House Dems Rail Against Bill Plundering Unemployment Fund

Contingent account ballooned after thousands of false claims of fraud
Tuesday, December 13, 2016

LANSING — Members of the House Democratic Caucus condemned today’s passage of Senate Bill 1008, legislation that transfers millions of dollars to the state’s General Fund from the Unemployment Contingent Fund within the Michigan Department of Treasury. The balance of the Contingent Fund swelled by 400 percent after an automated system caused a spike in fraud cases, nearly all of them unfounded, which means the bill is balancing the state budget on the backs of innocent citizens wrongfully accused of false unemployment claims.

“If House Republicans are concerned that the balance of the Unemployment Contingent Fund is too high, they should make every effort to repay the men and women who were wrongfully denied unemployment due to glitches in the state’s unemployment computer,” House Democratic Leader Tim Greimel (D-Auburn Hills) said. “Raiding the Contingent Fund to help balance the state budget drains the fund of resources that should be used to assist those who are out of work.”

In 2013, the state began using the Michigan Data Automated System (MiDAS) to detect unemployment fraud. In 2014, the state had initiated almost 27,000 cases of fraud, more than double the number of claims from 2012, with penalties totaling $57 million. When the state reviewed a portion of roughly 8,500 cases that had moved to the courts, it found only 8 percent were legitimate fraud claims.

“The Snyder administration spent $47 million on a system that was only right 8 percent of the time. Instead of correcting this mistake, legislative Republicans are doubling down and robbing the fund that robbed innocent Michiganders, often to the tune of tens of thousands of dollars, some of whom never even obtained unemployment benefits,” state Rep. Pam Faris (D-Clio) said. “This is a shell game of the worst kind because the men and women just trying to keep themselves and their families out of poverty are guaranteed to lose.”

The state uses the Contingent Fund to administer the Talent Investment Agency, so raiding the fund could also impact job training programs. While SB 1008 passed the House and Senate on largely party-line votes, another bill, House Bill 4982, would require additional notice and examination for unemployment fraud determination. It passed the House unanimously and awaits action in the Senate.

“Legislative Republicans are spending ill-gotten money from citizens who were wrongfully penalized for unemployment fraud. Before we spend a dime of money that isn’t ours, the least they can do is pass legislation that would ensure a situation like this doesn’t happen again,” state Rep. Jon Hoadley (D-Kalamazoo) said. “I urge my Senate colleagues to follow our lead and pass HB 4982 before the end of the legislative session, if only to right one of these egregious wrongs.”