Oregon ready to launch new unemployment computer system. Here's why it took 15 years

Fifteen years after it was launched, and at a cost of $106 million, Oregon’s new unemployment computer system is scheduled to start taking jobless claims early next month.

Sen. Ron Wyden, D-Oregon, helped the state get $80 million from the federal government in 2009 for the modernization of the computer system. He's been critical of how the state dragged its feet for more than a decade despite having the money for the work.

Eleven years after Oregon got the money and the COVID-19 pandemic hit, the state was still in the planning stages. The antiquated system was overwhelmed when hundreds of thousands of Oregonians were shuffled into the unemployment system as businesses shut down.

Oregon's unemployment system was hopelessly behind as the state's unemployment rate hit a record high of 14.2% in April 2020. Payments were delayed for weeks, months or years.

"No one should have to wait months for benefits like so many jobless workers did during the pandemic,” Wyden said.

Some Oregonians had to get legal help to get their claims paid more than a year later, some spent thousands of dollars challenging the state as it tried to take back their unemployment payments, some were hopelessly stuck in limbo waiting for unemployment.

"While it would have been better to upgrade the systems before COVID hit, the state now has vital lessons learned from the pandemic that can be incorporated into its modernization efforts, putting OED in a better position for any future economic downturn," Wyden said in a statement.

Unemployment Insurance Division Director Lindsi Leahy says the new computer system – which the state has been testing for a year – is flexible, adaptable and more user-friendly for people making claims.

But it still won’t be a perfect cure if an event similar to the pandemic occurs.

“There are a lot of programs and situations that people can be in," Oregon Employment Department Director David Gerstenfeld said. "It’s not always a simple 'Follow these three steps and it will work for everybody.' But the new system will be much more understandable."

Gerstenfeld said 40 additional staff have been hired to help during the transition, something managers learned from other states doing modernizations.

15-year timeline for Oregon to launch its unemployment system

The Oregon Employment Department was created in 1993. That state launched an unemployment computer system based on the COBOL programming language, which dated to the 1960s.

2009: The U.S. Department of Labor, through the American Recovery and Reinvestment Act, gives Oregon $85 million to replace its current unemployment system.

August 2012: The office of Secretary of State Kate Brown releases an audit that finds numerous problems in the unemployment benefit computer system. The audit recommended security of the system should be improved.

October 2014: A security breach resulted in hackers accessing confidential records for more than 850,000 people.

2014: Oregon launches Cover Oregon, a healthcare marketplace that the state shut down after spending $240 million. In the wake of that, Oregon set up “stage gates,” requiring similar projects – such as the unemployment modernization – to go through extensive checks.

2015: Six years after receiving federal funds, the state’s employment department begins the modernization of the unemployment computer system by evaluating what other states had done and mapping out a process for Oregon to modernize its computers.

December 2015: The Oregon Secretary of State’s office releases another critical audit of the Employment Department. “These computer programs are inflexible, poorly documented and difficult to maintain," the audit said. "Considering these factors, employment should take steps to replace them with more robust and maintainable computer code.”

"There was a fair amount of preparation work that was going on, and part of it was the agency wanting to make sure that it wasn’t essentially having the issues other states did when they modernized their unemployment insurance system," Gerstenfeld said.

Other states, such as Massachusetts, went millions of dollars over budget with their early modernization efforts and had major problems or fixes that still need.

2019: The Oregon Legislature creates a Paid Family Medical Leave program, to be administered by the Employment Department. It is intended to pay people to take care of a child, provide care for a family member who has a serious health condition or for a “safe leave” related to domestic violence, sexual assault or harassment.

March 14, 2020: Thirty-six cases of COVID-19 were confirmed in Oregon as virus began taking hold in the Pacific Northwest. The state's unemployment rate was 3.7% and there were 4,269 unemployment claims that week.

March 23, 2020: Gov. Kate Brown issues a “stay home” executive order that required businesses that couldn’t offer to-go services to close.

March 29, 2020: The federal government increased weekly unemployment payments by $600, eliminated the wait week, extended the weeks of benefits and gave unemployment to people who were self-employed.

The Oregon Department of Employment's computer system was unable to add those components immediately. Retired department staff to be brought back to add in coding for the additional programs.

April 4, 2020: A record 100 new COVID-19 cases were reported, and 62,788 initial unemployment claims were filed during this week.

May 14, 2020: The average wait time to talk with a department employee by phone was 216 minutes, up from less than five minutes in March prior to the pandemic.

May 30, 2020: Oregon lawmakers grill Oregon Employment Department director Kay Erickson about the failures of the department in getting people their benefits.

May 31, 2020: Erickson resigns under pressure. Brown names Gerstenfeld, who had been the director of the Paid Family Medical Leave program, as acting director.

July 2020: The Employment Department opens new call centers in Salem and Wilsonville to handle the influx in claims. The one in Wilsonville had nearly 500 employees.

September 2020: The state selects FAST Enterprises as the vendor for the Employment Department's modernization project.

December 2020: After a challenge by a competing vendor, FAST Enterprises was again chosen as to carry out the modernization.

By the end of 2020: 580,000 people in Oregon received nearly $7.5 billion in unemployment.

September 2021: The federal programs that expanded and extended benefits programs ran out of funding.

July 2022: The Secretary of State’s office releases an audit finding the Employment Department's “published resources were not updated timely, and information could be confusing, conflicting and difficult to navigate.”

September 2022: The Employment Department launches Frances Online for employers and part of Paid Leave Oregon. The system is named after former U.S. Secretary of Labor Frances Perkins.

January 2023: Employers and employees started paying into Paid Leave Oregon.

June 2023: Gov. Tina Kotek names Gerstenfeld as department director, and he is confirmed by the state legislature after being the acting director for more than three years.

Sept. 3, 2023: Paid Leave Oregon launches. Oregonians can receive 12 weeks of paid leave, if they qualify.

Feb. 1, 2024: About 44,000 people receive unemployment benefits and the unemployment rate is 3.7%.

February 28, 2024: At 5 p.m., the 40-year-old unemployment computer system will shut down, and the information from it will migrate to the new computer system. Neither claimants or employers will be able to file or check on information until the new system goes live.

March 4, 2024: The new unemployment system is scheduled to launch at 8 a.m. for claimants at frances.oregon.gov. Oregonians will be able to create a profile and make a weekly claim in the system that was initiated in 2009.

In addition to the original $85 million from the federal government, $20 million came from Paid Leave Oregon, grants from the Trade Adjustment Act, the Reemployment Services and Eligibility Assessment program and some flexible state funds.

Bill Poehler covers Marion and Polk County for the Statesman Journal. Contact him at bpoehler@StatesmanJournal.com

This article originally appeared on Salem Statesman Journal: Oregon launching new unemployment computer system after delays