The Department of Labor (DOL) – and numerous state governments that the agency assists – struggled during the coronavirus pandemic to ramp up unemployment insurance (UI) programs to meet sharp increases in demand.  Some of the principal culprits, according to DOL’s inspector general (IG), were legacy systems, insufficient staffing resources to manage increased unemployment claims, and unclear and untimely Employment and Training Administration (ETA) guidance.

The DOL IG offered a list of recommendations that emphasizes work to modernize state UI systems so they can handle future service demand spikes.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 worked to expand UI benefits to people that couldn’t work because of the COVID-19 pandemic. However, states “had difficulty ensuring programs were implemented and claimants were paid promptly,” the IG report says, confirming the gist of many months of news reports that state UI systems were not keeping up.

According to the DOL IG report, most states took more than 30 days to implement CARES Act UI programs. Additionally, states reported inaccurate and incomplete overpayments, fraudulent payments, and claims data. The IG sampled 12 states that reported claims data, and said that four of them had the following issues:

  • States didn’t track initial and continued claims data for separate CARES Act programs;
  • States couldn’t differentiate between initial claims and continued claims;
  • States couldn’t support Pandemic Unemployment Assistance (PUA) claims or PUA continued claims despite claims reported to ETA; and
  • States couldn’t support PUA initial claims, PUA continued claims, or Pandemic Emergency Unemployment Compensation (PEUC) continued claims reported to ETA.

“There were three common causes for the audit issues we identified: antiquated IT systems, insufficient staffing, and sometimes unclear and untimely guidance from ETA to address issues related to an unprecedented volume of new UI claims,” the IG wrote.

“States with modernized IT systems implemented CARES Act programs significantly faster than those using antiquated IT systems,” the IG said.

The IG made four recommendations for DOL and ETA, including:

  • Conduct an assessment of the technological needs of the UI programs to determine the capabilities that need to be upgraded or replaced, the features necessary to effectively respond to rapid changes in the volume of claims in times of emergency or high unemployment, capabilities needed to ensure effective and equitable delivery of benefits, and capabilities to minimize fraudulent activities;
  • Continue work “with states to develop, operate, and maintain a modular set of technological capabilities to modernize the delivery of UI benefits that is sufficient to manage and process sudden spikes in claims volume during emergencies or high unemployment;”
  • Assist states with claims, overpayment, and fraud reporting to create clear and accurate information; and
  • “Develop standards for providing clear and reasonable timeframes to implement temporary programs to establish expectations for prompt benefit payments to claimants.”

ETA has agreed with all the recommendations, and has indicated that the agency has already taken action to implement a few of the recommendations.

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