You know the saying “if it ain’t broke, don’t fix it?” Well, what if you don’t know it’s not working until it’s too late?
That’s exactly what happened in Florida. The state’s unemployment insurance (UI) program went from handling roughly 5,000 new claims each week to 50,000 claims each day. But the outdated system—known as CONNECT—couldn’t handle it. As Gov. Ron DeSantis said at the time, it was like a jalopy trying to win the Daytona 500.
A recent report confirmed DeSantis’s conclusion, noting the system was not positioned to handle this volume of claims. So, DeSantis took action, ordering the Chief Inspector General (CIG) to begin a review of the CONNECT system. The CIG found the system DeSantis inherited was designed to handle 200,000 users but was only tested for 4,200 users, while the primary vendor made mistake after mistake.
Florida Department of Economic Opportunity (DEO) Executive Director Dane Eagle also ordered an assessment of CONNECT, with specific instructions to improve the application and delivery process. The report’s findings led Eagle to ask legislators to help his Department replace CONNECT and modernize the state’s UI system with cloud-based technology. This forward-thinking approach will ensure that Florida will never find itself in this situation again. Indeed, thanks to the hard work of those at DEO and in the DeSantis administration, roughly 98 percent of all UI claims have been successfully processed.
The whole incident is reminiscent of when the state’s UI trust fund was bankrupt in 2011, forcing Florida to borrow more than $2 billion from the federal government to pay claims. Policymakers responded wisely by indexing the duration of Florida’s unemployment benefits so that their length is shorter during times of economic prosperity, but longer in times of crisis. This encourages folks to reenter the workforce and find a job during booms but also gives them more breaking room when the economy slows down.
As a result, the $2 billion UI deficit turned into a $3.9 billion surplus by 2018, all while UI taxes for small businesses plummeted by roughly 80 percent. Today, Florida is the only state with a population above 15 million that has a solvent trust fund. Its high-population peers—California, Illinois, New York, and even Texas—have been forced to collectively borrow nearly $45 billion—all while Florida hasn’t borrowed a single dime. As businesses thrive in Florida’s open economy, its UI taxes are the lowest in the nation. And the state just successfully adjusted its UI duration without a hitch as Florida’s unemployment rate continues to decline.
Meanwhile, there’s still important work to be done. Efforts to continuously modernize the state’s UI system—coupled with reforms to deter and recover fraudulent overpayments, while encouraging entrepreneurship—are essential to future success. After all, no amount of backend, system-level improvements can substitute for a government that is committed to reducing waste, fraud, and abuse.
Eagle’s Department, DeSantis, and other state policymakers are spearheading several of these initiatives and exploring others. Other opportunities for positive improvements include implementing recommendations from the United States Department of Labor’s Inspector General to cross-check free, preexisting databases against reemployment claims, enhancing opportunities for employers to report when people refuse offers of suitable work but still collect benefits (which is fraud), and informing the legislature of the state of the reemployment system’s integrity every year.
Florida’s UI challenges are in the past. And thanks to wise leadership at the state level, we have a robust, secure, and efficient unemployment system to look forward to.
