On July 13, 2023, USDOL announced that much of the UI Modernization funding to states was being cancelled. See Cancellation of American Rescue Plan Act (ARPA) Related Guidance, including Unemployment Insurance Program Letter (UIPL) No. 22-21, Change 2; UIPL No. 23-21, Change 5; UIPL No. 02-22, Change 3; and UIPL No. 07-23 (dol.gov)

The UIPL cancels the series of previous program letters announcing the availability of funds from the $2 billion that was provided under the American Rescue Plan Act (ARPA) , including,  UIPL No. 22-21, Change 2; UIPL No. 23-21, Change 5; UIPL No. 02-22, Change 3; and UIPL No. 07-23. The Department will determine the future uses of the remaining ARPA funds and will provide additional guidance, as appropriate.

Background – On March 11, 2021, the President signed ARPA into law (Public Law (Pub. L.) 117-2). Section 9032, ARPA, created a new Section 2118 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. L. 116-136) and provided for a $2,000,000,000 appropriation to the Secretary of Labor (Secretary) to:

(1) detect and prevent fraud,

(2) to promote equitable access, and

(3) to ensure timely payment of benefits to eligible workers with respect to unemployment compensation (UC) programs.

ARPA describes allowable uses of these funds, including awarding grants for such purposes to states and territories administering UC programs and for systemwide infrastructure investment and development.

On June 3, 2023, the President signed into law the Fiscal Responsibility Act of 2023 (FRA) (Pub. L. 118-5).

Section 24 of Title I of Division B of FRA, permanently rescinds $1,000,000,000 of the unobligated balances of amounts made available by Section 2118(a) of Title II of Division A of the CARES Act, as added by Section 9032 of ARPA.

Guidance.

Due to the permanent rescission in FRA of $1,000,000,000 of the unobligated ARPA funds made available to the Department, the Department is canceling the following guidance.

  • UIPL No. 22-21, Change 2, Additional American Rescue Plan Act (ARPA) Funding and Support for States to Strengthen Unemployment Insurance (UI) Program Integrity, including Identity (ID) Verification, Fraud Prevention and Detection, and Overpayment Recovery Efforts in All Unemployment Compensation (UC) Programs and Required and Strongly Recommended Strategies, Tools, and Services for UI Fraud Risk Mitigation and Improper Payment Reduction;
  • UIPL No. 23-21, Change 5, Additional Grant Opportunities for Promoting Equitable Access to Unemployment Compensation (UC) Programs;
  • UIPL No. 02-22, Change 3, Modifications to the Grant Opportunity Announced in Unemployment Insurance Program Letter (UIPL) No. 02-22, to Support States Following the Tiger Teams Consultative Assessment; and
  • UIPL No. 07-23, Announcement of a Grant Opportunity to Support State Unemployment Insurance (UI) Information Technology (IT) Modernization Activities Under the American Rescue Plan Act (ARPA).

The Department will determine the future uses of the remaining ARPA funds and will provide additional guidance, as appropriate.  Applications for Equity Grants provided under UIPL No. 23-21 were due by December 31, 2021 (see UIPL No. 23-21, Change 2). Since this time, some states have continued to revise their applications to be fully responsive to the solicitation after having submitted them to the Department. Effective July 14, 2023, the Department will not process any additional applications and no funding will be awarded for applications that have not been deemed fully responsive by that date.

UWC has supported additional federal funding for state UI administration, particularly for integrity and systems to enable sound management and protect state trust funds, employers and claimants. Without the additional ARPA funding, if federal administrative funding is based solely on average weekly insured claims, it will be insufficient to meet the needs of the UI system. We support enactment of provisions in HR 1163 and S 1587, the “Protecting Taxpayers and Victims of Unemployment Fraud Act”, that would provide incentives for states to pursue collection of overpaid amounts and to use portions of collections to improve integrity. See H.R.1163 – 118th Congress (2023-2024): Protecting Taxpayers and Victims of Unemployment Fraud Act | Congress.gov | Library of Congress