U.S. Senator Todd Young (R-Ind.) Friday reintroduced the Unemployment Insurance Systems Modernization Act, legislation that would upgrade antiquated state unemployment insurance (UI) systems to address outdated technology, emergency response capabilities, and fraud. UI systems across the United States faced unprecedented pressures during the COVID-19 pandemic, which exacerbated longstanding problems within the existing structure. On average, state unemployment insurance systems are 28 years old.
“The COVID-19 pandemic exposed the outdated infrastructure most states face when administering their UI systems. These antiquated systems caused delays and errors when many workers were in critical need of assistance during the pandemic,” said Senator Young. “This legislation is needed to ensure that we can efficiently and accurately target aid to those who truly need it.”
Even prior to the COVID-19 pandemic, roughly 10 percent of UI payments were improper payments. With the influx of additional funds authorized under the Families First Coronavirus Relief Act (FFCRA) and the CARES Act, states lost bandwidth to conduct quality oversight. Detecting fraudulent activity was extraordinarily difficult due to the lack of resources and outdated nature of UI systems. The combination of these challenges created gaping vulnerabilities, which criminals easily manipulated to access taxpayer dollars.
Technology improvements would enable UI systems to become more accurate and responsive when overwhelmed with an influx of claims. These updates would also allow UI systems to efficiently disseminate funds authorized by Congress and reach those who need it most.
Specifically, the UI Systems Modernization Act would:
- Require states to upgrade their state UI systems to be better prepared to handle a surge in claims and adjust wage replacement levels.
- Require states to be able to vary benefits over time, as well as automate a number of processes, which are currently done manually in many states.
- Boost program integrity provisions that include requiring the use of the electronic system states use to detect and prevent fraud and those employers use to communicate with the state UI agency.
- Provide the Department of Labor with additional authority to hold states accountable for performance.
- Require states to recoup funds from fraudulent payments that will go toward systems improvement or deposits into UI accounts – saving taxpayer money.
Senator Young introduced similar legislation in the last Congress.
To view the bill text, click here.