U.S. DOL Provides Funding for States’ UI Fraud Prevention

HR & Safety

Connecticut effort to stem improper unemployment comp payments paying off

The U.S. Department of Labor (DOL) announced the availability of funds for states to improve program integrity, performance, and technology infrastructure systems for the unemployment insurance program. The grants are intended to accelerate actions to reduce improper UI payment rates; provide an opportunity for modernizing UI tax and benefits systems; and enable the design of technology-based tools to prevent, detect, and recover improper UI payments.

“The unemployment insurance program is a lifeline to people who have lost a job through no fault of their own,” said Eric Seleznow, acting assistant secretary of labor at the DOL’s Employment and Training Administration (ETA). “We have a responsibility to ensure this program is run efficiently and effectively so that this critical safety net continues to be available in the future.”

In Fiscal Year 2011, ETA provided $192 million in supplemental grant awards to 42 states for integrity activities. In FY 2012, a total of $169 million in supplemental grant awards was provided to 33 states for the prevention, detection, and recovery of improper UI benefit payments. The FY 2013 funding provides an opportunity for states to go beyond improper payments to focus on additional UI technology system improvements, data exchange enhancements for UI for ex-military-service members, and integration of state UI, employment service, and Workforce Investment Act IT systems.

In order to qualify for FY 2013 funding, states must implement or commit to implement a set of core integrity strategies. The core strategies include a business process analysis for state workforce agencies with improper payment rates above 10% and for agencies identified for poor performance concerning first payment and appeals timeliness, the implementation or expansion of the State Information Data Exchange System, the implementation of a state-specific prevention strategy for reducing improper payments, and a commitment to maintaining a state integrity cross-functional task force.

In addition, states that have committed to implementing all of the core activities or already implemented them will be eligible to apply for technology infrastructure project funding. These funds will be used to modify and/or develop one of the core UI benefits or tax and benefit system designs; design additional core UI tax and/or benefit systems using open source components that are exportable to other states; and implement technology-based tools designed to prevent, detect, or collect/recover improper UI payments.

Connecticut’s Initiative

The Connecticut Department of Labor (CT DOL) has mounted an aggressive fraud prevention effort in their Benefit Payment Control Unit, including the use of surveillance, reports of fraud via telephone and online reporting, and improved employer data reporting to verify claimant eligibility.

CT DOL Commissioner, Sharon M. Palmer, projects recovery in 2013 of up to $8 million dollars in improper unemployment payments. Employers are encouraged to review the fraud reporting opportunities to assist in these efforts.

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