The Labor Department (DoL) went public last week with its latest plans to modernize unemployment insurance (UI) programs that it operates with state government partners, and requested that Congress do its part by funding the plan.
The UI system has been on the Government Accountability Office’s (GAO) high risk list since 2022, and the COVID-19 pandemic unveiled long-standing systemic issues in how the Federal agency and states work together to operate UI programs that are often saddled with dated and inadequate technologies.
Last week, DoL published its first document – “Building resilience: A plan for transforming unemployment insurance” – detailing strategies for transforming the nation’s UI system, including a recommendation that Congress create legislation to boost funding aimed at improving how the UI program works.
GAO said in 2022 that that UI fraud ran rampant during the coronavirus pandemic. Most recently, the government watchdog agency estimated that the COVID-19 UI fraud total reached a range of $100 billion to $135 billion.
Experts across the public and private sector have testified that UI program legacy IT is holding DoL and state agencies back from reining in fraud. At the same time, DoL’s UI transformation plan published this month also notes that Congress clawed back $1 billion of UI modernization funding last year.
“As requested in the 2025 Budget, Congress must act to provide sustained investments supporting efforts to continue to modernize and reform the UI system,” the transformation plan says.
Among other provisions, the plan calls on Congress to create legislation that would allow DoL to retain up to five percent of recovered fraudulent UI overpayments.
Apart from adequately funding the UI program, the transformation plan highlights six additional action areas for DoL:
- Deliver high-quality customer service;
- Build resilient and responsive state IT systems;
- Bolster state UI programs against fraud;
- Ensure equitable access to robust benefits and services;
- Rebuild and stabilize the long-term funding of state UI benefits; and
- Strengthen reemployment and connections to suitable work.
For each action area, the department offers activities and strategies that have been completed, those that are underway, or those that are being planned, as well as legislative actions Congress can take to further those goals.
To better deliver high quality service, DoL said it is currently working on promoting responsible automation to streamline tasks.
As it works towards building resilient and responsive state IT systems, the department said it is currently investing in measurable and agile UI IT modernization through grants, as well as enhancing the reliability and the accessibility of its UI database management system.
To bolster state UI programs against fraud, DoL gave Congress a laundry list of to-dos via legislation, calling on lawmakers to require states to take actions like disclosing information to the DoL’s Inspector General and requiring states to crossmatch data across systems.
Under the “ensuring equitable access to robust benefits and services” section, DoL’s transformation plan notes ways it is enhancing and expanding data for states, including better understanding racial, ethnic, and other inequities in regular UI benefit receipt.
Senate Finance Committee leadership released a bipartisan framework of legislation earlier this year that would make key improvements to the nation’s UI system, including the implementation of new technology.
“Today’s strong economy gives Congress, the department and states the opportunity to transform the UI system before the next crisis,” the department’s plan reads. “A lack of meaningful action now to address the UI system’s major vulnerabilities puts us all at risk when the next recession hits.”
