The Wisconsin Department of Workforce Development (DWD) has signed a contract for hardware and software updates to the state’s Unemployment Insurance (UI) system. DWD announced on September 29 that it will pay Flexion, a technology firm based in Madison, about $16.5 million over four years to perform phased software upgrades and other enhancements. The cost of the contract does not include other hardware and software that DWD will purchase as part of its upgrades.

The department’s press release on the contract with Flexion says it will spend a total of $80 million in federal funds on UI system upgrades, “including the call center modernization, efforts to address support outside of business hours, IT infrastructure costs (cloud services, code repository, etc.), licensing to support the effort, change management efforts, and other resources that may be needed to support the effort.”

Governor Tony Evers (D) is providing the funds for UI system upgrades from the American Rescue Plan Act (ARPA), a $1.9 trillion federal package signed in March by President Joe Biden (D). Under the ARPA, Wisconsin’s state government was allocated about $3.2 billion. As with previous federal spending bills related to COVID-19, Gov. Evers has broad discretion and sole authority to spend the state’s allocation under the ARPA.

Unemployment Benefits Have Become a Key Political Issue in Wisconsin

Since early 2020, Wisconsin’s UI benefit system has become a key political issue and point of contention between the Republican-controlled Legislature and the administration of Democratic Gov. Evers. The emergence of COVID-19 and subsequent public health orders drove an influx of UI claims that DWD had difficulty processing in a timely manner, leading to a large backlog of claims.

In his 2021 State of the State address, Gov. Evers called on the Legislature to take up his proposal to modernize the state’s UI system. The Legislature passed a compromise bill with some of the governor’s desired reforms but without the $5.3 million he had requested to begin making upgrades. DWD later secured a federal grant to fund the initial phase of updates.

Throughout 2021, the Hamilton Consulting Group has provided comprehensive coverage of this issue:

• In Third State of the State Address, Gov. Evers Calls for Unemployment System Overhaul and Declares 2021 “Year of Broadband” (January 14)
• Governor Evers Signs Bill Including COVID Liability Protections, UI Reforms (February 26)
• DWD Gets Federal Grant to Begin Updating UI Computer System (March 26)
• Legislature Reinstates Work Search Requirement for Those Receiving Unemployment Benefits (May 21)
• Republican Lawmakers Seek to End Federal Unemployment Supplements; Governor Likely to Veto (June 4)
• Legislative Update: Special Session and Veto Override Attempt End Without Changes (August 13)
• Employer Issues Update: Federal Unemployment Benefits Have ended; Class Action Lawsuit Filed by Disabled Residents (September 9)

On its website, DWD provides a weekly summary of UI Division activity as well as status updates on the UI Modernization project.