[UPDATED] Department of Labor announces $377M in available grants to states to strengthen unemployment insurance programs, modernize systems

WASHINGTON – The U.S. Department of Labor today announced three new funding opportunities that will make up to $377 million in grants available to states to strengthen the integrity and resilience of their unemployment insurance programs.

Funded by the American Rescue Plan Act, the grants will allow states to develop multi-faceted strategies to combat fraud and modernize systems and provide funding for a range of projects. The department informed states today in an Unemployment Insurance Program Letter.

Administered by the Employment and Training Administration, the grants will allow states do the following:

• Prevent and detect fraud by strengthening programs’ ability to verify individuals’ identity and employ recommended strategies.
• Increase resources to improve overpayment recovery.
• Adopt new strategies to modernize and redesign states’ UI programs.
• Implement recommendations the states developed through the department’s Tiger Team initiative.

In addition to grants to states, the department is also providing identity verification systems, including online verifications through the General Service Administration’s Login.gov and in-person verification at participating U.S. Postal Service retail locations nationwide. For states that participate, the department will fund transaction costs and work with these states to determine if their UI systems need standardized mechanisms to verify identity.

States choosing to participate in any of the grant opportunities announced in today’s Unemployment Insurance Program Letter must agree to share confidential Unemployment Compensation data with the Department of Labor’s Office of Inspector General for the purposes of audits and fraud investigations.

In addition, the enactment of the Fiscal Responsibility Act of 2023 reduced ARPA funding for modernization of the UI program from $2 billion to $1 billion. The department is currently deploying the remaining funds available to prevent and detect UI fraud, promote equitable access to the UI programs and ensure timely payment of benefits, as part of a government-wide focus on combating identity fraud in government programs.

The department’s Office of Unemployment Modernization continues to provide direct assistance to help states modernize their UI programs and safeguard them against fraud, while improving equitable access to benefits.

Learn more about the department’s UI modernization efforts.

Ed. Note: An earlier version of this release stated the amount of the availability was up to $427 million which incorrectly included $50 million in costs the Department of Labor will incur to provide identity verification system services to states.