Updates from April 28 Newsletter
Long-Sought Deposit Into Unemployment Fund Comes to Fruition
The State of Michigan’s Unemployment Compensation Fund got a big boost earlier this month.
House Bill 5525, signed into law by Governor Whitmer on April 11th, poured an additional $140 million into the fund with the primary purpose of targeting potential future fraud. This legislation, now Public Act 61 of 2022, will fund dozens of additional employees at the agency to help spot fraud and abuse. Some funding may also be shared with the Attorney General’s office to pursue cases of fraud.
During the COVID-19 pandemic, Michigan paid out an estimated $4.5 billion in fraudulent claims, and 54 people have been charged with fraud; an additional $43.7 in attempted fraud was spotted before it could be carried out. The vast majority of the money paid to fraudsters seems to have come from federal sources.
In addition to fraud, Michigan incurred $4 billion in overpayments. Though the state initially asked erroneously overpaid individuals to reimburse the payments, many beneficiaries have already received waivers, and the state has opted to pause collections on other overpayments until at least May.
By law, when the state’s Unemployment Compensation Fund drops below $2.5 billion, Michigan employers’ payments into the fund are increased. With record unemployment during the COVID-19 crisis, the fund took a huge hit, dropping from a balance of $4.6 billion down to $500 million, in just one year’s time. Fortunately, PA 61 diverts the need for Michigan businesses to incur those increased payments.
The $140 million payment into the Unemployment Compensation Fund came from three sources: Nearly $107 million from federal funding, $24 million from the state’s general fund, and nearly $9 million from the state’s restricted funds.
Establishing an adequate level of funding in Michigan’s Unemployment Compensation Fund is one of the 12 priorities on the MBA’s current Legislative Priorities.