US Department of Labor announces $653M in American Rescue Plan funds available to states for unemployment insurance infrastructure modernization
WASHINGTON — The U.S. Department of Labor today announced the availability of up to $653 million in grants to modernize unemployment insurance information technology systems and to participate in pilots. Funded by the American Rescue Plan Act, the grants will help states modernize their technology, increase flexibility and performance, protect against fraud proactively and make claims processing more efficient.
Administered by the Employment and Training Administration, $600 million in grants will enable states to upgrade their UI systems, improve service delivery and ensure effective response to the needs of claimants and employers, with a focus on improving the flexibility of IT systems through modular and evidence-driven approaches.
In addition, up to $53 million will be available to enable states to participate in IT modernization programs sponsored by the Department of Labor. Awarded in a single grant, these funds will provide states with resources needed to employ innovative IT solutions that align with the department’s strategic objectives.
“The U.S. Department of Labor is committed to working in partnership with states as they modernize their unemployment insurance systems and improve service delivery,” said Acting Assistant Secretary for Employment and Training Brent Parton. “This funding represents a historic investment in the nation’s UI infrastructure intended to help states invest in and equip themselves with the tools needed to strengthen their systems now and for the future to operate programs effectively.”
The need to invest in the nation’s UI systems became obvious during the pandemic as one million unemployed Americans filed initial claims every week for a year. The crushing demand overwhelmed the nation’s 53 different systems. Many of these systems were long overdue for maintenance or replacement.
This funding availability aligns with the Biden-Harris administration’s commitment to help states modernize their systems, improve fraud prevention and ensure claims are processed more efficiently. Today’s announcement follows an additional $200 million in ID verification and fraud prevention funds announced last month and is part of the broader historic investment of $2 billion in ARPA funding, $1.6 billion of which has now been made available to states. In addition, the department is leading the effort to offer new and expanded public options to states for claimants to verify their identity using Login.gov, or in person through the U.S. Postal Service.
The availability of $1.6 billion in ARPA funds for states includes:
- $653 million announced today to modernize vulnerable state IT systems, countering decades of underinvestment that led to significant fraud and payment errors. The grants will help states modernize their technology — such as moving to cloud-based infrastructure — that enables improved flexibility and performance, protects against fraud proactively, decreases erroneous payments and makes claims processing more efficient.
- $340 million in anti-fraud grants and identity fraud prevention, including $140 million in anti-fraud grants already available to states, and the $200 million investment announced in April 2023 for strengthening identity verification and fraud prevention.
- $246 million for “Tiger Teams” to help states identify and employ fraud prevention solutions, claims risk scoring and increasing usage of the multi-state UI Integrity Data Hub operated by the National Association of State Workforce Agencies.
- $249 million in equity enhancements that improve payment accuracy, focusing on ways equity and program integrity can enable applicants to understand program requirements better and provide more accurate information, which will decrease improper payments.
In addition to grant funding, the department is providing direct assistance and resources to help states modernize their UI programs and safeguard them against fraud while ensuring equitable access to benefits. Its Office of Unemployment Insurance Modernization is leading and coordinating the department’s efforts to help states with strategic projects to continue to automate benefits processing, improve customer experience, develop claims status tracking tools, improve the user experience when using state systems on mobile devices, and simplify forms and web pages to comply with federal Plain Language standards.