A Michigan House committee heard testimony Thursday scrutinizing the state’s Unemployment Insurance Agency’s enforcement of financial penalties following an audit which estimated hundreds of millions of undercalculated fines.
The report from the Office of Auditor General found that undercalculated penalties could total over $800 million, much of which was attributed to software errors. In a random sample taken from panedmic-era fraud determinations, auditors found the agency had incorrectly assessed penalties in 84% of cases, resulting in a 49% undercalculation of fraud penalties.
The agency was also found to have given out nearly $250 million in payments to those ineligible for payments, including the deceased and incarcerated.
Julia Dale, director of the agency since late 2021, said that the agency has been constrained by limited funding and understaffing. Dale also highlighted that the agency has recovered over $90 million since pandemic aid began in 2020.
“The UIA has worked closely on multiple successive audits with the OAG staff over the last three years to make sure that we not only identify where we fell short, but we fix issues swiftly and implement lasting reforms,” she said. Dale said that the department is in the process of upgrading its computer systems and implementing other safeguards against potential errors.
But House Republicans weren’t satisfied with Dale’s answers, some saying the agency shouldn’t have gotten here in the first place.
“I’m glad you got back $90 million. That’s 1.6%. That’s not acceptable,” said Rep. Tom Kunse, R-Clare. “You know, we didn’t prosecute fraud, even when there’s known fraud. We’re paying dead people. And we didn’t go back after the money. So we talked about — oh, this ship is turning. We need dramatic changes right now.”
House Republicans suggested linking the agency’s revenue with the amount in penalties they’re able to recover.
