Michigan's unemployment agency did not require worker background checks or quickly deactivate former contract and state employees' computer access to the confidential benefits system amid unprecedented jobless claims early in the COVID-19 pandemic, state auditors said Friday.
Their review concluded that the agency did an insufficient job both “onboarding” and “offboarding” thousands of workers to help with the deluge of new and continued claims in 2020. The audit flagged four material conditions, the most serious type of finding.
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The Unemployment Insurance Agency agreed mistakes were made and pledged to make improvements.
Auditors found problems with how the agency contracted with staffing agencies and delays in blocking some former workers' ability to use the state network or the Michigan Integrated Data Automated System. The agency also was dinged for not executing or timely implementing data-sharing agreements with the staffing agencies and 16 Michigan Works! agencies to protect confidential claimant and employer information.
The audit said the agency did not mandate the outside agencies to run criminal background checks for temporary workers assigned to the state, though the three staffing agencies indicated to auditors they had conducted them. Forty-seven workers had at least one felony conviction, including some for financial crimes.
While it was not immediately clear that having a record precludes people from working for the agency, the state said it is defining which types of convictions should bar access to the automated benefits system, according to auditors.
The agency's director, Julia Dale, who took the helm last fall, said the audit covered a period in which its workforce more than quintupled to process record-high claims.
“As UIA worked quickly to increase the department’s capacity to address Michiganders’ needs, the execution was far from perfect," she said in a statement. “The lessons learned and opportunities articulated by the audit serve as the platform to launch an improved Michigan Unemployment Insurance Agency.”
The Detroit News reported this month that the agency fired or suspended 18 employees during the pandemic because of pending criminal investigations. In 2021, a former contract worker pleaded guilty in a scheme to fraudulently release payment on more than 700 claims, more than 10 of which involved stolen identities. About $3.8 million was paid; more than $8 million was not.
Auditors said while it is unlikely the woman's criminal past would have precluded her from working at the agency based on its criteria for internal hires, "the establishment and application of more stringent criteria may have done so.”
Sen. Mike McDonald, a Macomb Township Republican, called the audit “alarming" in the wake of a report that estimated the agency paid about $8.5 billion in fraudulent benefits over a 19-month period.
“I call on the governor to work with the Legislature on proactive steps to address this situation and make sure it never happens again," he said.
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