Unemployment programs nationally have had relatively minor changes since their creation in 1937, after the Great Depression. Due to the overwhelming financial impacts to state unemployment programs across the United States during the Great Recession, the federal government has mandated significant changes at the state level to ensure state unemployment funds both recover and are better protected for the next financial crisis. Much of the resulting legislation is to prevent improper payments to claimants.

SIDES (State Information Data Exchange System) and “Integrity” legislation were the two major outcomes from the Federal Government and Department of Labor (USDOL) that have had a significant impact on how employers and their agents operate within each states’ unemployment system. We have discussed “Integrity” legislation previously; this article will discuss the two most common automated electronic systems that state agencies are implementing to reduce improper payments, and their effectiveness to streamline the unemployment process.

Most states have chosen to implement SIDES. SIDES was developed through a strategic partnership between the U.S. Department of Labor (USDOL) and state unemployment insurance agencies. SIDES offers employers a secure, electronic and nationally-standardized format to better anticipate and supply the data needed to respond to UI information requests, reduce follow-up phone calls and streamline UI response processes. This web-based system is designed to meet the unique needs of both large and small businesses. For employers with a large volume of UI information requests, SIDES provides an automated, “computer-to-computer interface” between employers’ and/or TPA’s IT systems and state agency networks.

In September of 2013, the USDOL gave 40 state unemployment agencies over $174 million in grants for program integrity, performance and system improvement projects. One of the stipulations in accepting the grant was the implementation of the SIDES system. As of this writing, 47 states have either gone live with the program or will in the next 12 months.

While the implementation of any new system will have a few “glitches,” it has been noted that they have been relatively minor with the SIDES system. CCC has been unable to locate articles regarding implementation issues with the SIDES program.

uFACTS is a system developed by Deloitte that has been implemented in a small number of states including Florida and Massachusetts. According to Deloitte, “uFACTS (Unemployment Framework for Automated Claim and Tax Services) offers to integrate UI Tax and Benefits functionality. uFACTS is designed to make the most of UI program staff resources through an innovative customer self-service model. uFACTS self-service business processes allow claimants, employers, and third-party administrators to conduct most of their UI business without UI program staff intervention. Where UI program staff are required, intelligent workflow helps drive work to the right staff at the right time, when necessary documentation is complete, to help UI program staff make timely, accurate decisions.”

Unfortunately, the ease of transitioning to the Deloitte system has not been easy on the state agencies that have contracted for uFACTS. In both Florida and Massachusetts, the implementation of uFACTS has been quite difficult, with both projects being delayed and over budget. In Massachusetts, the implementation took an additional two years and was $6 million over the original contract.

More importantly, the system nearly stopped claims from being able to be processed and caused significant delays in payments made to claimants. According to The Tampa Bay Times (http://www.tampabay.com/news/business/floridas-unemployment-benefits-website-was-not-ready-for-launch-and-state/2164594)
, the (Florida) system was “so riddled with technical glitches that it has left thousands of unemployed Floridians without the money they need for food, rent, and bills. The problems were so bad that the DEO began fining the contractor $15,000 a day and federal officials intervened; convincing the state to pay the back claims so claimants could get their money. Two months after CONNECT’s debut, so many claims remained unpaid that the DEO hired an extra 330 employees, at the cost of $165,000 a week.”

Just last week an article in the Boston Globe noted that “7 a.m. on the first day of operation, Michelle Amante, director of the unemployment division, was alarmed to find the system was down. “Already getting e-mails from claimants. Get it fixed,’’ she said in a dire e-mail to her staff and Deloitte executives. “If this isn’t fixed by 7:30, we are going to have to take paper claims on our first day of going live.”

It is unclear how many states will implement uFACTS, but what is clear is the response of both CCC, and the state agency can help employers deal with the stresses that a system change can have. In Massachusetts, CCC has worked closely with the unemployment division to help identify employer issues with the system and communicate the solutions to our clients. It is the strength of this partnership that has helped to more quickly resolve the implementation issues in Massachusetts when compared to other states implementing the uFACTS system.

Corporate Cost Control strives to be the expert for our clients for all unemployment compensation matters. Working with all 50 state agencies, as well as both Puerto Rico and the Virgin Islands, allows us the opportunity to evaluate and provide feedback regarding all aspects of a state unemployment program. As we move toward more automation, CCC will keep you informed with the changes and challenges taking place.


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