After two successful start-up phases, the Oregon Employment Department will soon proceed with the transition of unemployment benefit claims and payments to its upgraded computer system.

The transition will go live in March, following the 2022 transfer of employer payroll taxes to the unemployment insurance trust fund and the 2023 launch of employee and employer contributions — and payment of benefits — under the Paid Leave Oregon program. Contributions to that fund began in January 2023, and the first benefit payments began in September. Those benefits can be used for medical or family leave, or in some instances for safety leave.

The payment of unemployment insurance benefits is the mainstay of Employment Department programs. Those benefits go back more than 80 years to the Great Depression and New Deal, when they were created. The current computer system used by the Oregon agency dates back to 1992 and relies on even older technology.

Testing and training on the new system, known as Frances Online — in honor of Frances Perkins, U.S. labor secretary under President Franklin D. Roosevelt and the first woman to lead a federal Cabinet department — is continuing.

“We are excited that the new system will bring much needed improvements to the customer service experience,” Lindsi Leahy, director of the agency’s Unemployment Insurance Division, told reporters during an online briefing Dec. 20.

“We have been planning for this change for several years. As with any major technology project, the state has an extensive oversight process. We know we cannot plan for everything, and we expect there will be bumps in the road. We are prepared to react quickly to issues as they arise.”

Oregon received a federal grant of $89 million in 2009 for an overdue computer upgrade. But the project languished under several directors and its lack of progress was the subject of critical reports by the state Audits Division and the Legislative Fiscal Office. The Legislature finally approved spending in 2021, plus additional money for programming Paid Leave Oregon, which lawmakers created in 2019. The Employment Department chose a vendor that had worked on previous state technology projects and implementation of the new system began in 2022.

Leahy said the new system will enable people to file claims online, respond to agency requests more quickly, and see the status of their claims.

Warding off fraud

David Gerstenfeld, the current agency director who once had Leahy’s position, said he expects some people to try filing fraudulent claims for benefits from the unemployment benefits trust fund, just as they have for benefits under Paid Leave Oregon.

“Since the first daily launch of Paid Leave Oregon, people have been trying to use stolen identities” obtained outside the agency’s own systems, he said.

“Just like any other benefits agency, the Employment Department is always trying to find the right balance between the customer service of providing timely benefits and the customer service of protecting people’s benefits by making sure someone hasn’t already used their name to file a claim. When that happens, it can cause a delay for the real person while we investigate the records.”

Officials have been vague about details of the fraudulent claims affecting Paid Leave Oregon — and Gerstenfeld said there is a reason for the limited disclosures.

“Our first priority is to protect people’s benefits and the trust funds,” he said. “We know that people committing fraud watch the news. We have seen them change their behavior in the past after they watch news segments.”

Gerstenfeld said the agency has issued general reports for unemployment fraud attempts in 2020 and 2021, and plans to release a report for 2022 in January. A similar report is pending for Paid Leave Oregon, although the program has been in operation for only four months.

Similar attempts are occurring in other states. While he declined to discuss comparisons, Gerstenfeld said the National Association of State Workforce Agencies has considered it a priority topic.

One key benefit of a new system is that it will result in quicker action on routine claims for unemployment benefits and free up staff time to deal with the more complex claims.

“It is much more flexible and easier for us to make systemic upgrades,” Gerstenfeld said. “It was one of the key things we wanted out of this new modernized system.”

At the same time, he said, no state employment agency and no computer system would have been prepared for the sheer volume of unemployment benefit claims resulting from the coronavirus pandemic and the subsequent business shutdowns and curtailments in spring 2020 — and the array of new benefit programs that Congress created as a response in the CARES Act and subsequent legislation. Some of those programs aimed at helping self-employed and part-time workers, both groups that never drew unemployment benefits until the 2020 pandemic.

Oregon’s volume of unemployment claims jumped in the pandemic’s first couple of months as the statewide unemployment rate shot up from 3.7% in March 2020 to a record 13.7% in April 2020. The rate for November 2023 was 3.6%.

“I will say that no system I am aware of can implement programs when they are created retroactively, like some of the ones during the pandemic, or without some advance guidance of what they will look like,” said Gerstenfeld, who was thrust into the director’s job in May 2020 after then-Gov. Kate Brown fired his predecessor. Gov. Tina Kotek removed the “acting” from his title earlier in 2023.

“If there were to be another half-dozen programs created overnight, it would still take time to implement them. But it will be much easier to do them in a new system and much more user-friendly for people using the new system.”