States need federal standards for tech used in unemployment programs, GAO says 

A new GAO report identified gaps in the Labor Department's efforts to assist states with their unemployment insurance programs.

A new GAO report identified gaps in the Labor Department's efforts to assist states with their unemployment insurance programs. courtneyk / Getty Images

One of the senators that requested the new report from the Government Accountability Office — Finance Committee Chair Ron Wyden, D-Ore. — is tinkering with potential legislation on unemployment modernization. 

The Government Accountability Office is offering a window into challenges with modernization efforts and recommendations for the federal government to set up common standards for unemployment insurance tech in a new report on how eight different states are modernizing their individual systems.

So how does modernization look across this federal-state program that operates over 50 different systems? Six of the eight states GAO examined are still in the process of modernizing to the tune of estimated costs between $35 million to $85 million over two to seven years. The different benefits, appeals and tax systems they are replacing are up to 50 years old.

Overall, 34 of the 53 states and territories in the U.S. are still using legacy IT to support their UI benefits, tax systems or both, as of June, GAO said, based on National Association of State Workforce Agencies information.

Among the states GAO looked into, two common challenges emerged: the use of contractors and problems with staffing.

All eight — Arkansas, Delaware, Maine, Nevada, Ohio, Pennsylvania, Tennessee and Texas — “rely extensively” on contractors for system development and implementation; maintenance and support; identity verification; and program services like auditing, the report says.

Seven of them have used or are planning to use separate contracting for project management. Tennessee, for example, used a contractor “to perform a needs assessment, develop a roadmap and strategy and provide procurement services for their modernization project,” the report states.

The overwhelming majority of states GAO talked to struggle with limited staffing for modernization. A majority also cited a lack of staff with the right expertise. 

In the contracting space, states reported challenges including coordinating across contractors, system quality issues in terms of what contractors deliver and more. 

There were also management challenges, financial constraints and technical problems for some states. Despite these, half of the states “reported successes” from migrating services and applications to the cloud, the report found.

As for the federal Labor Department’s work, GAO said there are “gaps in managing its efforts to assist states… and its oversight of states.”

The department, GAO said, needs to establish unemployment tech standards and measure states’ performance. 

Currently, states with grants are subject to federal reporting, and all states with major IT modernization projects have to go through a “pre-implementation checklist.” All states also have to submit state quality service plans every year, according to the report.

The department showed GAO a draft of an unemployment modernization strategic plan with some standards — and has released specific standards for customer experience already — but GAO said until the agency has standards and uses them to measure progress, “it will lack a critical mechanism to measure whether states’ UI IT systems are performing efficiently and effectively.”

Brent Parson, acting assistant secretary for the department’s Employment and Training Administration, wrote in comments included in the report that the department “agrees that additional measures related to IT performance and customer experience would provide states with clearer direction and enhance the department’s ability to support timely and accurate payment benefits among the states.

“The department plans to continue exploring the best measurements of IT performance” in state systems, he continued.

This isn’t the first time the department has been confronted with the reality of a system where states design and deliver jobless aid programs under federal parameters. A recurring question for the department has been the amount of power it has to discipline states if they fall out of line with federal guidance. 

Recently, the department has also had to recalibrate after lawmakers took back $1 billion they had given the Labor Department to support modernization and fraud prevention as part of the American Rescue Plan Act.

Overall, the department only fully agreed with one recommendation to measure states tech performance against standards and partially agreed with the other two recommendations for it to set up modernization standards and update pilot processes to include “leading pilot design practices.”

The report came at the request of Sens. Bernie Sanders, I-Vt., who chairs the Committee on Health, Education, Labor and Pensions, and Ron Wyden, D-Ore., who chairs the Finance Committee. 

Wyden has previously introduced a bill to prod the department to make shareable tech capabilities centrally available to states. 

Ryan Carey, chief communications advisor for the committee, told Nextgov/FCW via email that “Senator Wyden is updating his legislation aimed at helping states modernize their unemployment insurance programs in ways that will help to both address fraud and get benefits out to eligible workers on time. 

“GAO’s report shows that states are making some progress with UI modernization, but there’s a long way to go to make sure state UI programs are operating as effectively as possible,” they added.