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Recession Pounds State Unemployment Insurance (UI) Systems

While some states agencies prod forward on their own to plan and deploy Unemployment Insurance (UI) Information Technology (IT) modernization projects, other states are embracing neighboring state agency leaders to leverage the power and synergy of a consortium. Regardless of the approach, the common goal is to modernize legacy mainframe systems, in spite of diminished funds. Demands on legacy systems are necessitating greater need for states to streamline processes, integrate benefit and tax systems and ensure unemployment checks are dispersed timely, given many citizens continue to wrestle with unemployment.

The U. S. Department of Labor (DOL) awarded funds earlier this year for State Unemployment Insurance and Employment Service Operations, targeted for eligible workers through Federal and State cooperation. Recently DOL awarded funds for an Unemployment Insurance (UI) Technology Infrastructure Grant program. Though dollars provided are not of the magnitude to fund complete modernization projects, some states are using federal dollars to plan projects, and will seek additional funds from U.S. Department of Labor as they move forward with projects. Varying amounts were allocated to states and some are using funds to add technologies to enhance call centers that have been slammed with calls, or create more web interface with existing back end systems. Two regions are working together to use funds for studies to evaluate the best method to move away from legacy mainframe systems, written mostly in Cobol programming language, to newer platforms that are better for both the tax side and the benefit side of UI systems in the states.

States that have already upgraded UI systems successfully are indicating it is feasible for considerable operation cost savings to be realized given such statistics as of up to 88% claims now being filed via Internet without staff intervention. Achieving similar results is a significant driver in states planning modernization efforts to follow suit. The modernization projects are a vast undertaking and a sizable effort and typically software development is not a core competency of workforce agencies, though state IT organizations are striving to achieve some measures internally, these comprehensive projects cannot be tackled with internal staff alone.

The first region consisting of Tennessee, South Carolina, North Carolina and Georgia are collectively giving consideration to a regional "cloud" based system in a Service as a Software (SaaS) environment. The premise is that such a model will likely yield a reduction in operations and support cost. In a climate of diminishing budgets, the ability for states to gain twenty to fifty million dollars from legislatures to fund replacement systems is a seemingly insurmountable challenge. Grant funds allocated: Tennessee $6,892,526; South Carolina $6,845,618; North Carolina $5,625,765; and Georgia $8,850,630.

Another regional effort underway includes Idaho serving as the lead state working with Arizona, North Dakota and Wyoming. This consortium anticipates plans for one of two possible directions. One, having a new system developed and having one state serve as a host state and process the other consortium members UI taxes and benefits. The second option is to have the new system developed and each state will then have their own migration plan for their existing systems to the new platform. The effort will likely take years to fully implement; however, plans are moving forward to look at a high level design of moving to modernize needed changes to yield more efficiency and lower operating costs. Grant Funds allocated: Idaho $6,093,305; Arizona $6,778,673; North Dakota$6,473,523; and Wyoming $4,682,103.

States look to the National Association of State Workforce Agencies (NASWA) as a voice to advocate on their behalf and advise congress of state needs. Additionally, states have enacted new legislation during current legislative sessions to plan for receipt of the UI Modernization incentive payments. Integrators and vendors need to be aware that state labor agencies have experienced a high rate of failed systems in years past and leaders will need strong assurance that testing systems will be a critical component of plans, to ensure systems are successful once deployed.

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