During the ongoing COVID-19 pandemic, state unemployment insurance (UI) systems have been stressed to their limits, and have been used to help nearly 53 million workers nationwide.
With many state UI systems already in need of modernization before the pandemic even started, the last year has made modernization essential. As a result, the Department of Labor (DoL) announced that it has allocated $240 million in grant funding to help states bring their UI systems into the 21st century.
In a press release, DoL said $140 million of the funding will be used for fraud prevention measures, including identification verification subscription costs, establishing and expanding data analytics, and implementing cybersecurity defense strategies. The remaining $100 million in funding will be used to combat fraud and implement cybersecurity measures in the Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation programs beyond the expiration of benefits.
“The pandemic underscored the need for modernization of the 53 different systems that administer unemployment insurance benefits in the United States, and it exposed significant vulnerabilities in state technology to criminals looking for an opportunity,” said U.S. Secretary of Labor Marty Walsh. “The Biden-Harris administration and Congress provided the means to reform this critical safety net for future crises, and our department is committed to executing that mission in a way that leaves no community behind.”
The funding is in part coming from the $2 billion allocated to DoL as part of the American Rescue Plan Act. The $2 billion will be used to address the most acute challenges states have faced over the last year. Additionally, the department will also use previously unobligated CARES Act funds.
The DoL also announced additional strategies that it will use to improve the UI system, including:
- Direct technical assistance through tiger teams – Multi-disciplinary tiger teams will deploy to states to conduct intensive discovery assessments, provide resources for identification verification and propose solutions to address fraud and equitable access.
- Tools to address immediate fraud concerns – Identity verification is a critical tool in paying unemployment benefits to eligible individuals. The department issued a blanket purchase agreement to work with three vendors to employ cross-matching technology to verify applicants’ identities at the time of filing for unemployment programs and tools to identify suspicious attributes after claims are filed.
- Modernizing antiquated state technology – DoL has partnered with the U.S. Digital Service to develop open, modular technology solutions that states may adopt as part of ongoing modernization and improvement efforts. Additional plans included shared IT solutions designed to integrate with state systems and provide software to support end-to-end administration of UI, including benefit delivery, employer tools, appeals, and working with states’ IT staff to develop and implement plans that build resilience in UI systems across the country.