Reported Y2K Readiness of State Employment Security Agencies' Unemployment Insurance Benefits and Tax Systems

AIMD-00-28R: Published: Oct 28, 1999. Publicly Released: Oct 28, 1999.

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Pursuant to a congressional request, GAO provided information on year 2000 readiness of State Employment Security Agencies' (SESA) unemployment insurance benefits and tax systems and determined the reported status of whether these systems have been independently verified and validated for year 2000 compliance. GAO also determined whether SESAs have submitted contingency plans for continuity of business operations.

GAO noted that: (1) on August 6, 1998, the Department of Labor issued a directive that required SESAs to conduct independent verification and validation (IV&V) of the year 2000 readiness of their unemployment insurance benefits and tax systems; (2) the department set a target date of July 1, 1999, for all SESAs to submit IV&V year 2000 certification reports for their systems to Labor; (3) the department obtained the services of the Information Technology Support Center (ITSC) to start reviewing these reports in June 1999, and to assess, from low to high, the probability of year 2000 compliance for each SESA; (4) based on ITSC's review of the available SESAs' IV&V reports, ITSC concluded that: (a) 20 benefits and 19 tax systems had a low probability of compliance; (b) 10 benefits and 9 tax systems had a medium probability of compliance; and (c) 7 benefits and 6 tax systems had a high probability of compliance; (5) 11 and 12 states, respectively, had not submitted IV&V reports for their benefits and tax systems; IV&V reports had been submitted but had not yet been rated at the time of GAO's briefing for five benefits and seven tax systems; (6) in September 1998, Labor issued a directive requiring that SESAs develop and submit business continuity and contingency plans (BCCP) for the benefits and tax programs; (7) Labor set two deadlines for SESAs to submit BCCPs for benefits programs; (8) Labor also set a target date of June 4, 1999, for the unemployment insurance tax program; (9) in June 1999, ITSC also began reviewing the SESAs' business continuity and contingency plans; (10) these plans were rated from low to high in terms of their compliance with Labor's requirements for coverage of core business functions of benefits and tax systems; (11) ITSC's reviews showed that the quality of BCCPs varied widely; (12) although three of the SESAs that GAO reviewed had reported to Labor that their benefits were compliant, GAO determined that noncompliant interactive voice recognition system components had not been replaced in Kentucky or Utah; (13) GAO confirmed that the California SESA had not yet replaced noncompliant scanner equipment; and (14) two other SESAs reported that they had not yet implemented compliant benefits or tax systems.

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