by Scott McClallen
The Michigan Unemployment Insurance Agency failed to perform employee background checks or sever timely ex-employee access to a system that processed more than $36 billion in claims, an auditor general report found.
Auditor General Doug Ringler said the UIA spent $60.8 million on the Michigan Integrated Data Automated System but didn’t take other safeguards to prevent unemployment fraud.
For 42 of 61 sampled ex-employees, the UIA didn’t timely disable account access to MiDAS, disable the State of Michigan network for 30 employees (49%), or disable remote 41 users (67%) with devices that can log in remotely.
The report sampled 45 of the 330 people with access to federal tax information and found the agency didn’t conduct background checks for 36, or 80%, of the ones sampled.
Of those 36, five were UIA employees, and 31 were Department of Technology, Management, and Budget employees or contractors.
The auditor report said 27 of the 45 (60%) failed to receive required training, and 16 (36%) weren’t included on the agency’s tracking sheet of people with information access.
The audit said the UIA didn’t train some workers, failed to conduct background checks, didn’t sever application access to ex-workers timely, or ensure employees only had the least access needed to do their jobs.
This access cost taxpayers $3.8 million in fraud committed by a former worker who pleaded guilty to fraud in July 2020. It would have netted more than $12 million if that scheme was successful.
The UIA has fired or penalized at least 18 employees after a criminal investigation.
UIA Director Julie Dale said that the UIA had made “significant” problem-solving changes over the last six months.
“After more than a decade of disinvestment in UIA, there is still more work to do,” Dale said in a statement.
In October, Dale took the helm of the embattled UIA after former UIA Director Steve Gray resigned after the unemployment rate spike to 22.7% in 2020. He brought with him a then-secret $85,872 severance deal.
The agency has repeatedly erred in disbursing billions of dollars to Michiganders since March 2020. The UIA wrongly paid out at least $8.5 billion, but one independent group placed the number closer to $11 billion.
Dale said the UIA now requires background checks, fingerprinting for all employees with confidential information, better tracking of staff training, and timely removal privileges for ex-employees.
“With these changes, UIA has in place robust policies and practices that we are confident we will begin to restore the public’s confidence in our agency,” Dale said.
This audit overlaps with a March audit that found the UIA failed to screen 5,508 workers, train some workers, or cut off application access to ex-workers.
Of 139 departed workers, 63, or 45.3%, continued to have access to MiDAS to view and make unauthorized claims for an average of 32.6 days post-departure, the earlier audit found.
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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. Previously, he worked as a financial analyst at Pepsi.
