Performance Audit Memorandum: COVID-19 — Audit of State Workforce Agencies' Information Technology Systems Capability in Processing UI Claims (DOL OIG…

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U.S. Department of Labor 
Office of Inspector General 
Washington, DC 20210 
Working for America’s Workforce 
September 19, 2023 
MEMORANDUM FOR: 
BRENT PARTON 
Principal Deputy Assistant Secretary 
  for Employment and Training 
FROM: 
CAROLYN R. HANTZ 
Assistant Inspector General 
  for Audit 
SUBJECT: 
COVID-19 – Audit of State Workforce Agencies’ 
Information Technology Systems Capability in 
Processing Unemployment Insurance Claims  
Report No.19-23-008-03-315   
The purpose of this memorandum is to provide the results of the U.S. 
Department of Labor (DOL) Office of Inspector General’s (OIG) performance 
audit to determine to what extent the capability of State Workforce Agencies’ 
(SWA)1 Information Technology (IT) systems impacted their ability to timely and 
accurately process regular, as well as pandemic-related, unemployment 
insurance (UI) claims under three key temporary programs.2  
The Employment and Training Administration (ETA) is responsible for overseeing 
the UI program, including SWA implementation of the UI programs under the 
Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Continued 
Assistance for Unemployed Workers Act of 2020. In April 2020,3 we issued an 
advisory report outlining six initial areas of concern for ETA and the SWAs to 
consider as they implemented the CARES Act UI provisions amidst the largest 
1 For the 50 states, as well as the U.S. Virgin Islands, Puerto Rico, and the District of Columbia, 
the body that administers the UI program is a SWA. There are, therefore, 53 SWAs. The CARES 
Act also provided certain UI benefits to American Samoa, the Commonwealth of the Northern 
Mariana Islands, the Federated States of Micronesia, Guam, the Marshall Islands, and the 
Republic of Palau, provided the territory signs an agreement with the U.S. Department of Labor. 
2 Pandemic Unemployment Assistance, Pandemic Emergency Unemployment Compensation, 
and Federal Pandemic Unemployment Compensation 
3 Advisory Report, CARES Act: Initial Areas of Concern Regarding Implementation of 
Unemployment Insurance Provisions, Report No. 19-20-001-03-315 (April 21, 2020), 
https://www.oig.dol.gov/public/reports/oa/2020/19-20-001-03-315.pdf 

increase in initial UI claims since DOL began tracking data in 1967. Our 
identification of these areas represented years of oversight work relating to 
DOL’s UI program, including the use of prior stimulus funds; one of the areas 
was state preparedness, specifically, the issues of staffing and the SWAs’ IT 
systems capabilities. 
In Congressional testimony,4 the OIG stated that it has repeatedly reported 
significant concerns with DOL and states’ ability to deploy UI program benefits 
expeditiously and efficiently while ensuring integrity and adequate oversight. As 
stated in OIG’s 2022 U.S. Department of Labor’s Top Management and 
Performance Challenges, 
For the UI program, the Department needs to: (1) Work with State 
Workforce Agencies to upgrade their technological capabilities to 
modernize the delivery of UI benefits and ensure their systems are 
sufficient to manage sudden spikes in claims’ volume and protect 
federal benefits from improper payments, including fraud.5 
Based on these concerns, we contracted with the independent certified public 
accounting firm GenTech Associates (GenTech) to conduct this performance 
audit to determine to what extent the capability of SWAs’ IT systems impacted 
their ability to timely and accurately process UI claims, including those under the 
CARES Act and the Continued Assistance for Unemployed Workers Act of 2020. 
GenTech identified no material findings that the OIG had not previously reported 
to ETA. Additionally, DOL has begun significant efforts in the UI modernization 
area. 
In August 2021, the DOL Office of the Secretary established the Office of 
Unemployment Insurance Modernization (OUIM). OUIM was temporarily 
established to carry out the functions of fraud detection and prevention and to 
promote equitable access and ensure timely payment of benefits to eligible 
workers. According to ETA, OUIM is responsible for strategic planning and 
management across all UI modernization work streams in close coordination with 
both the Assistant Secretary for Employment and Training and the Assistant 
Secretary for Administration and Management. OUIM will assist ETA but will not 
assume any of ETA’s responsibilities or oversight.  
According to ETA officials, the agency is proactively working with OUIM and 
SWAs as it increases oversight of UI IT modernization efforts in carrying out its 
responsibilities under the American Rescue Plan Act of 2021. GenTech, 
however, did identify one issue for ETA management’s attention: specifically, 
4  “The Greatest Theft of American Tax Dollars: Unchecked Unemployment Fraud,” Hearing, 
Statement for the Record of Larry D. Turner, Inspector General, U.S. Department of Labor; 
House Committee on Ways and Means (February 8, 2023),  
https://www.oig.dol.gov/public/testimony/02082023.pdf 
5 U.S. Department of Labor’s Top Management and Performance Challenges (November 2022), 
https://www.oig.dol.gov/public/DOL%202022%20Top%20Management%20and%20Performance
%20Challenges.pdf 
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ETA could improve its oversight of SWAs’ progress in modernizing UI IT 
systems.6 The OIG plans to perform follow-on work in this area to determine the 
impact of these efforts on improving the efficient deployment of UI benefits, 
including readiness for future emergencies. 
ETA COULD IMPROVE ITS OVERSIGHT OF SWA PROGRESS IN 
MODERNIZING UI IT SYSTEMS   
GenTech identified that, historically, ETA did not evaluate the capability of SWAs’ 
UI IT systems to successfully administer UI benefits. Further, ETA did not have 
sufficient information to know which SWAs’ UI IT systems posed the greatest risk 
of failing. This lack of sufficient information happened because ETA did not 
require SWAs to develop UI IT modernization plans with the following elements 
to represent a future-ready approach:  
1. the baseline architecture,7
2. target architecture,8 and
3. a transition plan to reach the target architecture.
For example, only 1 of the 10 SWAs reviewed had developed or implemented UI 
IT modernization plans that improved the timeliness or accuracy of UI benefits 
processing. The surveyed SWAs reported similar results: only 14 of 38 surveyed 
SWAs reported that they had implemented an IT modernization plan with a 
future-ready approach. Although all 10 SWAs reviewed reported lacking the 
resources to continuously keep pace with evolving technology, we observed that 
49 of the 10 SWAs were in the process of developing a modernization plan prior 
to the pandemic. Ensuring SWAs have these plans in place and are actively 
pursuing implementation would be a strong step toward ETA ensuring SWAs 
improve administration of benefits, particularly during a future crisis. 
ETA relies on several stakeholders to assist SWAs with UI IT system 
modernization initiatives and has partnered with the National Association of State 
Workforce Agencies’ (NASWA) UI Information Technology Service Center for this 
purpose. Personnel from NASWA’s UI Information Technology Service Center 
stated to GenTech that the service center provides recommendations to SWAs 
but has no authority to enforce the recommendations. SWAs are responsible for 
funding UI IT improvements unless Congress authorizes federal funds for this 
purpose.  
No official management response is required of ETA. In providing this 
memorandum to ETA, the OIG considers this audit closed. This memorandum, 
6 IT modernization refers to an organization’s efforts to upgrade legacy IT systems and to ensure 
that existing IT systems do not become legacy IT systems. Legacy IT systems are those that are 
past their lifecycle end date for either technical or business reasons. 
7 Baseline architecture refers to an organization’s existing IT systems and infrastructure. 
8 Target architecture refers to an organization’s description of future IT systems and infrastructure 
that would replace the organization’s existing architecture.  
9 The SWAs in the States of: Arizona, Arkansas, Georgia, and Ohio 
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however, does not preclude the OIG from conducting a follow-up audit of this 
subject at a later date.  
Audit Scope and Methodology 
The OIG monitored GenTech’s work to ensure it met professional standards and 
contractual requirements. GenTech’s independent audit was conducted in 
accordance with generally accepted government auditing standards. Thus, 
GenTech was responsible for the evaluation and conclusions expressed in this 
memorandum based on its audit work. The OIG reviewed GenTech’s report and 
supporting documentation.  
GenTech’s audit work covered UI claims processed from March 27, 2020, to 
April 6, 2021. The OIG chose 10 SWAs for an in-depth examination of ETA and 
SWA policies, processes, and outcomes for UI claims—the SWAs in the States 
of: Arizona, Arkansas, California, Florida, Georgia, Kentucky, New Jersey, Ohio, 
and Virginia, as well as the U.S. Virgin Islands. GenTech also sent surveys to 
43 SWAs not selected for an in-depth examination, of which 38 SWAs 
(88 percent) responded. 
GenTech interviewed DOL and SWA officials about the UI claims process and 
procedures, fraud risks, best practices, and lessons learned. This included 
interviews with personnel from ETA, SWAs, and the NASWA’s UI Information 
Technology Service Center who may have had knowledge of past and current UI 
IT modernization funding, performance measures, audits, examinations, and 
related corrective actions. GenTech also reviewed policies, procedures, and 
documents regarding ETA’s and SWAs’ UI IT strategy and project management, 
services, corporate governance, system operations and business resilience, and 
information and asset security.  
We appreciate the cooperation and courtesies ETA personnel extended 
GenTech and the OIG. If you have any questions about this information, please 
contact Tracy Katz, Audit Director, at (202) 210-0769 or katz.tracy@oig.dol.gov. 
cc:   
Laura Watson, Deputy Assistant Secretary, 
Employment and Training Administration  
Greg Hitchcock, Special Assistant, Office of Grants Management, 
Employment and Training Administration   
Chantel Sollers, Audit Liaison, Office of Grants Management, 
Employment and Training Administration

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