by Scott McClallen
Gov. Gretchen Whitmer signed a bill appropriating nearly $140 million to revamp Michigan’s embattled Unemployment Insurance Agency (UIA.)
“This fiscally-responsible, bipartisan bill will lower costs for small businesses and fight waste, fraud, and abuse in our unemployment system,” Whitmer said in a statement. “This is the latest step we are taking to fight fraud, hold people accountable, and strengthen the Unemployment Insurance Agency after decades of disinvestment. By making a deposit into the Unemployment Compensation Fund, we can help small businesses balance their books by lowering the costs of unemployment.”
House Bill 5525 disburses a total of $139.8 million to the UIA. Broken down, federal funds comprise $106.8 million, with $24 million from the General Fund, and $8.9 million from state restricted funds. The money will be spent as follows:
- $100 million of federal stimulus money into the Unemployment Compensation Fund.
- $20 million of state general fund money to improve UIA customer service.
- $8.9 million from the restricted Contingent Fund – Penalty and Interest Account to hire 52 limited-term employees to assist with enhanced fraud enforcement efforts.
- $6.8 million in federal funds for unemployment insurance equity grants.
- $4.1 million general fund money to the Attorney General to support limited-term staff to solve claimant fraud, employer fraud, and identity theft.
“Together, we will pursue anyone who improperly exploits unemployment benefits to pad their own pockets and ensure they are prosecuted to the full extent of our laws,” Whitmer said. “Attorney General Dana Nessel, Michigan’s UIA agency, our federal partners, and my administration will continue working together to utilize this funding as effectively as possible to crack down on fraud and save taxpayers money.”
The funds aim to fix UIA mistakes during the COVID-19 pandemic, which include:
- Paying at least $8.5 billion in fraudulent claims, including to a self-proclaimed “Kimberly Kardashian” from Traverse City and “Kylie Jenner.” A separate fraud expert group estimates identity fraud closer to $11 billion.
- Despite being warned twice, the UIA fumbled disbursing federal pandemic unemployment benefits, forcing it to ask 700,000 Michiganders to recertify for benefits.
- Then-UIA Director Steve Gray was paid $85,872 in a severance deal after he resigned on Nov. 5, 2020, after months of record jobless claims.
- Hired people convicted of armed robbery and identity theft to disburse benefits. In total, the agency didn’t screen 5,508 workers.
Since March 15, 2020, the UIA has paid $39 billion in benefits to more than 3.3 million workers after the COVID-19 pandemic and accompanying restrictions spiked the unemployment rate to 22.7%.
The governor’s proposed $74.2 billion budget aims to spend another $88 million on the UIA.
The agency’s new director, Julie Dale, has promised increased transparency, and the UIA has fired or penalized at least 18 employees for criminal activity.
The UIA paused new wage and state income tax refund garnishment until May 7 for about 398,000 Michiganders marked with overpayment statuses during the COVID-19 pandemic.
Nessel and local law enforcement have charged 54 individuals related to pandemic fraud, 13 have been convicted or pleaded guilty.
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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.
Photo “Gov Gretchen Whitmer” by Gov Gretchen Whitmer.