Title: Unemployment Insurance Delays Caused by Old Computer IT

Description: Unemployment Insurance programs saw unprecedented increases
in demand during the pandemic. But despite this increase, many Americans
were extremely frustrated when they tried to apply facing delays and
other issues in accessing this essential safety net program. That was
because many states that administer unemployment relied on outdated or
legacy computer technology. So what's being done to ensure states are
ready to manage future demand as well as current Unemployment Insurance
needs? We'll learn more from GAO's Carol Harris.

Related GAO Work: GAO-23-105478, Unemployment Insurance: DOL Needs to
Further Help States Overcome IT Modernization Challenges

Released: July 2023

[Music]

[Carol Harris:] Many of these states had outdated systems that dated as
far back as the 1970s, which contributed to many of those system
performance issues. 

[Holly Hobbs:] Hi, and welcome to GAO's Watchdog Report. Your source for
fact-based, nonpartisan news and information from the U.S. Government
Accountability Office. I'm your host, Holly Hobbs. Unemployment
Insurance programs saw exponential increases in demand during the
pandemic. But many Americans were extremely frustrated when they tried
to apply, facing delays and other issues in accessing this essential
safety-net program. That was because many states that administer
unemployment relied on outdated or legacy computer technology. So,
what's being done to ensure states are ready to manage future demand, as
well as current Unemployment Insurance needs? We'll learn more from
Carol Harris, an expert here at GAO on federal IT management. Thanks for
joining us.

[Carol Harris:] Thanks for having me.

[Holly Hobbs:] So, Carol, let's go back in time a little bit. What
happened during the pandemic when demand for unemployment insurance
surged?

[Carol Harris:] Yeah. So states faced significant challenges in
processing their unprecedented number of Unemployment Insurance claims
during the pandemic. So one state noted that typically they'd receive
about 28,000 claims in the month prior to the pandemic, and then that
number jumped up to 577,000 in the first month of the pandemic. So that
was more than a 20 fold increase.

[Holly Hobbs:] So volume of claims was an issue, but so was the IT used,
right? What have states been doing since this surge to address IT
issues?  

[Carol Harris:] Well, you know, to their credit, states have been
working to modernize their systems. I mean, if you think about it, many
of these states had outdated systems that dated as far back as the
1970s, which contributed to many of those system performance issues. And
so in many of those cases, those states needed to migrate those outdated
systems to cloud computing solutions or acquire just new systems
altogether. And so as part of our review, we looked at eight states. Six
of them were in the process of modernizing their systems, which, you
know, is really positive news. And then the remaining two had already
completed their modernization efforts back in 2018 and 2021.

[Holly Hobbs:] So, is there an example of a state that was prepared for
this surge in unemployment claims? 

[Carol Harris:] So Maine is a great example. They were one of the states
in our review, they completed their modernization effort back in 2018.
And the state officials in Maine reported that their systems were stable
during the pandemic, and they were able to handle that unprecedented
workload increase. So, again, that's a great example of having
modernized systems that where, you know, states can be better prepared
for unexpected events, including pandemics and recessions.

[Holly Hobbs:] And what are states still struggling with?

[Carol Harris:] So the biggest challenge that we found is with staffing.
So that was like limited staff resources at the state agencies to
support their modernization efforts. And then just also a lack of staff
with the necessary IT expertise. Other challenges included contracting.
So these included having unrealistic schedule estimates and then also a
lot of difficulties with the project coordination when using multiple
contractors in their IT modernization efforts.

[Holly Hobbs:] We've done kind of a lot of reports now on federal IT
systems and state IT systems, and all of them seem to be pretty old. I
mean, if you think of what was going on with technology in the 1970s, we
didn't have smartphones or, like, the Internet didn't exist. And I'm
wondering why so much time passed without them updating their systems.

[Carol Harris:] When you look at the IT spend across the federal
government, 80% of that is mired in these legacy systems. So the ones
from the 70s and the 80s that you're mentioning. And it's really just a
challenge to identify new funds to make those capital improvements. I
mean, when you want to make those large investments, it's... you got to
commit to it and you have to have leadership backing to do that. And
then probably the larger challenge is the human component. So when you
think about changing how you do things from a day-to-day basis in using
a particular system, sometimes people, and actually in most cases, they
like to use what they know. It's not great, but at least they know it.
And so they get stuck in that that way of things. And before you know
it, decades pass. And then now they've got a system that is incredibly
difficult to maintain. The people necessary to maintain really old code
just aren't there anymore. And then you're in the situation that we're
in today.

[Holly Hobbs:] So we've talked about the state's role in Unemployment
Insurance, but Unemployment Insurance is a joint federal and state
partnership. What role does the Department of Labor play in helping
states modernizing IT?

[Carol Harris:] So Labor plays a very critical role in overseeing
Unemployment Insurance programs to ensure that states are operating the
program properly and efficiently. Labor has taken steps to assist states
in their IT modernization efforts, including providing funding when
available, as well as that technical assistance. And most recently,
Labor has used funding provided by ARPA, the American Rescue Plan Act,
to assist states in modernizing those systems. And so that includes like
sending teams of experts to those states to do that forensic analysis
and work with them to identify areas where they can enhance those
existing efforts, as well as conducting pilot tests of Unemployment
Insurance technology solutions, which would include things like identity
verification capabilities, which is really important.

[Holly Hobbs:] So we looked at Labor's efforts, specifically the pilot.
What did we find?

[Carol Harris:] So in our prior work, we've identified a series of
leading practices for designing pilot programs. And what we found when
we were examining Labor's pilot is that they didn't fully implement all
of these leading practices. You know, they had developed clear
objectives for the pilot, which was great. But in many other cases they
just didn't develop data analysis plan and ensure stakeholder
communications. So there was certainly more improvements that could be
made to their pilot program. 

{MUSIC}

[Holly Hobbs:] So Carol just told us that some of the states we looked
at and the Department of Labor have taken some steps to address IT
system issues that caused challenges with Unemployment Insurance during
the pandemic. So, Carol, for now, demand for Unemployment Insurance has
declined and we might not see a spike like that, hopefully, any time
soon. Why is this still an important issue?

[Carol Harris:] Well, these problems with Unemployment Insurance
administration are longstanding. GAO and the IGs [Inspectors General]
and others have cited persistent weaknesses in customer service and
timely claims processing, as well as just the general need to modernize
these state IT systems. So the risks associated with improper payments
and fraud, for example, have really exposed these Unemployment Insurance
programs to potentially significant financial losses. So we really want
to make sure that we continue to highlight these issues regarding the UI
systems. And so that's another actual reason why GAO added the
Unemployment Insurance system to our high risk list back in June of last
year, with that goal of bringing greater attention to these challenges
facing the Unemployment Insurance area and to help spur those needed
changes.

[Holly Hobbs:] Moving forward, what do we think the Department of Labor
could do to improve its efforts?

[Carol Harris:] Well, we made three recommendations, the first of which
is to update the processes for its pilot design and implement the
leading practices we identified in our report on their future pilots.
The second of which was to have Labor defined Unemployment Insurance, IT
modernization standards for states. And this will be critical to Labor's
ability to provide effective oversight of state Unemployment Insurance
programs and really help ensure that the states are operating the
program effectively and efficiently. And finally, our last
recommendation was for Labor to measure state's Unemployment Insurance
IT performance against established standards. Now, measuring performance
could help inform Labor of where those gaps may exist in the state's IT
capabilities and where to commit additional resources.

[Holly Hobbs:] And last question, what's the bottom line of this report?

[Carol Harris:] Well, modernizing IT systems is difficult. And although
Labor has taken some steps to assist states, it can certainly do more to
help them overcome the challenges that they're facing in modernizing
these very critical UI systems.

[Holly Hobbs:] That was Carol Harris talking about GAO's new report on
Unemployment Insurance modernization efforts. Thanks for your time,
Carol.

[Carol Harris:] Thanks for having me.

[Holly Hobbs:] And thank you for listening to the Watchdog Report. To
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