Michigan Capitol | Susan J. Demas
Liza Estlund Olson, the acting director of Michigan’s Unemployment Insurance Agency (UIA), testified before a state House panel Thursday on unemployment system problems since the start of the COVID-19 pandemic.
Olson’s appearance before the Oversight Committee comes after Republican lawmakers have leveled withering criticism at the Democratic Gov. Gretchen Whitmer administration over its handling of jobless claims since spring 2020. Whitmer named Olson to the post in November after UIA Director Steve Gray stepped down.
House Speaker Jason Wentworth (R-Clare) last month urged Whitmer to remove Olson, claiming the Michigan UIA has failed Michiganders who are “still desperate for help” and said he was “done hearing all their excuses.”
Whitmer spokesman Bobby Leddy said at the time it was “unfortunate that the Legislature is focused on lobbing partisan political attacks” and urged lawmakers to take up Democratic legislation to improve jobless services.
This week, federal pandemic unemployment benefits expired. The UIA said 442,000 Michigan residents will no longer receive a range of federal pandemic benefits, including an additional $300 per weekly unemployment check, an extended amount of time people could receive jobless aid, and funding for gig workers not normally covered by state benefits.
Some may still qualify for state unemployment benefits, which maxes out at $362. That’s lower than any other Midwest state and is not enough to prevent a family from falling below the poverty line, according to the Michigan League for Public Policy (MLPP). The Legislature could pass an increase and other reforms, but experts told the Advance this week that’s unlikely.
Meanwhile, at the beginning of the pandemic, the UIA’s system was overwhelmed with applicants. And for about six months, the UIA failed to notify nearly 700,000 people who would be affected by the rejection of four-state developed unemployment qualifications by the federal government. Those who had continued to receive the benefits were asked to reapply under the updated qualifications.
Although about 450,000 beneficiaries failed to respond, the UIA announced in late July it would not request money back from 350,000 of those claimants. About 263,000 have been granted waivers, with Olson and the UIA hoping to complete the last round of waivers by next week.
House Oversight Committee Chair Steve Johnson (R-Wayland) grilled Olson and accused her for not taking responsibility for the UIA’s failures. She responded that she has worked to the best of her ability.
“I absolutely take responsibility for what I have done since I entered this agency,” Olson said. “We have had to make decisions on what are the priorities to get money out the door. We have done that to the best of our ability with the tools that we have.”
A continual point of contention between the panel and Olson was the failure of the UIA to hand over a Feb. 10 letter addressed to Olson that notified her that four criteria mentioned in the state’s Pandemic Unemployment Assistance (PUA) were not in sync with the criteria from federal CARES Act providing COVID-19 relief. The letter was sent by Rose Zibert, acting regional administrator of the U.S. Department of Labor to the Michigan Department of Labor and Economic Opportunity. Although the UIA gave the Oversight Committee a copy of a Feb. 25 notice, it never provided a copy of the Feb. 10 letter.
Rep. Jack O’Malley (R-Lake Ann) lambasted Olson for not informing the committee of the updated criteria that left Michiganders worried they’d have to pay the money back.
“You’ve failed,” O’Malley said. “Why can’t we work together here? Why can’t you tell us this? The image of your department is not very good.”
Olson maintained that the UIA makes “decisions every day,” and highlighted that she has “not come before the Legislature before every one of those.”
The PUA was established in March 2020 as part of the CARES Act to help people receive unemployment aid who had lost their jobs due to the pandemic. The PUA was established alongside two other federal unemployment aid programs.
House members also questioned Olson on if the UIA had a dollar amount for the amount of fraud incurred. She noted that the UIA has caught about 500,000 fraudulent claims, but could not provide a dollar amount mistakenly allotted to fraudulent claimants.
In a report released by Deloitte & Touche LLP in November 2020, the company estimated that about $1.5 billion was sent to fraudulent claimants.
Olson also said the UIA has about $958 million left in its trust fund.
Olson also discussed that the agency has processed over 5.3 million unemployment claims, saying it was “26 times” more than the normal amount. Olson said that the UIA has received about 23,000 claimant calls a week since April.
“Everybody in this world wants everything instantaneously and our system is not set up for instantaneous,” Olson said.
Olson also noted that the Legislature has not authorized the 500 additional employees the agency requested in March to handle the flood of unemployment claims.
The UIA also announced Thursday it plans to issue a request for information next week through the Department of Technology, Management and Budget (DTMB) to begin looking for replacement options for its current unemployment benefits and employer tax system. The purpose of the RFI is to explore options to upgrade the current system to one that can handle the influx of claimants.
Fast Enterprises is the UIA’s current vendor and will continue to operate and maintain the UIA’s system for claimants.
In January 2021 about 21,400 claimants were awaiting payment by the Michigan UIA despite their claims being certified. By January, 2.3 million claimants had been paid by the UIA since the start of the pandemic in March 2020. About 290,000 claims were denied or withdrawn by the UIA. According to Olson, about 20,000 claimants have still not received benefits.
In July 2021, Michigan’s unemployment rate was .6 points below the national average, at 4.8%. At the beginning of the pandemic in April 2020, Michigan’s unemployment rate skyrocketed to 22.7%. That number was the highest rate since at least 1976.
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