Feds Pump $191 Million into Upgrades for Unemployment Insurance Systems

White House hopes that waste and fraud will be reduced through modernization of states’ unemployment insurance systems.

by / September 14, 2011
United States Secretary of Labor Hilda L. Solis U.S. Department of Labor

The U.S. Department of Labor has awarded a total of $191 million to 40 states for modernizing unemployment insurance (UI) programs and detecting fraudulent payments.

Of the total amount, $128 million will go to three state consortia that are working together on benefits systems and fraud detection technology that can be shared, according to the announcement Wednesday, June 14. The rest of the money went to individual states for “program integrity” activities.

The funding announced Wednesday was part of larger effort launched Wednesday by the Health and Human Services Department and Vice President Joe Biden to cut waste in Medicaid and UI payments, which officials hope will save taxpayers $2 billion.

The Labor Department launched an interactive online map showing each state’s rate of improper UI payments, and the three-year cost of that waste and fraud.

Furthermore, six states — Virginia, Indiana, Colorado, Washington, Louisiana and Arizona — will be subject to “comprehensive turnaround plans” in order to reduce their rate of improper payments to less than 10 percent, and will be subject to more stringent monitoring, the federal government said.

The Labor Department said for states to qualify for the program integrity funding, they needed to have implemented or committed to implement the following: activities to address worker misclassification; technology-based prevention, detection and collection activities; State Information Data Exchange System (SIDES) for earnings/wage verification, as well as monetary and potential employer charges; subscription fees for SIDES; contract staff support for benefit payment control activities; the federal Treasury Offset Program; and automation efforts that result on overall performance and system improvement.

Award funding for program integrity ranged from nearly $200,000 to more than $2 million per recipient.

Recipients of technology infrastructure consortium project awards included Arizona, Colorado, Nevada and Wyoming and each received $72 million; Georgia, North Carolina, South Carolina and Tennessee each received $50 million; and Maryland, West Virginia and Vermont each received $6 million.
“We owe it to the American people, especially those who rely on unemployment insurance as a safety net, to be responsible stewards,” said Secretary of Labor Hilda L. Solis. “This funding will help ensure state UI programs have integrity and run efficiently.”

To qualify for technology infrastructure consortium project funding, all members of state consortia had to commit to implementing the integrity funding requirements. Funds awarded for the consortium project will be used to:

  • modify and/or develop one of the core unemployment insurance benefits or tax and benefit system designs;
  • design additional core unemployment insurance tax and/or benefit systems using open source components that are exportable to other states; and
  • implement technology-based tools designed to prevent, detect or collect/recover improper unemployment insurance payments.