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Nevada’s Employment Security Division defends UI modernization, ID verification and fraud prevention spending
Summary
State employment officials told lawmakers their $72 million modernization contract and ID.me-based identity verification efforts are on track; leaders proposed using penalties-and-interest funds to cover ongoing administration shortfalls and described expanding permanent staffing at local career hubs.
Nevada’s Employment Security Division (ESD) presented multiple, interconnected budget items and operational updates to the Joint Subcommittee on Human Services, defending a long-running unemployment insurance (UI) modernization contract, explaining identity-verification investments, and asking to convert dozens of intermittent staff to permanent positions at local career hubs.
What agencies presented. DETR and ESD officials described a roughly $72 million, 10-year UI modernization contract that they say remains on budget and on schedule. They told the committee that approximately $54 million of the contract was tied to ARPA funding and that about $33 million of that ARPA allocation had been expended to date. Officials said rollout of the benefits side (phase 2) of the modernization is targeted for a summer go-live window and that the department plans a demonstration for legislators before launch.
Identity verification and fraud prevention. ESD described ID.me virtual identity-proofing and ID.me kiosks deployed in 46 statewide career hubs to reduce identity fraud. Officials said the ID.me approach is both a frontline defense (virtual identity proofing for online claims) and an in-person option for rural clients. Deputy director Troy Jordan and others said DETR is coordinating with federal and local law enforcement, the attorney general’s office and other partners to pursue pandemic-era fraud and other fraudulent claims. Staff described pandemic-era identity fraud as substantial and said recovery and investigative efforts are ongoing.
Funding shifts and ongoing costs. Agency leaders asked to shift certain positions and expense authority to special funds (penalties and interest), arguing that the federal administrative grant for UI fluctuates and historically has not covered administrative costs. One enhancement (E125) would transfer special fund dollars into the UI account — about $6.5 million over the biennium, according to the department — to fill an administrative shortfall. Department officials said their plan for ongoing maintenance costs of the modernized system (estimated at $4–5 million annually after implementation) includes using penalties-and-interest revenue to support recurring costs rather than relying entirely on federal administrative grants.
Workforce and hub staffing. The Employment Security Division requested conversion of long-standing intermittent positions used at statewide “employNV” career hubs to permanent status (E310). Officials said 31 intermittent PCNs have served in expanded hub operations and that the conversion would secure permanent status for staff who have provided long-term services statewide, plus three new permanent FTEs to support hub expansion. The department also proposed hub expansions in growing communities such as Fernley and a relocation/expansion in Elko to better accommodate workforce partners and growing employer needs.
Contract and project status. Agency leaders told legislators that the tax-side rollout of the new system had proceeded successfully and that the benefits rollout (phase 2) is moving toward a summer target. ESD officials said the vendor implementation is on schedule, with a planned member demonstration before going live. They reported an anticipated annual platform maintenance cost for one new system at about $32,000 (for the BEN platform discussed earlier) and that the UI modernization’s ongoing support cost would be materially higher — in the low millions annually — and planned to be funded by program revenues and penalties/interest.
Lawmakers’ concerns and agency responses. Committee members asked how long ARPA integrity and other federal carve-out funds would remain available and whether alternative federal grants had been sought; officials said they had not applied for new Department of Labor modernization grants but did plan to use remaining CARES Act/ARPA carve-outs and penalties-and-interest to meet near-term obligations. Senator Dondero Loop and others pressed for clarity, and agency officials said they are working with the Governor’s Finance Office and LCB analysts on budget amendments and technical adjustments.
Fraud investigations and coordination. Deputy director Jordan said the department is “actively working on that every day” with federal partners including the FBI and local prosecutors to recover pandemic-era fraud. The department signaled that additional detection tools and staff resources are part of its strategy to reduce fraud when the new benefits system goes live.
Ending: Department leaders asked the subcommittee to approve the requested reclassifications and transfers to ensure continuity of customer service and to support fraud-prevention, identity verification and hub services while continuing to report back on contract costs and project milestones.
