COVID-19 Highlights Needs for States to Modernize Unemployment Systems

States can Tap into $1 Billion in Federal Funding to Upgrade Technology and Data Use

Unemployment persists even as many states have begun the reopening process. State unemployment agencies are working overtime to help dislocated workers and clear their backlog of jobless claims. An initial surge crashed online systems in many states and triggered a sharp uptick in unemployment fraud. Unfortunately, state unemployment infrastructures were simply not prepared to handle the high number of claims or manage the weekly, and in some cases biweekly, certification needs.

Legislation Creates Opportunity for Tech Upgrades

The Families First Coronavirus Response Act (FFCRA) enacted into law in March included a number of provisions aimed at stabilizing and ensuring access to unemployment insurance. For state agencies, the FFCRA included $1 billion in new unemployment insurance (UI) administrative funding to all states for staffing, technology, systems and other administrative costs. This much needed funding opens up opportunities for states to improve outdated technology. Additionally, they can quickly adopt new processes and data to help expedite claims and improve unemployment fraud detection.

Decades-old Systems Part of the Problem

Bloomberg has reported that most state unemployment offices still use COBOL (Common Business-Oriented Language) as the programming language for their systems. The problem is that COBOL is 60 years old. Therefore, it’s very difficult to program, and there is a limited number of IT workers who even know how to use it.

There is another side effect of the aging technology. The newer feature integrations and datasets that can help streamline and expedite claims have been an issue. Data usage to more quickly validate and expedite claims, and weed out the distractions caused by fraudulent unemployment claims, is hampering delivery of funds to out-of-work individuals -- almost as much as their initial struggles to file the claims due to outdated platforms.

Why is This Funding Crucial?

The economic impact of the pandemic has exposed weaknesses in older systems’ ability to adapt and function at scale. The FFCRA provides for funding to help make positive changes. Even modest investments can pave the way. Something as simple as the use of new data resources can make tremendous improvements. For example, batch comparisons of claims against an up-to-date payroll database like The Work Number® are now a possibility. This can evolve to system-to-system integrations delivering information in real time once systems are upgraded to accommodate newer technology. The available data can help expedite the bi-weekly claims submitted by unemployed workers for continued support. And those numbers are not insignificant. In Ohio alone, the Columbus Dispatch recently reported that more than a million claimants file new paperwork every week.

Using employment and income verifications during the benefit delivery process can add an additional layer of confidence, accuracy and efficiency. This is especially true when working quickly with large claim volumes. Following a batch run against an employment database like The Work Number, state agencies can often isolate inconsistencies, which may indicate fraud. This is accomplished by identifying duplicate claims or claims for workers who have not been laid off. The agencies can then more quickly continue payments for those who qualify. And they have more time to address issues that arise, like indications of fraud.

Bottom line? State governments have an opportunity to tap into federally available funds to upgrade the capabilities of their unemployment programs. Using new technology solutions will help states prevent potential overpayments, more quickly identify return to work and prevent fraud. As a result, they can better handle both the volume and improve their overall program integrity of their critically important UI systems. For more information, visit our social service resources.