Michigan’s Acting Unemployment Director Once Again on Oversight Committee Hot Seat

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by Bruce Walker

 

For the second time since last March, acting Unemployment Insurance Agency chair Liza Estlund Olson testified Thursday morning before the Michigan House Oversight Committee.

Much like her March appearance, Thursday’s testimony prompted scathing commentary from Republican committee members.

The embattled UIA has been subjected to harsh criticism since the beginning of the COVID-19 pandemic in March 2020. During that period, the UIA processed 5.3 million unemployment claims while fielding 23,000 phone calls and 553,000 virtual chats, according to numbers provided by Olson.

“Back in March 2020, Gov. [Gretchen] Whitmer issued her first of many shutdown orders,” Chairman Rep. Steven Johnson, R-Wayland, said. “This included even stopping lawn care workers from mowing grass. Now obviously, this wholesale shutdown of the economy led to a massive spike in unemployment, one that we’ve never seen before, and the agency was not able to handle that influx of claims.”

Complaints registered with legislators regarding the UIA’s perceived inept handling of unemployment claims were instantaneous and massive, Johnson said.

Johnson then related the abrupt resignation of then UIA director Steve Gray in November 2020, and said Gray received a $85,000 “hush fund” severance package from the governor.

Johnson also addressed a UIA audit conducted by the U.S. Department of Labor, which began in October 2020. Results of the audit were presented to the UIA on Feb. 20 of this year, five days before the DOL issued new unemployment guidelines to all 50 states. At the time, taxpayers victimized by identity theft were beginning to receive 1099 forms from the state indicating they had received unemployment benefits for which they were being taxed, although, in fact, they had never applied for unemployment.

In late June, the UIA surprised approximately 700,000 freelancers and independent contractors receiving Pandemic Unemployment Assistance benefits with a letter stating they potentially were required to repay their benefits in total or face additional fines and interest.

At this point, the Oversight Committee commenced its investigation into the UIA, after which they discovered what Johnson described as a UIA “failure” of the DOL audit in February.

“We were misled,” Johnson said. “We were not informed about that, we only found out about that from a third source.”

In her opening comments, Olson said the UIA paid out $38.5 billion in unemployment claims to 2.4 million out-of-work Michigan residents, which provided $73.15 billion in economic impact in Michigan. In the meantime, Olson told Rep. Patrick Outman, R-Six Lakes, the UIA stopped payment on approximately 500,000 fraudulent unemployment claims.

Claiming the UIA has paid benefits to 99% of eligible applicants, Olson said her agency had performed “yeomen’s work” despite receiving “hundreds” of changes from not only the DOL, but as well changes in federal criteria prompted by the Coronavirus Aid, Relief, and Economic Security Act, the Coronavirus Response and Relief Supplemental Appropriations Act, and the American Rescue Plan Act, necessitating “literally hundreds of coding changes”; what she described as “antiquated” software for processing claims; the failure of the Legislature to authorize the hiring of 500 additional UIA staff; and the sheer volume of claims received by the UIA.

Olson described the FAST Enterprises MIDAS software, which has been in use by the UIA since 2012, as “light years ahead of the mainframe technology the agency had used for decades” but said it is now antiquated.

Rep. Julie Brixie, D-Okemos, noted the FAST system was contracted initially during the administration of Republican Gov. Rick Snyder.

Johnson fired back that the Whitmer administration approved a one-year extension of the FAST contract within the past couple weeks. “If you’re going to continue to blame software, then you should be in contact with your boss, the governor, and say, ‘Hey, we have an issue here. We need to fix this.”

On Thursday morning, the UIA issued a news release stating the agency will issue a Request for Information through the Department of Technology, Management and Budget for potential replacements of the FAST Enterprises MIDAS operating system.

“I think we got some good information here today,” Johnson said in conclusion. “But I’m still disappointed. I don’t think there’s been a lot of responsibility taken, and it seems there’s been a lot of blame being placed, whether it’s blaming the federal government, blaming the Legislature, blaming funding. I’m not seeing a leader take responsibility. That’s just my initial reaction, but we will continue to delve into this issue as we move forward.”

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Bruce Walker is a regional editor at The Center Square. He previously worked as editor at the Mackinac Center for Public Policy’s MichiganScience magazine and The Heartland Institute’s InfoTech & Telecom News.

 

 

 

 

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