Officials ask Legislature for $244 million to fix flawed unemployment system

State officials are asking for up to $244 million over the next five years to overhaul the unemployment system that failed for millions of Floridians during the pandemic last year.

In a Monday hearing before state senators, Department of Economic Opportunity Director Dane Eagle said the online unemployment system, known as CONNECT, “did a disservice to the people of Florida.”

He said the system wasn’t worth saving, comparing it to an iPhone purchased in 2013 that had hardly been updated. The solution, he told senators, was spending up to $73 million on a new system, plus $24 million in maintenance and $146 million over five years in additional costs brought on by the pandemic. The new system would be online by July 2023.

That price tag is magnitudes above the nearly $80 million Florida initially spent on CONNECT, which launched more than seven years ago amid a tangle of technical malfunctions that never got resolved heading into the pandemic.

Eagle cautioned that those proposed costs were the “ceiling” and that they could go down as the agency’s workload diminishes. Senators on Monday gave no indication whether they would approve it.

That solution, if approved by lawmakers, is part of the costly fallout from CONNECT, which epically failed last year when millions of jobless Floridians needed it most. For months, it was offline more than it was online, prone to an absurd number of glitches that kept Floridians from filing and receiving their jobless benefits.

While nearly every state struggled to pay benefits on time last year, CONNECT’s failure caused Florida to become the second-worst state in the country at getting money into the pockets of unemployed residents.

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The recommendations to replace the system came from a third-party analysis, which the Department of Economic Opportunity paid up to $247,000 for last year. The report, by Florida-based ISF, recommends shifting the new system into the cloud, where it could more easily handle a rise in claims. CONNECT is currently housed on state servers.

ISF’s report doesn’t go into details about the longtime underlying problems with CONNECT, however, including allegations by lawmakers and Gov. Ron DeSantis that the system was designed to fail.

Instead, the company blamed CONNECT’s meltdown on the historic rise in jobless claims that began in mid-March, in the first weeks of the pandemic.

“Florida would receive more claims in nine months than it had in the previous eight years combined,” the report states. “This unprecedented stress test revealed weaknesses in the CONNECT system that must be addressed.”

Monday’s hearing was the first serious discussion state lawmakers have had about CONNECT’s future since it melted down last year, and the questions by some senators were contentious.

Sen. Jason Pizzo, D-North Miami Beach, on Monday questioned why the report didn’t mention CONNECT’s longstanding problems. He said he wondered if that omission was intentional.

Eagle responded that the report was focused on fixes to the system, and that a forthcoming investigation from the state inspector general, requested by DeSantis, should answer many of those questions. That report will be released later this month, Eagle said.

The issues with CONNECT started 10 years ago, when the state hired Deloitte Consulting to create a new unemployment system. The project quickly ran into cost overruns, and when CONNECT went live in 2013, it immediately crashed and took months to function properly.

While Deloitte has taken much of the blame for the system’s problems over the last year, the company has had nothing to do with the system since 2015, when its contract with the state ended.

Unlike states with other Deloitte systems, such as Massachusetts and New Mexico, Florida officials made no apparent effort to upgrade the system in seven years leading up to the pandemic.

“This CONNECT system is garbage, and everyone knows that,” said Sen. Randolph Bracy, D-Orlando. “Why wasn’t there an effort to deal with the CONNECT system before the pandemic?”

“We didn’t have the resources that may have been necessary” to perform the upgrades, said Eagle, an attorney and former state lawmaker who took over the agency that oversees the system in September.

ISF’s report did note that CONNECT has “known, open defects” that created “potential system stability issues.”

It did not say why those defects were not fixed in the seven years before the pandemic, though. State auditors flagged defects that remained unfixed in reports issued in 2015, 2016 and 2019.

To handle the unprecedented workload of claims during the pandemic last year, the department installed 72 more servers on top of the four already in place, hired about 500 more employees and spent millions to hire call centers to take calls.

In all, the pandemic cost the jobs agency $39 million, according to the report. Eagle is asking lawmakers this year to approve hiring another 435 employees, many of whom would answer complex unemployment claims.

Eagle said that one of the bright spots during the last year has been the tireless work of the agency’s employees.

“These are state employees that are dedicated to their service,” Eagle said. “They’re owed our thanks.”