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Have State Unemployment Insurance Systems Recovered from COVID-19?

The number of unemployed Americans skyrocketed due to COVID-19 and the surge hit state unemployment systems hard. We look at systems in Hawaii, Rhode Island, Indiana and Texas.

Illustration of two small figures standing in front of a large bar graph conveing increasing U.S. unemployment numbers during COVID-19
During the first quarter of 2020, the U.S. Department of Labor told an unforgettable story with its unemployment insurance claim numbers. In the week that ended on March 21, UI claims across the country amounted to about 3 million, dwarfing the previous week’s count of roughly 250,000 claims nationwide. “This marks the highest level of seasonally adjusted initial claims in the history of the seasonally adjusted series,” a DOL press release robotically pointed out.

The absurd volume of claims brought about a time of reckoning for state UI systems, 48 percent of which, according to 2018 Center for Digital Government* data, were considered legacy systems or, to use a less flattering phrase, old and broken. Jobless Americans, who were already dealing with the anxiety that comes with a historic health crisis, had to endure busy signals, unresponsive websites, late payments and sheer uncertainty as they waited for benefits.  

Of course, the public servants behind state UI programs knew the situation was far from sufficient and adapted systems as quickly as they could. The addition of new federal programs, such as Pandemic Unemployment Assistance, complicated the goal of swift technological improvements. Even near the end of 2020, state UI services continued to struggle. At the start of November, “only three states, North Dakota, Wyoming and Rhode Island, met the federal standard of getting benefit payments out within three weeks for 87 percent of applicants,” as reported by Pew Trusts publication Stateline.  

“They’re trying to bail out the boat while more water is coming in,” said Andrew Stettner, senior fellow with The Century Foundation, which published a detailed UI modernization report in September. “They got flooded, they’re trying to bail it out, but there’s still lots and lots of people filing new [claims], so [they’re] having to deploy people to deal with that. And then they’re also getting this onslaught of fraudulent claims to defend against. I’m talking organized crime going after them, which they have not been consistently able to deflect. Because of that, they are still just struggling to deal with everything. Some of that’s technology and some of that’s just business process challenges.”

Scott Jensen, director of the Rhode Island Department of Labor and Training, isn’t cocky about his state being one of the fastest at paying out claims. If he had to give Rhode Island a grade for UI services in 2020, it would only be a B-minus. In any case, he attributes the state’s success to “a little bit of technology and a little bit of management.”

“Rhode Islanders were not treated to the greatest service, but ultimately it turned out to be some of the best in the country,” Jensen remarked. “This was a situation where nobody was going to have a fun time. It was just such a crush of people all at one time. Something like no one’s ever seen. Again, I don’t want to say, ‘Boy, if you were just in Rhode Island, it would have been a pleasure.’ It wasn’t.”

Despite myriad challenges, states managed to move their UI systems forward to various degrees in 2020, and many of them are taking more steps toward modernization in 2021. We talked in depth with four states about their UI system journey.

Three people wearing face masks stand in line while looking at their smartphones


The Hoosier State didn’t go into 2020 with a legacy UI system. In the first half of the 2010s, Indiana rolled out new technology for its UI program. Chief Information Officer Tracy Barnes, who took his current job only weeks after COVID-19 rattled the nation, noted that the on-premises solution had been in development for about a decade.

“It’s a pretty current client service technology, but it is not a current cloud technology,” Barnes pointed out. “So it was more modernized, but … not extremely current. But it was very well constructed.”

Although the system was able to sustain the historic load of claims reasonably well, the state ran into issues related to processing and back-end activities. Using the AppDynamics tool from Cisco, Indiana was able to identify and correct code insufficiencies for improved performance. Barnes said the state extended its call center footprint as well with the help of a local partner and added a couple hundred agents to help field front-line calls.  

“We also made some additional code changes to allow interaction with telephones, voice response processing, so that we didn’t have to have folks individually answering calls and having to work through the system,” Barnes said. “It allowed the system to respond and provide data back to the users and constituents through a telephone line and such.”

Barnes feels Indiana’s UI system is now in a decent spot technology-wise, meaning that the state plans to ride with its current setup unless certain variables start to change. The majority of the state’s UI issues involve combating illegitimate traffic and fraud. More recently, the state implemented Shape, a traffic-blocking solution from F5, and, a tool for identity verification. Barnes admits it’s easier to prevent unwanted traffic than it is to stop fraudsters who use stolen information without lengthening the wait time for actual unemployed citizens.

“It’s a very difficult world when you try to go from that pay-and-chase model to that prevention model to keep the money from getting out the door,” Barnes said of the battle against fraud. “It’s a very fine line and a difficult balance in trying to make sure that you’re holding back as much as possible without negatively impacting … folks that we know need the funds, and our goal is not to keep money from them, it’s to try and keep funds from going out the door that can never be claimed back in. But unfortunately some folks do get caught in the crossfire there.”

Another challenge for the state is getting timely responses from businesses about the validity of jobless claims. Barnes stated that closures and the increase of remote work among private organizations can slow down responses to requests for information about laid-off employees. Indiana is still searching for the answer to this communication issue. While technology may be part of the answer, Barnes has his doubts, as automation may only do so much.  

“You talk about small businesses,” Barnes said. “They don’t all have levels of technology that are needed to do system-to-system interactions. There’s usually somebody on the other side that has to have ownership of providing that feedback.”


The Texas Workforce Commission credits part of its pandemic response success to its cloud-based AI chatbot Larry, which can answer more than 100 kinds of questions and has helped more than 2.5 million users. /


In February 2020, the Unemployment Insurance Division of the Texas Workforce Commission (TWC) received an average of 13,000 UI claims each week. By the middle of March, Texas saw well over 100,000 weekly claims. During one week in April, the number exceeded 400,000.

Given this enormous shift, Texas, which has a legacy UI system, had to make several tech-related changes, said TWC CIO Heather Hall. The TWC website was moved to the cloud. Web servers were doubled in March and again in April. Mainframe capacity had to be increased by 200 percent. The UI department expanded its call center capacity by deploying interactive voice response with help from Google and Genesys and doubling its call centers from four to eight through local partnerships.  

Then came the new federal programs that Texas had to implement. UI Director Clay Cole said the state was one of the first to start issuing Federal Pandemic Unemployment Compensation, which initially added $600 to an eligible individual’s UI benefits. Cole credited this achievement partly to the fact that his team had recent experience adapting to the effects of multiple hurricanes.  

“Even though we had legacy systems, our information technology teams were very nimble and were able to modify our software programming in order to allow us to deliver these new programs, and we did so,” Cole said.  

Hall said a lot of pressure was taken off the call center with the rollout of a chatbot named Larry, who hangs off the TWC website. The cloud-based, AI-enabled bot can now answer more than 100 types of questions. At the time Government Technology interviewed Hall, Larry had provided 11 million answers to 2.5 million users.  

Texas plans to replace its legacy UI technology this year. This step toward modernization was in the works before the arrival of COVID-19.  

“We had already started a system replacement project and secured the necessary funds and released an RFO and actually had the RFO responses back,” Hall shared. “Although it’s been slightly slowed down because of the pandemic, we are still on the course to replace our unemployment insurance system with more modern technology. While … we have been able to pivot quickly during the pandemic, we definitely feel this has really brought it home that we were on the right track prior to the pandemic.”

The goal is to procure something that can “stand a COVID test.” In particular, Texas has looked at modern security solutions, such as multifactor authentication, to make it easier for citizens who have struggled with the current password and PIN system.   

“Some of our users hadn’t been on unemployment in seven, eight, 10 years, and didn’t remember what email address they signed up with back in the day or what PIN they used,” Hall said. “A lot of our calls and questions came in about that combination of security layers … they were needing our help. They were needing to get into our system quickly, and they couldn’t understand why we just couldn’t let them get in.”

Cole mentioned that the state lacks a common system across the board for the three main business areas of UI: benefits, appeals and taxes. A consistent system architecture would give everyone a similar understanding of the technology and allow the UI program to be even nimbler when changes need to be made.  

Looking ahead, Texas also wants to further capitalize on the success of Larry the chatbot, who is now learning Spanish.  

“A natural next step as we move into a new system is looking at how we can integrate authenticating from the chatbot into the UI system to let people check the status of their claim, request their payment, use some of those basic functions through the chatbot rather than having to get out of it and go into another system and log in,” Hall said. “We’ve also been talking about integration of live chat, kind of seamlessly transferring a user over from a chat instance to a live agent for certain questions.” 

Prior to the pandemic, Hawaii had one of the lowest unemployment rates in the U.S., at just 2.4 percent. That made the onslaught of claims in spring 2020 even harder to handle. /


Hawaii once had one of the lowest unemployment rates in the country. But COVID-19 devastated the state’s tourism-based economy, putting Hawaii among the states hit hardest by unemployment over the last year. Adjusting to this new status quo has been grueling for the Hawaii Department of Labor and Industrial Relations.  

“Unemployment was at 2.4 percent prior to the pandemic hitting,” said Anne Perreira-Eustaquio, director of DLIR. “Our staffing here at the unemployment insurance office was at our lowest staffing ever because the U.S. Department of Labor funds you on workload …. Once you don’t have a baseline staff that you can count on, ramping up people to understand these requirements and these statutes is very difficult and takes time. So when you have an emergency like this, you don’t have those subject matter experts available.”

To make matters worse, the technological backbone of the state’s UI program is an antiquated mainframe system that runs on a Natural database language. According to reports from Honolulu Civil Beat, thousands of claimants expressed frustration with the unresponsive UI system. Some even sent death threats to then-DLIR Director Scott Murakami, who ended up resigning in August.  

“Our CPUs just reached their limit,” Perreira-Eustaquio said. “It was 100 percent capacity due to the workload, and so we had to change our priorities in how we accepted data and how our front-end applications talked to the mainframe to free up some processing time so that the mainframe could work more efficiently. We streamlined the code in our UI system as best as we possibly could to reduce the traffic to the mainframe.”

One tweak to the system proved to be “something that we should have stayed away from,” Perreira-Eustaquio said. The state created an online form that allowed claimants to file their claims on a 24-hour basis outside of the stressed mainframe. Unfortunately, the form bypassed fraud-preventing validation processes for personal information, which led to a lot of “rubbish data” that had to be cleaned out on the back end.  

More successful was the replicated database that was developed to reduce hits to the mainframe and speed up claim processing. After this change, Hawaii went from taking around 1,000 to about 10,000 claim certifications per hour.  

A nagging limitation persists, however. The outdatedness of the legacy system makes federal programs like Pandemic Emergency Unemployment Compensation and Extended Benefits a chore for everyone involved.     

“This is a very fragile system, and we wanted to make sure that we balanced being able to service our community as well as get these applications up and running,” she explained. “Both applications are automated on the front end, so claimants can come on, they can file through the automated process, but once it hits our mainframe, everything’s manual. That manual process is a strain on the staff here as well as a strain on the community, because since each individual claim is manual and each one has to be touched prior to a claim being paid out, it backs up the system in every way.”

Before the health crisis, Hawaii thought its UI program would start moving toward the cloud during summer 2020. The state was $1 million away from being able to pay Idaho to migrate Hawaii’s UI data to Idaho’s cloud-based system, according to the Honolulu Civil Beat. The pandemic put an end to that idea.  

“I can tell you that Idaho has decided to move on, and they won’t be providing assistance to states like they had anticipated prior to the pandemic …. They were great partners, and they would have continued to be great partners if we did go down that path, but this year has changed everything,” Perreira-Eustaquio said.  

Hawaii still has its eye on the cloud in 2021. Perreira-Eustaquio is hopeful, notwithstanding the drastically different economy caused by COVID-19.  

“Yes, [the] budget’s very tight,” she admitted. “The governor announced furloughs here in Hawaii. So we are seeing tough times in Hawaii right now, but I think the legislators understand the importance of upgrading the mainframe.”


Rhode Island

How’s this for shocking news: Rhode Island doesn’t necessarily see legacy technology as a bad thing for a UI system, and it even thinks modernization can be a mistake.  

“Pew Trusts had an article out recently: Rhode Island paid quicker during the pandemic than almost any other state,” said Scott Jensen, director of the Rhode Island Department of Labor and Training. “And the way we did that, in large part, was we hadn’t modernized yet. We do have this old COBOL-based mainframe system, but fortunately, our IT team knows how to use that …. If you modernize and you don’t do it well, and that system isn’t flexible, and you don’t really know how to adapt it, when you’re faced with the giant challenge that we were during the worst parts of the early pandemic, you can’t adapt.”

For the foreseeable future, Rhode Island will keep its mainframe, as Jensen thinks it’s too risky to rebuild an entire system in waterfall fashion. Instead, the state views the mainframe as part of an evolving, agile organism. The strategy is to gradually peel off functionality from the mainframe. This approach is what Jensen calls the “strangler pattern.”

“We’ll keep taking pieces off the mainframe, and there will be a point where we won’t need it anymore,” Jensen explained. “It’s like a tree covered up in vines. The tree can go away, and the vines can now hold themselves up. That’s kind of the idea. Or it might be that there’s just functions that the mainframe works great for. It might be just a system of record … because mainframes are very reliable. It’s hard to hack into them.”

Rhode Island did utilize the cloud in 2020 for two significant UI projects. First, the state mimicked its application for Pandemic Unemployment Assistance in the cloud where customers could apply; later, that customer data is pumped into the mainframe. Second, the state installed a cloud-based call center so that it could take more phone calls.  

Jensen also revealed two improvements that the state will implement in 2021. With the assistance of Amazon Web Services, Rhode Island will transition its entire front-facing UI interface for citizens to the cloud. The project, a native cloud solution, is called the “pizza tracker” and is funded by DOL money.

“When you order a pizza, you know where that pizza is the whole way,” Jensen said. “Similarly, when you’re interacting with our new front end, the idea is that you’ll know where your claim is the whole way, the whole time.”

Moreover, the pizza tracker will ask questions and remind claimants when they need to provide documents. Perhaps most importantly to users, the interface will allow people to, with the press of a button, skip to the front of the service line when their claim has been processed.  

“It will allow you to call in and get right to the front of the queue, because you’ve waited a week,” Jensen detailed. “That kind of integration and sort of communication between claimants and … the whole system is possible if you build a native cloud solution, rather than sort of an old-fashioned system that is simply on the cloud.”

The other new addition is related to a bot named Skipper that Rhode Island has already launched. Skipper is essentially a platform that mines user data and labor market information for job and career matching. In 2021, another bot named Hope will appear on the UI application. Hope, who was made possible by CARES Act funds, will be an aid to users as they deal with UI claims.  

“At certain points in the certification process, Hope will hand you off to Skipper, and Skipper will appear on the UI application in the certification field and say, ‘Hey, are you interested in looking for a job? Click here,’” Jensen said. “You’ll now have a relationship with Skipper. Skipper will have your UI data. If you decided, for example, that you have found a job you’re interested in applying for, Skipper can fill out the application for you online, so pretty straightforward ability for a bot to do that, but what a help. No more spelling mistakes. You can apply to a lot of jobs and get help in very practical ways like that.”   

*The Center for Digital Government is part of e.Republic, Government Technology's parent company.

Jed Pressgrove has been a writer and editor for about 15 years. He received a bachelor’s degree in journalism and a master’s degree in sociology from Mississippi State University.