This report details the use of the historic investment of $1 billion in funding from the American Rescue Plan Act (ARPA) to the Department of Labor and state unemployment (UI) agencies to modernize state UI programs. Reflecting the most pressing system needs, the funding provided to the Department centers on three goals, or “pillars,” of UI modernization: detecting and preventing fraud, promoting equitable access, and ensuring the timely payment of benefits. These investments sought to address major shortcomings in the UI system revealed during the pandemic, as states worked to deliver a lifeline of unemployment benefits to record numbers of claimants after years of underinvestment in their infrastructure.

ARPA represents the first time the Department has been provided major resources to work collaboratively with states to implement system improvements, including information technology-related upgrades. In the two and half years since the enactment of the American Rescue Plan in March 2021, states and the Department have partnered to launch innovative projects across all three ARPA pillars, powering that work with more than $780 million in grants to states. Key takeaways from this report include:

  • The Department is now offering public options to states to verify the identities of applicants either online through or in person at U.S. Postal Service locations, addressing a major pandemic-era vulnerability of fraudulent claims filed with stolen identities.
  • States have taken a major step forward in the use of system security enhancements, data analytics, and cross-matching to identify suspicious claims.
  • Any state that received an ARPA-funded grant must disclose information to the Department of Labor Office of Inspector General (DOL-OIG) for the purposes of both investigating fraud and performing audits, facilitating multi-state investigations.
  • The Department has accelerated plain language efforts to help claimants more easily understand benefits programs by providing direct assistance to states and by making available a suite of resources for states to draw on to craft clearer UI communications.
  • Equity and Navigator Grants and related initiatives are helping states expand and promote customer assistance to help people—in particular those from traditionally hard-to-reach, vulnerable worker groups—navigate the UI application process, and access additional supports as needed.
  • Several states are using Robotic Process Automation and enhanced Document Management Systems to streamline previously manual processes and improve timeliness of claims-processing by working through the backlogs caused by the pandemic.
  • ARPA is enabling stronger state adoption of information exchange tools through the State Information Data Exchange System, or SIDES, a tool that supports the quick, accurate, and secure exchange of UI claims information between states, employers, and employer representatives.
  • The Department has provided 36 states with a voluntary no-cost assessment by multi-disciplinary experts (Tiger Teams) that have provided 344 state-specific recommendations aimed at improving integrity, timeliness, and equitable access of UI benefits.
  • The newly established Office of Unemployment Insurance Modernization (OUIM) has brought product development expertise to more than half of the states to test and deploy model solutions, and to establish a new vision for technology modernization focused on modular solutions that can reduce costs and increase systems’ capacity to respond to change.
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The accomplishments and approaches tested in this new transformative partnership between the Department and state UI agencies have played a critical role in informing the Department’s strategy for utilizing the remaining ARPA funds.