Michigan unemployment director, under fire, pledges ‘user friendly’ upgrades

Oct. 25: Michigan’s embattled unemployment agency gets third director in 11 months
Sept. 28: Michigan Republicans propose ‘fix’ for state unemployment agency

Michigan’s unemployment agency is promising a more-user friendly experience for jobless workers, announcing on Thursday it will replace a problem-plagued computer system and communicate in “plain language.”

But frustration remains among some legislators who told acting Director Liza Estlund Olson during a House Oversight Committee meeting Thursday the Unemployment Insurance Agency has failed repeatedly.

Issues ranging from communication to agency leadership dominated questions to Olson, who was appointed in November and last appeared before the committee in March. In late August, Michigan House Speaker Jason Wentworth called for her removal.

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• 500,000-plus jobless Michigan workers brace to lose unemployment benefits

“How can I be comfortable in the fact that the UIA knows what it’s doing and is going to inform people what’s going on?” asked Rep. Jack O’Malley, R- Lake Ann.

The most recent snafu, O’Malley said, involved notices sent to 700,000 residents this summer telling them they needed to recertify for their benefits, sparking fear they would have to reimburse the state for payments early in the pandemic.

O’Malley said he’s upset the agency knew about the potential problem in February and never mentioned it to elected officials, many of whom have staffers who could have helped constituents.

“You’re in the hot seat here. Your department, the previous administration running it, whatever, you’ve done some good things,” O’Malley told Olson. “But (as for) public image … you’ve failed.”

He added: “The image of your department right now is not very good.”

Olson said she and her team “recognize that we have more work to do.”

“Michigan is not alone in struggling to meet the demands for unemployment benefits,” she said. 

“(Unemployment) systems are unique, complicated and not off-the-shelf technology that you can install one day and have working seamlessly the next,” Olson told lawmakers.

The UIA has paid $38 billion to more than 2.4 million Michigan workers since the start of the pandemic. Another 20,000 are still waiting for payments, even as extended benefits for part-time, gig, self-employed and long-term unemployed workers expired on Sept. 4.

Among the 700,000 people who received warnings they had to recertify, 263,927 have received waivers from making restitution, with another 100,000 expected next week, Olson said.

System changes

In the hour before the hearing, the agency rolled out a plan to upgrade its benefits system that Olson on Thursday she called “antiquated.”

The system, designed by FAST Enterprises with software known as MiDAS, has processed state unemployment claims since 2012. 

Critics call it awkward to navigate, but note two bigger problems: It was designed to catch fraud and slow payments rather than pay benefits, and much of the decision-making about benefits is automatically generated without human review.

MiDAS was blamed when the state falsely accused 40,000 people of committing unemployment fraud, which was discovered by claimant advocates in 2015. The scandal ended up in court and sparked legislative reforms — along with several class-action lawsuits that could still cost the state millions.

The agency wanted to replace the system under former Director Steve Gray, who abruptly quit last year after failing to fix agency problems that he helped identify when he was in private practice.

The pandemic derailed plans to replace the system, Olson said, and problems escalated after the agency was crushed by record numbers of jobless claim applicants starting in mid-March 2020.

Lisa Ruby, an attorney with the Michigan Poverty Law Program, said clients and advocates have struggled since. Fixes and updates to the system could not be easily resolved as the scope of unemployment benefits expanded under the federal CARES Act.

Problems in the department, she told Bridge Michigan in a recent interview, “are embedded in the computer system there. … It should be set up in a way that people can fix it.”

The UIA is now exploring its options, and it plans to issue a request for information to contractors next week for systems that are “robust, secure and protects sensitive claimant and employer information,” according to a news release.

A replacement system would be used for both jobless benefits and the employer tax system. The state’s Department of Technology, Management and Budget will use the information gleaned over the following five weeks to eventually issue a request for proposals.

“We want to provide a better, more agile user experience for both our claimant and employer users,” Olson said in a news release.

Any change may not come soon.

“Until a new system is implemented, we need to continue using what is available to us,” Olson said Thursday. “ Installing a new system cannot be done overnight.”

At the same time, the state said, FAST Enterprises is upgrading the existing system to “offer a more intuitive process.”

The UIA is also contracting with Detroit-based nonprofit Civilla to improve experiences among both employers and jobless workers using its system. The Detroit company — which streamlines processes for governments — has worked with the Michigan Department of Health and Human Services to trim its benefits application from 40 pages to 18.

Olson said it’s one of “several initiatives regarding the use of plain language in our communications to both the claimant and employer communities.

“Our goal is to make our letters and applications easier to understand in a clearer and more concise format using plain language to provide important information more clearly,” she said.

Ongoing tension

While Olson came into the hearing with a plan for upgrades, committee members say UIA leadership and performance remain a concern. 

Olson’s testimony started with conflict, as committee Chair Steve Johnson, R-Wayland, would not let her read a written statement in full.

The drew concern from Rep. Julie Brixie, D-Okemos, but Johnson said the agency has so many problems that lawmakers needed all the time allotted in the 75-minute hearing to ask questions.

“Unemployment continues to be one of the biggest issues that our offices face,” Johnson said. 

“We have a number of questions,” he said. “We have things we need to ask.”

Johnson asked Olson what failures took place in the agency and what steps she’s taken to fix them. Her response started to outline the changing requirements from Congress. 

“I’m not asking for excuses,” Johnson said, stopping her answer.

Olson pushed back.

“I absolutely take responsibility for what I have done since I entered this agency,” she 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 I have.

“If we have not done it as fast and as efficiently as you believe we needed to, then we need to work toward making the programs more efficient,” she said. “However, we have paid 99 percent of the people who are eligible … The sheer volume that we are dealing with requires us to make sure we are not paying fraudulent (claims).”

The system, she added, “was not designed to handle 2.4 million people in one year.”

Brixie, the Democrat, noted the Republican-led Legislature isn’t helping by ignoring Olson’s March request for another 500 employees to help process claims.

Johnson said lawmakers want to work with the agency to improve communications with jobless recipients. But they expect regular updates on issues.

“I think everyone on this committee, we’re not expecting perfection,” Johnson said.

By the end, Johnson said, he said the hearing yielded a lot of good information. 

“But I’m still disappointed,” he said. “I don’t think there’s been a lot of responsibility taken.”