Vermont labor officials explain $8 million reversion, outline UI modernization and backlog timelines

The Vermont Department of Labor told the House Appropriations Committee on Jan. 24 that an $8 million reversion in the FY25 budget adjustment consists of unspent federal ARPA dollars and carryforward funds for a UI modernization project that began in September 2024.

“Really, the big thing about the $8,000,000 is unspent funds that were part of the department’s base budget,” said Michael Harrington, Commissioner for the Department of Labor. He said part of the balance was ARPA funding used for UI administration and that carryforward money remained for a modernization line the department had not yet begun to spend.

The committee heard that the department awarded a contract to vendor FAST and that the modernization is an 18‑month project managed as part of the Agency of Digital Services (ADS) project portfolio. Harrington said the department expects a full cutover and go‑live “probably between May [and] July of 2026.”

Why it matters: committee members pressed the department about claimant wait times, adjudications delays and the use of one‑time federal funds. Lawmakers signaled interest in how reversions and sunsetting special funds could be redeployed elsewhere in the current budget adjustment.

Modernization, vendor and timeline

Harrington said the modernization began in September 2024 and that the vendor FAST — which he described as an established provider with multiple states using its UI product — won a public bid. The project is intended to replace a decades‑old mainframe system the department said was first deployed in 1970 and modified over the years.

“We will go live with the entire system … somewhere between May [and] July of ’26,” Harrington said. He described a planned data conversion and cutover process and said the department expects to run the legacy mainframe in parallel while confirming conversions before shutting it down.

Backlog, adjudications and call center performance

Committee members raised constituent complaints about long delays. Harrington said the current average turnaround for adjudications is “roughly about 60 days,” and that the department’s goal is to reduce that to under 30 days. He described adjudication as a fact‑finding process that requires contact with claimants and employers and noted that roughly half of claims require that extra review.

On call center wait times, Harrington said high‑season Monday mornings can produce waits “upwards of 4 hours,” while calls placed later in the week often wait only 10–15 minutes. He said the department offers a callback feature but limits the number of callbacks available each day so staff can complete return calls and nightly system jobs.

Harrington cited staffing, training time and turnover as major constraints. He said adjudications staffing is “fully staffed” as of the prior month but that onboarding and training new adjudicators takes months. The department is adding positions for adjudications and the call center, and it is working with ADS on a secure forward‑facing initial claim application that officials expect will reduce average call length (from roughly 25 minutes to an estimated five minutes for initial claim work under the new model).

Fraud, legacy code and technical limits

Harrington told the committee that during the pandemic the department shifted processes to limit fraud, noting that fraud rates were substantially higher for a temporary web‑facing application used early in the pandemic. He said the legacy UI mainframe relies on COBOL‑era code and that the department’s IT team no longer contains staff with institutional knowledge of the older system.

Officials said the modernization will replace that fragile mix of legacy code and manual processes, and that the vendor’s commercially maintained product is intended to be updated regularly.

One‑time funds, WEP fund and federal program risk

Committee members asked about a special workforce fund (WEP/WEP fund) balance that the department said totaled about $2.6 million remaining from awards and grants that had rolled forward from prior years. The department said much of the WEP fund had been granted to multiple providers over time and that the balance dated back to before 2016.

Harrington also discussed federal pandemic programs and potential federal clawbacks. He said most pandemic program spending has been reviewed and closed out, and that the state’s “finality” law limits federal recovery in many cases after a window of time absent evidence of fraud. He singled out the Lost Wages Assistance (LWA) program — administered through FEMA — as one the administration and several states were still reviewing for potential paybacks; he identified Vermont’s potential exposure at about $3.3 million.

What the committee asked and next steps

Committee members pressed whether the Department of Labor would be liable for federal clawbacks and whether reserves should be held. Harrington said any LWA payback would be a state liability, not one the department would attempt to collect from individual claimants unless there was fraud or identity theft. He said the administration might seek a multi‑year payback if required and was awaiting further federal guidance and possible administrative changes.

The department offered to accept constituent case referrals from members when claims appeared to be mishandled or stuck. Harrington reiterated that the department cannot “move people up in line” for personal circumstances but will look into instances where a claim was mishandled or stuck in the process.

Ending

Committee members thanked department officials; no formal committee action or vote occurred during the testimony. Lawmakers indicated they will continue oversight of the modernization timeline, staffing needs and the treatment of remaining one‑time funds as the FY25 budget adjustment proceeds.