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Michigan Republicans propose ‘fix’ for state unemployment agency

Steve Johnson
House Oversight Chair Steve Johnson, R-Wayland, outlines a new proposal to reform the MIchigan Unemployment Insurance Agency (Jonathan Oosting)

LANSING — Describing jobless constituents driven to tears by bureaucracy and miscommunication, Michigan House Republicans on Tuesday outlined plans to improve customer service at the state's unemployment insurance agency.

The six-part proposal, which has not yet been formally introduced, is "just the beginning," House Oversight Chair Steve Johnson, R-Wayland, promised in a Capitol press conference.

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"The agency doesn't work for the people, and that has to change," he said. "We have to fix customer service."

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Among other things, the forthcoming legislation would create a new "independent citizens' advocate" position that would serve as a point-of-contact between the agency and families who need help accessing jobless benefits.

Lawmakers said the reforms will also seek to speed eligibility determinations and limit the length of time the agency can attempt to make claimants repay benefits it mistakenly paid out.

As of Tuesday afternoon, the Michigan Unemployment Insurance Agency had not yet reviewed the GOP proposal, according to spokesperson Nick Assendelft. 

But, he said in an email, "leadership is is open to discussions on processes and procedures that will efficiently and effectively serve jobless claimants as well as being open to working cooperatively with the Legislature and maintaining compliance with our federal partners to better serve the residents of Michigan."

In legislative testimony this month, Acting Director Liza Estlund Olson promised "user friendly" upgrades, including replacing a computer system that critics say has contributed to structural flaws in the way claims are handled.

The initial House GOP plan would not provide any more funding for the agency to replace that $52 million computer system or make other changes to improve service.

That’s because funding is "not the problem," Johnson argued, accusing agency leaders of trying to shift blame from their own failures.

House Republicans are still ironing out details and have not yet decided whether they will propose a single citizens' advocate or a "council" of individuals. But, as initially envisioned, the advocate or advocates would likely be appointed by legislative leaders and work for the Legislature.

The goal is to ensure there is an "independent voice for the people of Michigan" with access to "what's going on" in the UIA and the ability to help resolve problems that may arise for claimants, Johnson told reporters.

House Republicans contend some of that work has fallen to their offices over the past 16 months as frustrated constituents flood the phone lines in search of help.

“My staff is tired of working for the UIA,” said Rep. Michelle Hoitenga, R-Manton. “That's all my staff does anymore.”

Rep. Tommy Brann, R-Wyoming, told reporters he has personally provided money to some constituents who called his office seeking help as they struggled to buy groceries while awaiting unemployment benefits.

"I've had people sobbing on the phone," he said.

Like many states, Michigan struggled to process jobless claims early in the COVID-19 pandemic as forced business closures prompted unprecedented layoffs. All told, more than 3.3 million claims have been filed since March 2020.

The House Republican plan aims to speed up the claims process by requiring the UIA to review benefit applications and make an eligibility determination within 10 business days.

But there will be an “off ramp” to give the agency more time if it is warranted, Johnson said, acknowledging the 10-day window may have been unrealistically narrow during the initial claims surge caused by the pandemic.

House Republicans pointed to more recent problems as evidence the agency remains dysfunctional — even after claims volumes have slowed and months after the abrupt November resignation of former Director Steve Gray.

The agency faced backlash this summer after warning more than 600,000 unemployment claimants they may need to repay benefits because of a possible state mistake related to changing unemployment regulations.

Democratic Gov. Gretchen Whitmer ultimately promised that no one who "followed the rules and received (mistaken) benefits through no fault of their own should have to pay back money to the federal government."

Current law gives the agency up to three years to request payback of benefits it determines were paid out improperly. The House GOP plan would reduce that to one year, except in cases of potential fraud.

The pending legislation would also require the UIA to provide transparent and regular updates about the Unemployment Insurance Trust Fund, which is financed by employers and used to pay benefits to jobless residents.

House Republicans have spent months grilling and investigating the UIA over processing backlogs and other claimant complaints, but until Tuesday, the GOP had not proposed any significant reforms.

"This is how government should work," said Rep. Jack O'Malley, R-Lake Ann. "We have heard from the people, provided oversight, and are now delivering accountability and shoring up key areas."

Gray, the former UIA director, quit amid a barrage of complaints from claimants and lawmakers alike. House Speaker Jason Wentworth, R-Farwell, has also called on his successor, Olson, to resign.

In an August hearing, unemployment advocates urged lawmakers to help fix what they termed a glaring problem in the agency: The Michigan Integrated Data Automated System, which the state has used since 2013 to help flag potential unemployment fraud and send automatic notices to claimants.

The computer algorithm falsely accused tens of thousands of jobless residents of unemployment fraud between 2013 and 2015 and then automatically assessed huge fines and penalties. The false fraud scandal, which unfolded under former Gov. Rick Snyder, prompted a series of legislative reforms in 2017 — but the system was never replaced.

"If they have problems with IT, then why did they just renew that vendor for another year?" Johnson said Tuesday.

"The problem is a lack of leadership.”

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