Pamplin Media Group – Department of Employment Reports Soft Boot to IT System

A three-year rollout, beginning with payroll reporting, is planned to replace the 1993-dated mainframe.

The first phase of the Oregon Department of Employment’s new computer system got off to a relatively good start.

Acting director David Gerstenfeld said just under 1,000 employers had created payroll reporting accounts on the first day the system went live on September 6, and the total was 1,750 when spoke to reporters in a videoconference on September 14.

He credited planning by staff for anticipating potential problems. About 413 million pieces of data have been transferred from the current central system, which dates back to 1993.

Wage reports allow the Department of Employment to help the Oregon Department of Revenue collect payroll taxes from employers for the state unemployment trust fund, whose benefits are paid exclusively from employer contributions.

“The system allows our customers to do dozens of things they couldn’t do before,” he said, such as changes to contact and address information, payments and refund requests. .

The new system is called Frances Online, after Frances Perkins, US Secretary of Labor under President Franklin D. Roosevelt (1933-45) and the first woman appointed to a presidential cabinet position.

He will be paid from $89.6 million the US Department of Labor gave the state agency in 2009 that sits in the unemployment trust fund.

States run their own trust funds, which provide 26 weeks of unemployment benefits, but the Department of Labor oversees the funds under an arrangement that dates back more than 80 years to the Great Depression.

The 2021 Legislature added more into the current two-year state budget for start-up costs related to paid family leave — Oregon is one of 10 states with such programs — but that money will be reimbursed to from employer and employee contributions to the program.

“The project is on schedule and on budget,” Gerstenfeld said.

The next phase of the system will start in early 2023, when the Department of Employment will start collecting contributions for the new state fund for paid leave. Total contributions are capped at 1% of employee wages, split 60% for employees and 40% for employers.

Actual benefits from the new fund will be paid beginning September 3, 2023.

In addition, the new system will begin to account for employers’ payroll tax (0.1% of employee wages) that goes to public transit.

A future phase will begin in March 2024, when the system will start accepting applications and paying out unemployment benefits.

“Every part of this system is a monumental undertaking,” Gerstenfeld said. “We know that in every phase there are challenges and adjustments that we have to make.”

Decade of delays

The agency was implicated in 2012 and 2015 audits by the Oregon Secretary of State – and an Information Technology Management letter and Legislative Tax Office report, both in 2020 – for a lack of progress towards upgrading the IT system. The agency has had four directors in nine years.

Gerstenfeld was propelled to the position of acting director in May 2020 when Governor Kate Brown fired his predecessor due to the huge backlog of claims resulting from the onset of the coronavirus pandemic in the spring of 2020, when many businesses closed or reduced their operations. Congress approved several new programs, in addition to additional federal benefits, that allowed self-employed and gig workers to receive payments for the first time since unemployment benefits were created in 1935.

A Secretary of State audit released in July said: “Due to limitations in the agency’s IT systems, OED has been unable to reprogram its systems to accommodate new programs created during the pandemic. …requiring the agency to implement many of these programs using mostly manual processes.”

Even so, according to the audit, Oregon still managed to process pandemic unemployment compensation claims — the now-ended, temporary federal benefits program for self-employed and construction workers — in a average delay of 31 days, compared to the national average of 38 days.

Oregon’s fraud rate for claims was also relatively low compared to other states.

Oregon was among 39 states that received grants from the US Department of Labor under the American Recovery and Reinvestment Act of 2009 to modernize the computer systems of their employment agencies. Of these states, 15 had completed modernization before the onset of the pandemic in spring 2020; Oregon was among 24 states that did not. The state audit also indicated that a total of 21 states have modern systems; the others don’t.

As chairman of the Senate Finance Committee, which oversees employer payroll taxes paid into state unemployment trust funds, Oregon Democrat Ron Wyden has called on states for additional funds. to modernize their IT systems – and a comprehensive plan to overhaul unemployment benefits themselves.

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Gordon K. Morehouse