State contractors offer updates on new unemployment system following delays
As state agencies collaborate with contractors to craft a replacement to Michigan's outdated unemployment insurance system, individuals overseeing the effort offered an update on their progress, with plans to begin rolling out the system before the end of the year.
The subject of those enhancements to the system were up for discussion Thursday before the House Appropriations Subcommittee on General Government.
Testifying before the committee was Brett Gleason, chief of staff with the Michigan Unemployment Insurance Agency, who noted the current system is more than 10 years old and has placed limits on the agency's ability to adapt, support self-service, detect fraud and use data effectively.
The agency selected the tech and strategy consulting firm Deloitte to lead the project in November of 2022, with the project costs estimated at $78 million, according to a report from the Detroit Free Press. Work on the project launched in May 2023, with the first component of the project expected to go live on Sept. 30, 2024.
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David Parent, a managing partner of Deloitte, told the subcommittee on Thursday that while the project had faced challenges with management, scope and technology, the service for employers is expected to launch in December with the claimant side of the program rolling out in May 2026.
As of Tuesday, test cases in the new system were passing at a 97% rate, Parent said, with the part of the system set to go live in May logging an 88% pass rate, Parent said.
With the project set to launch 14 months later than initially promised, members of the committee pressed Parent and members of the Unemployment Insurance Agency and the Michigan Department of Technology, Management and Budget on why the state requested an additional $20 million for the project despite the delays.
Gleason explained that the state pays roughly $2.5 million a month to maintain the old system, and that the costs for maintaining the old system had been higher than anticipated due to the project delays. As a result, the additional $20 million would be used to maintain the current system and to cover costs for independent verification and validation services on the new system.
With the Unemployment Insurance Agency paying out an estimated $8.5 billion in fraudulent claims during the COVID-19 pandemic, Rep. Greg VanWoerkom (R-Norton Shores) voiced concern, saying the delays had cost the state millions and put its unemployment safety net at risk.
Gleason said the state has pursued an aggressive timeline in crafting and implementing the new system, and that the project still fell within the four to six year timeline that is typical in putting new systems like this in place.
Laura Clark, the chief information office for DTMB, also noted the new system was expected to save the agency $5 million annually.
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