Submitted by the Office of the Governor
MADISON, WI – On Tuesday, August 12th, Gov. Tony Evers sent a letter urging the Trump Administration to immediately reverse course on its attempts to cut approximately $29 million Wisconsin expected to receive to help support and complete Wisconsin’s years-long efforts to modernize the unemployment insurance (UI) system and efficiently and effectively prevent benefit fraud and waste. In a letter to U.S. Department of Labor (DOL) Secretary Lori Chavez-DeRemer, Gov. Evers noted that if the Trump Administration does not reverse course and provide the $29 million in approved funding that Wisconsin expected to receive, “the state will not be able to complete its UI system modernization project, which is designed to use innovative tools to help efficiently and effectively prevent benefit fraud and abuse.”
Wisconsin’s unemployment insurance system programming was developed in the early 1970s. The Evers Administration’s efforts to modernize Wisconsin’s UI system began during the COVID-19 pandemic after decades of inaction by previous administrations and lawmakers were brought to bear during the worst economic crisis in over a decade. The early stages of the pandemic saw state unemployment rates rise from 3.5 percent in February 2020 to 14.8 percent just two months later. Over the course of four years from 2016 through 2019, the Department of Workforce Development (DWD) handled 7.2 million claims. In just nine months in 2020, DWD processed nearly 8.8 million claims. This massive influx of claims overwhelmed and backlogged Wisconsin’s aging UI processing systems, which relied on legacy infrastructure dating to the 1970s.
To help respond to these challenges and finally fix Wisconsin’s unemployment system after decades of inaction, Gov. Evers called a special session of the Wisconsin State Legislature and, in February 2021, signed 2021 Act 4, which began the process of modernizing these critical systems to prevent a future emergency from causing a similar crisis. Since then, DWD has advanced swiftly and successfully toward this goal, protecting the integrity of the claims processing system with cutting-edge technology designed to help crack down on fraud and abuse in benefit claims while increasing virtual customer service options.
Importantly, for example, since undertaking modernization efforts under the leadership of Gov. Evers, Wisconsin’s UI program at DWD has been audited nine times between the years of 2020 and 2023. All told, the Legislative Audit Bureau was unable to identify any previously undiscovered fraud within the program. The Trump Administration’s decision attempting to cut $29 million—a majority of which is designed to help bolster anti-fraud measures—will significantly impact efforts to authenticate applicant identities, improve cybersecurity and overpayment collections, and ensure integrity in the unemployment system.
According to the governor’s letter, DWD was on the cusp of even greater progress, however, the U.S. DOL suddenly terminated approximately $29 million in ARPA funds the state expected to receive to support this effort, halting work on some of DWD’s most critical modernization and fraud prevention projects. According to DWD, the terminated funds included:
- $11.25 million to create a state-of-the-art web-based and mobile employer portal, including secure communications infrastructure to reduce improper payments and fraud;
- $6.3 million to prevent and detect fraud, ensure program integrity, and improve cybersecurity and overpayment collections;
- $6.8 million to modernize written communication with all UI customers through an agile and efficient systems interface, reducing costs and staff resources; and
- Nearly $4.5 million to implement identity authentication and identity proofing tools, modernize the application process, enhance automation for case scheduling, and centrally document all interactions on a given claim.
The governor’s letter further states that the U.S. DOL cited no objections to these projects beyond an unsupported assertion that they “no longer effectuate the Department’s priorities” despite the secretary’s recent statements indicating, “Under President Trump’s leadership, the Department of Labor is delivering on its commitment to root out waste, fraud, and abuse.”
In his letter, the governor reiterated the critical need to continue Wisconsin’s work to modernize its UI systems and protect the integrity of the state’s claims process, highlighting that despite current efforts, “a future economic downturn and spike in unemployment claims could once again overwhelm the system and create acute hardship for Wisconsin families.” More information on DWD’s efforts to date to support UI modernization is available here online at: dwd.wisconsin.gov/uifeedback/modernization.
A copy of the governor’s letter to U.S. DOL Secretary Chavez-DeRemer is available along with this Release at: content.govdelivery.com/accounts/WIGOV/bulletins/3ed6dcf.
