The Department of Labor is cutting roughly $400 million in grants meant to provide states with funding to modernize their unemployment insurance systems.
The department confirmed the cuts in a statement to the Washington Examiner on Wednesday. A spokesperson said hundreds of millions in federal funding sent to support the unemployment benefits system had been abused and spent on “bureaucratic and wasteful” equity projects.
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“America’s unemployment benefits system is facing an infrastructure crisis, riddled with waste, fraud, and abuse,” the spokesperson said.
“The Biden administration was given a historic opportunity by Congress to fix it, but instead squandered it on bureaucratic and wasteful projects that focused on equitable access rather than advancing access for all Americans in need,” she continued. “We’re committed to ensuring our unemployment system is free from fraud and abuse, and we look forward to partnering with state workforce agencies on real solutions that meet the needs of American workers.”
The latest cut grants are unrelated to another roughly $400 million that the department confirmed was uncovered in fraudulent payments last month.
The move to pull the grants comes after Congress initially authorized the funding in a $1.9 trillion coronavirus relief bill passed in 2021. The Labor Department is now reviewing funding authorized under the American Rescue Plan Act.
Last week, the department announced it would send states letters directing them to terminate the $400 million grants.
“These grants are being terminated because they no longer effectuate the Department’s priorities for its grant funding,” the department wrote, per Nextgov. “After completing its review, the Department may consider new funding opportunities to achieve these objectives. … Taking this action now allows the Department to maintain the flexibility to meet those objectives in alignment with administration and agency priorities.”