA has provided questionable customer service since the COVID-19 pandemic. House Oversight Committee Chair Rep. Steve Johnson, R-Wayland, called for accountability within the UIA.

“I don’t know about you, but I think that any private company that loses $4 billion, no one is going to get away saying ‘some errors were made,’” Johnson said in a phone interview with The Center Square. 

The report said officials from the UIA and the Department of Labor and Economic Opportunity sent a PowerPoint to Gov. Gretchen Whitmer’s office detailing their options.

The slide deck read: “This means we have a choice between speed and overpayment risk” for the 190,000 claimants at that time. It’s unclear how Whitmer’s office responded, and her office hasn’t responded to a request for comment.

“The agency had two choices: Either get the money out the door as soon as possible and don’t verify anyone’s eligibility, or they verify the eligibility, and it takes a little bit longer to get the money,” Johnson said. “That decision cost the state of Michigan $4 billion.”

So what could Michigan have bought with $4 billion? Whitmer’s failed 45-cent gas tax aimed to raise $2.5 billion annually. The Michigan Department of Transportation estimated fixing Michigan’s bridges would cost $4 billion, the Holland Sentinel reported.

“This is a failure beyond anything we’ve really seen in our Oversight Committee at this point,” Johnson said.

That $4 billion wasted by the UIA, if paid upfront, was enough to have fully funded Whitmer’s $3.5 billion road bonding plan that will cost taxpayers more than $5 billion.

“Think how many of the damn roads we could have fixed with this $4 billion that they recklessly and knowingly lost,” Johnson said, referring to Whitmer's campaign promise to "fix the damned roads."

Senior UIA staff said said that former UIA Director Steve Gray “made unilateral decisions” before his Nov. 2020 resignation and then, at that time, secretly pocketed an $85,872 severance deal and a confidentiality agreement amid months of record jobless claims.

It’s unclear if the federal government will ask for the lost $4 billion back.

In a statement, the new UIA Director Julia Dale said her staff is “justifiably proud” of the UIA’s accomplishments during a “once-in-a-lifetime crisis.”

The agency dealt with “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 early November, Dale promised lawmakers more transparency and a reform of the embattled agency. 

“The work the UIA did this time supported millions of Michiganders by providing a temporary lifeline to pay for food, housing, prescriptions and other critical needs," Dale said. "So far, more than $39 billion has been paid out to nearly 3.5 million Michigan residents.”

However, Johnson said at least $4 billion of that money should never have been disbursed.

“They’ve been bragging about all the money they got out the door to people, while at the same time, ignoring that a lot of that money – probably 10% of it – was not supposed to go out,” Johnson said.

It’s unclear how much money was paid to fraudsters.

The UIA said it’s “implementing program controls and processes based on the OAG’s audit, and will continue to refine those processes as the agency moves forward with its priorities of establishing a level of care, expertise and training to ensure unmatched excellence in customer service; strengthening and maintaining stakeholder relationships; and taking important steps to seek, develop and retain top talent.”

Staff Reporter

Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.