During the COVID-19 pandemic, some states had trouble processing unemployment insurance claims due to issues with their IT systems—some of which are about 50 years old. The Department of Labor (DOL) is helping states modernize these systems by, for example, sending experts to evaluate them and recommend improvements.
The Government Accountability Office (GAO) says DOL could improve its oversight by setting IT modernization standards for states and then measuring the states’ progress against those standards.
GAO studied eight states, which the watchdog determined were in “varying phases” of modernizing their unemployment insurance (UI) IT systems, ranging from planning to operations and maintenance. As of February 2023, six of the eight states had modernization efforts underway, but not yet completed. According to officials from the six states, these efforts were expected to replace legacy UI systems that ranged from seven to about 50 years old. The remaining two states completed modernization efforts in 2018 and 2021 and were in the operations and maintenance phase. To support their modernization efforts, the eight states rely extensively on contractors for system development and implementation, technical support, and identity verification.
The selected states reported several modernization successes. For example, states reported improved system stability after migrating systems to cloud computing solutions and a reduction in paper-based UI processes. However, states also identified modernization challenges in five areas: staffing, contracting, management, financial, and technical.
Regarding staffing, most states reported not having enough staff resources and not having staff with the necessary expertise to support their modernization efforts. To help states address modernization challenges, DOL initiated several efforts, such as sending teams of experts to states and conducting pilot tests of UI technology solutions for states.
However, GAO found that DOL has gaps in managing its efforts to assist states’ with UI IT modernization and its oversight of states’ UI IT performance. Although DOL fully implemented key contract management activities on its first pilot, GAO found the department did not fully implement leading pilot design practices such as developing a data analysis plan and ensuring stakeholder communication.
Regarding oversight, although DOL is responsible for overseeing the UI program to ensure that the states are operating the program effectively and efficiently, GAO found it has not measured states’ UI IT performance.
GAO is making three recommendations to DOL to address pilot design weaknesses, establish standards for states’ UI IT performance, and then measure such performance.
