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On average, state unemployment insurance systems are 28 years old. Portions of the ARPA funds are dedicated to upgrading these antiquated operations, including replacing outdated technology.

Using ARPA to Modernize Unemployment Insurance

By Jon Jukuri | Jan. 10, 2022 | State Legislatures News | Print

The coronavirus pandemic caused more than 9.5 million American workers to lose their jobs, with about 4 million out of work for half a year or longer.

In response, Congress passed the American Rescue Plan Act, known as ARPA. The act provides $2 billion in funding to the U.S. Department of Labor to promote equitable access to and timely payment of benefits by reducing backlogs in the unemployment insurance system. Portions of the allocation also are dedicated to modernizing antiquated state UI systems so states can respond to rapidly changing laws and economic conditions, and to preventing and detecting fraud.

The Labor Department has identified four tracks for the funds:

  • Direct assistance in the form of “Tiger Teams” of technical experts deployed to the states.
  • Tools for states to address fraud by facilitating more effective ID verification.
  • Modern IT solutions for states to update their technology.
  • Direct grants to promote timeliness and equity as well as to fight fraud.

About $200 million in Tiger Team Recommendation Grants have been allocated to support teams that will be deployed initially in six states on a voluntary basis—Colorado, Washington, Kansas, Wisconsin, Virginia and Nevada.

Administered through the department’s Employment and Training Administration, about $140 million in ARPA fraud grants will be awarded to states for fraud prevention, including identification verification subscription costs, establishment of data analytics and implementation of cybersecurity defense strategies. Another $260 million in Equity Grants will help to improve claimant outreach and customer services processes, implement strategies to reduce backlogs, and improve access for lower-income claimants.

ARPA funding is designed to enable the department to both tackle short-term issues facing states and their UI systems and address long-term challenges by improving state processes and building IT systems that are safer, more accessible and more resilient in the event of future surges in claims.

Jon Jukuri is a federal affairs advisor in NCSL’s State-Federal Program.

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