When Minnesota's economy took a nosedive in the late 1990s, thousands of newly unemployed workers struggled to get by on unemployment insurance - and the state's Department of Employment and Economic Development (DEED) was saddled with piles of paperwork.

All applicants to the system had to complete an initial screening and weekly review. They had to show they were seeking a job and were entitled to an unemployment insurance check. Each of the state's 130,000 employers was required to keep up-to-date tax information on file with the state's Unemployment Insurance (UI) Program office.

"Imagine a 10-by-10-foot cube filled with paper," said Kathy Nelson, the director of Minnesota's UI Division.

Those were dark days, filled with recession and cardboard boxes. Because an economic downturn is what unemployment insurance is there for, the office's leadership decided to do something to get rid of the boxes.

Former UI Director Jack Weidenbach envisioned and sold state officials on a nearly paperless system to relieve the burdened and small UI staff. The new system was designed to handle the glut of applications that would inevitably, as the economy soured, bog down the paper-based system. "The concept was, how do you build for the future?" Nelson said. The UI wanted a solution to respond to any fluctuations in the unemployment rate.

From those seeds of discontent, rooted in the recession nearly a decade ago, Minnesota developed a streamlined Web-based system to efficiently serve applicants and employers, and cut the state's labor and paper costs.

Self-Service Unemployment
The UI system's initial phase rolled out in 2005, and focused on letting companies self-report their tax information. In the past, state staff calculated what each company owed to the UI program based on that company's employment and financial records. Today, the company enters the relevant data itself, and the software returns an updated balance due. It even alerts companies to periodic updates.

"We needed to get out of the data entry business," Nelson said. "The work we do with the most value is determining whether employees should be paid, and whether employers should pay for that."

This let the UI office cut its staff from 60 employees to 20 because they no longer needed to calculate employers' payments, a time-consuming duplication of labor.

"We can now get done in one month what used to take three," Nelson said.

Melinda Skalicky, who works for Technology Navigators Inc., a consulting firm in Owatonna, says though online tax payment systems are now commonplace, she was won over by the online UI system's clarity amid so many dense tax regulations.

"It's very confusing," she said about tax regulations. "We thought we had submitted everything for the quarter, but it turned out we hadn't." She started looking for information on Minnesota's UI Program because the company was continuously getting fined.

When she explored the new UI program site in April 2007, Skalicky said she found answers to her questions, payment alerts sent by the system and free tutorials the state offers on how to use the program.

Now Skalicky knows where to go for company payment status updates, and it's easy to update information when the time comes. "If I submit a payment online, I can go back and double-check right away," she said. "It's one of those things like, 'Why wouldn't everybody do this?'"

Doing More With Less
In November 2007, the UI added an online application process that makes the program more efficient and user-friendly. Those without computer access can apply via a new phone system instituted with the program overhaul. The new application system is more responsive to unemployment surges and slowdowns - a crucial feature for the state.

"Minnesota probably has one of the highest

Patrick Michels  |  Contributing Writer
Patrick Michels is based in San Francisco and Austin, Texas. He writes for Government Technology, Texas Technology and Emergency Management magazines.