An audit of the Michigan Unemployment Insurance Agency has uncovered significant undercounting of fraud penalties. The fault lies largely with unresolved programming issues involving the Michigan Integrated Data Automated System. The audit, completed by the Office of Auditor General Doug Ringler, pointed out two “material conditions which indicate a lack of adequate protection for the agency’s funds.

Additionally, the audit revealed that the UIA’s Investigations Division failed in several areas. However, the UIA will have three years to rectify fraudulent payments. Consequently, an additional $840 million in fraud penalties may be assessable.

From March 2020 to December 2022, the UIA disbursed $40 billion in compensation to 2.5 million people. Unemployment funds were also defrauded by over 2,300 people intentionally misrepresenting themselves, with unemployment fraud charges leveled against at least 158 individuals. It is estimated that Michigan lost $11 billion to unemployment fraud.

The audit also found that the UIA distributed $245M in possibly improper payments to claimants who were either incarcerated, deceased, or living in long-term care facilities, as well as to UIA or LEO employees, or those people outside the conventional working age bracket. Auditors claim that the UIA either failed to identify these payments or took no action to assess their appropriateness.

House Republican Leader Matt Hall criticized the Democrats for detracting from the main issue by aiming to make unemployment a permanent entitlement instead of fixing the system. According to him, the focus should be on helping those out of work and easing burdens on job providers. Hall called for the cleanup of this mismanagement to become a top priority for the bipartisan House of Representatives in 2024.