Michigan Unemployment Agency Overpays $3.9 Billion in Improper Benefits, Audit Says

Michigan’s auditor general says the state’s unemployment agency paid $3.9 billion in improper benefits during the pandemic. It’s a mammoth figure that caused eyes to pop all over Lansing and across the state last week.

First, some context. As you may know, the pandemic bulldozed through large portions of the economy across the country in 2020. The federal government decided that it would open up unemployment benefits to people who normally wouldn’t be eligible.

People who are self-employed, independent contractors and individuals with limited recent work history all fell into that category. Under this new program, they could get up to 50 weeks of unemployment benefits paid for with federal CARES Act money. And this was significant, because those kinds of workers were often ones who were hardest hit by the pandemic and were less likely than most to have any sort of financial safety net.

But it was also a huge undertaking for a department that had to suddenly adjust to an explosion of unemployment filings, while also contending with the fact that the federal Pandemic Unemployment Assistance were vague. Supporters of the Whitmer administration have said that the agency did its best to come up with a system that worked while erring on the side of giving out benefits to people who needed them. Critics, however, have said for months that the agency just ignored federal guidance. At one point, the unemployment agency asked thousands of recipients to re-apply for the benefits they were already receiving, causing a lot of confusion.

In its new audit, the state’s auditor general says actions taken by the then-leaders of the state’s unemployment agency “directly contributed” to invalid processes. And it says that on several occasions, the agency failed to address issues that were pointed out by the U.S. Department of Labor and the agency’s own staff in a timely or appropriate way.

Related: State’s Approach to Unemployment Lawsuit Puts Victims in Limbo

This isn’t the first trouble the state’s unemployment office has had in recent years — far from it. The agency made tens of thousands of false fraud accusations during the Snyder administration and the agency has been dealing with massive lawsuits as a result. More recently, agency director Steve Gray was forced to resign last year because of the agency’s actions during the pandemic.

But the unemployment agency isn’t the only one under fire as of late. The auditor general’s office has also been taking heat for trying to audit county clerk operations and local election results in the 2020 election, a move critics view as dangerous amid conspiracy-fueled lies about that election. Attorney General Dana Nessel had to issue an opinion in August saying that the auditor general has no legal authority to conduct post-election audits.

This is all to say you’ll see a lot of spin around this story. But it is an unusually forceful audit dealing with a massive amount of money that puts much of the blame on current and former unemployment officials. It’s safe to say Republican leaders in the Legislature will be looking more into this. But one thing we do know is that it’s unlikely the agency will be able to recoup the vast majority or any of the $4 billion in federal money that it gave out.

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State’s Approach to Unemployment Lawsuit Puts Victims in Limbo

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