Deployment extends to 2025, replaces 30-year-old mainframe inadequate for business and worker needs.
Businesses and workers in Oregon will begin to see the rollout of a new IT system for the Department of Employment after more than a decade of false starts and frustrations.
When the transition is complete in more than three years, the new system will automate employer payroll and tax records, employee claims and state unemployment trust fund benefits – as well as contributions and benefits for Oregon’s new paid family leave program, which begins in 2023.
“This is a complex project and a multi-year effort to transform the employment service’s business processes and core technology to be more flexible, adaptable and efficient,” said David Gerstenfeld, acting director of the agency since May 2020.
On September 6, the new system will go live with Oregon employers filing their third-quarter payroll reports, on which their unemployment tax payments are based. Employers will also use the new system to access their unemployment tax rates.
On August 28, the two current systems that support these functions will be shut down to allow for the transition to the new system.
“We’re doing this to make sure all the remaining work is done,” Gerstenfeld said. “We believe this will not impact most employers,” as they should have completed filing payroll reports for the second quarter of 2022, which ended June 30.
He said some employers who participated in the agency focus groups were asked to log on to a copy of the new system to familiarize themselves with how it works.
“It was positive overall,” he said, and suggested adjustments will be incorporated into future work on the system.
“Our staff has run over 1,500 test cases with a 99% success rate,” he added. “These failed scenarios have been returned to the team, fixed, and will be retested. We are also working with other state agencies and organizations with whom we share data and processes to ensure that these connections are intact and functioning as they should.”
One such agency is the Oregon Department of Revenue, which is the repository of unemployment payroll taxes paid by employers. Employees do not contribute to the unemployment fund.
The new system, Frances Online, is named for Frances Perkins, U.S. Secretary of Labor for Franklin D. Roosevelt’s 12 years as president and also the first woman appointed to a presidential cabinet in 1933.
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. 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.
States run their own unemployment trust funds, but the Department of Labor oversees them under an arrangement that dates back more than 80 years to the Great Depression.
The provider is FAST Enterprises, based in Centennial, Colorado, outside of Denver.
On January 1, Oregon employers and employees will begin in a second phase of the new system to contribute their shares to another fund for family leave benefits. Aggregate contributions are capped at 1% of employee wages, split between 60% of employees (0.6%) and 40% of employers (4%). Actual benefit payments are expected to begin on September 3, 2023.
Last year, lawmakers changed start dates under the original 2019 law, which covers a range of situations.
A third phase of the new system will begin in 2024, when jobless claims and benefits will transition.
The project is expected to be completed by the end of 2025, six months after the end of the state’s 2023-25 budget cycle.
Gerstenfeld was with the agency, but not its director, when Oregon secured the $89.6 million in federal funds for a new system in 2009. The current central system dates back to 1993 and relies on a language of computer programming dating back to 1959. .
Frequent changes of branch managers and a lack of sustained focus stalled the project for years.
The system proved unable to handle the flood of jobless claims filed with the agency at the start of the coronavirus pandemic – more than half a million claims in a few months as businesses closed or downsized — and also several benefit programs that Congress approved in response in 2020 and 2021. Among them: Benefits for self-employed and gig workers who had never paid unemployment tax before .
In contrast, during the Great Recession more than a decade ago, Congress approved repeated extensions of federal unemployment benefits — up to 99 weeks — when unemployed workers exhausted their 26 weeks of benefits from the United Nations trust funds. State. But it took 18 months for unemployment to peak during this downturn. The extensions ended in 2013.
FAST Enterprises was the supplier for two other major Oregon projects over the past decade.
One is the Department of Revenue’s GenTax system, which rolled it out between 2013 and 2017 to replace a system that dated back to the 1980s. The other was a new system for the Driver and Motor Vehicle Services Division , which completed the three-year rollout of its Service Transformation Project in 2011. It enables the DMV to comply with the requirements of the federal Real Identity Act of 2005 to make driver licenses more secure.
FAST Enterprises has also worked for the Portland city government.
The state government has a history of failed IT projects for over three decades.
Due to the Cover Oregon website fiasco, which led Oregon to abandon its own state-run health insurance marketplace in 2014 and rely on the federal exchange, new IT projects from the State are subject to further scrutiny by the Department of Administrative Services, the Legislature and outside participants in addition to the agencies involved. Oregon and Oracle Corp. settled a lawsuit in 2016, but the state recovered only part of the $240 million spent on the project.
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