Michigan’s Unemployment Insurance Agency has chosen Deloitte to replace its decade-old unemployment compensation system, which over the past decade has falsely accused thousands of Michigan residents of unemployment fraud and contributed to delaying claimants getting benefits during the pandemic.
The new system, which will be called uFACTS, is expected to be fully operational in 2025 and cost approximately $78 million over 10 years.
“It’s an exciting time that sets the tone for a new direction,” UIA Director Julia Dale said on a call with reporters on Tuesday. Dale said the new system will have an “intuitive, human-centric design” and allow callers to easily access the system from their phone.
The state has long been trying to replace the system, which was put in place under Gov. Rick Snyder and was found to have a 93% error rate in making false fraud discoveries between 2013 and 2015, affecting tens of thousands of Michigan workers.
Those falsely accused of fraud were subjected to quadruple sentences and collection techniques such as wage garnishment and seizure of income tax refunds. The state of Michigan last month reached a settlement in one of the class action lawsuits against the agency for $20 million.
The state of Michigan issued a request for proposals for a new unemployment insurance system earlier this year. Dale said the agency had received five bids, including one from current vendor Fast Enterprises to update the system. The other four bids were to replace the system.
The agency received five bids for initial five-year contracts ranging from $30.2 million to $70.1 million. Deloitte’s offer was for $56.3 million, said agency spokesman Nick Assendelft.
What Dale liked about Deloitte’s offering is that it’s an “open system,” which allows the agency to have easier access to data.
“In terms of reporting, access to different data or patches, we depend on the vendor to make those changes,” she said of the current system, called MiDAS.
Like many unemployment systems across the country, the Deloitte system has not had a perfect track record. During the pandemic, when federal unemployment benefits for the self-employed and contract workers became available, Deloitte upgraded several states’ current unemployment systems or provided ones specifically to distribute federal benefits. A Forbes investigation found that these systems were marketed for their fraud detection abilities, but still resulted in the distribution of billions of dollars in fraudulent claims, a widespread problem that many states, including Michigan, struggled with. .
In response to a question about the Deloitte system’s fraud detection capabilities, Dale said it allows for a “proactive approach” and that the agency has the ability to “improve and develop any existing fraud rules”. .
Dale also noted that Deloitte supports unemployment insurance benefits and tax systems in 15 states, including California, Florida and Massachusetts.
After:Pandemic unemployment insurance claimants told they reported wrong income, get waivers
After:Michigan to settle 2015 bogus unemployment fraud lawsuit for $20 million
Dale said there is no contract in place yet as the state continues to negotiate terms. Funding has already been allocated for the new system, she said.
Until the Deloitte system is implemented, a process Dale said “is not an easy transition,” she said, the agency renegotiated its contract with Fast Enterprises during the period of Implementation. The current contract with Fast runs through September 2025 for a total cost of $86 million, Assendelft said.
Dale said the agency will look at opportunities to update its services and seek grants during this time to improve the customer experience.
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