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US Michigan Overpaid Nearly $4B in Unemployment Benefits, Unlikely to Recoup Funds

08:40  19 november  2021
08:40  19 november  2021 Source:   newsweek.com

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A Michigan state audit revealed that the state's Unemployment Insurance Agency Office overpaid residents by about $3.9 billion, the Associated Press reported.

The state of Michigan accidentally overpaid residents $3.9 billion in unemployment benefits. Above, the Michigan state capitol building in Lansing on Jan. 20. © Photo by Rey Del Rio/Getty Images The state of Michigan accidentally overpaid residents $3.9 billion in unemployment benefits. Above, the Michigan state capitol building in Lansing on Jan. 20.

The unemployment benefits were mishandled at a time when 5.4 million people were applying due to the COVID-19 pandemic. This led to the agency sending out letters over the summer to 648,100 Michigan residents who were found eligible for benefits the previous year, telling them they needed to reapply for eligibility.

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According to the audit, 347,437 of those who had qualified before were now found ineligible. The audit also pointed out that the state will most likely not be able to recoup the money it has lost, as the fault lies with the agency and not the claimants.

AP reported said that the former director of the agency Steve Gray, who resigned in November of 2020, made a presentation in April of 2020 discussing this issue. The agency weighed "paying ASAP and establishing eligibility in parallel" against "establishing eligibility and delaying payments until eligibility is verified." They acknowledged that there was an overpayment risk.

The agency used four eligibility criteria not authorized by the U.S. Department of Labor. Though they were not sure about the requirements, the audit said they did not reach out for clarification, despite the Department of Labor alerting them in June of 2020 of "critical" issues over implementation."

So far, little fraud evident in rental assistance programs

  So far, little fraud evident in rental assistance programs SACRAMENTO, Calif. (AP) — After watching scammers make off with more than $20 billion in fraudulent California unemployment benefits during the pandemic, state housing officials were wary of a repeat when the federal government poured money into the state and told them to use it to pay off people's unpaid rent. But in the eight months since California's rental assistance program began, fraud has been virtually nonexistent. The Department of Housing and Community Development has identified 1,800 fraudulent rental assistance applications out of nearly 500,000 statewide — 0.0036% — and none was paid.

For more reporting from the Associated Press, see below.

Republican lawmakers have criticized the agency and called for accountability, particularly concerned at the anxiety the letters caused Michigan residents and the agency's mishandling of funds.

Republican Representative Steve Johnson, who chairs the state House Oversight committee, issued a statement on Thursday blaming Governor Gretchen Whitmer's administration for confusing people navigating unemployment and her for implementing executive orders that shut down people's livelihoods during the pandemic.

"These findings provide concrete proof that a pivotal arm of Governor Whitmer's administration failed when people needed it most, this was a state mistake," Johnson said. "...rampant ineptitude and ineffectiveness at the agency led to weeks and months of hardship for a tremendous amount of people."

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Leadership at the unemployment agency has changed at times amid criticism for slow payouts and fraudulent claims. Gray was replaced by acting Director Liza Estlund Olsen, who then was replaced by current Director Julia Dale.

Dale, who took over the agency in recent weeks, acknowledged the audit's findings in an email statement Thursday, saying the agency is working to implement the suggestions, but she maintained that the agency should still be proud of the work it has done.

"The work the UIA did this time supported millions of Michiganders by providing a temporary lifeline to pay for food, housing, prescriptions and other critical needs. So far, more than $39 billion has been paid out to nearly 3.5 million Michigan residents," Dale said. "But we should also be sure to learn from this experience so that we can do a better job of stopping fraud and paying legitimate claims in a timely fashion."

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California Changes to Unemployment Could Pay Out Benefits Faster to 100,000 People .
"This is a monumental change by (the Employment Development Department) that will allow more claimants to be paid on time," said Daniela Urban, executive director of the Center for Workers' Rights.The change was the result of a lawsuit settlement between the state and an advocacy group, the Center for Workers' Rights.

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