Student Blog — Outdated Technology Infrastructure Hampers Covid-19 Relief

By Ranie Lin
Research Intern, McNair Center for Entrepreneurship and Economic Growth

Among the provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act are the Economic Impact Payment stimulus checks, the expansion of unemployment benefits and the Paycheck Protection Program for small businesses. However, as these provisions were rolled out throughout April 2020, each of these facets was plagued by information technology challenges, delaying relief for many Americans. This post explores the software systems used by state and federal governments to implement these CARES Act provisions and the underlying causes behind the technological failures.

First, for the Economic Impact Payment program, the Internal Revenue Service was tasked by U.S. Secretary of the Treasury Steven Mnuchin to deliver stimulus payments to individuals and households. But a series of glitches — including the launch of a “Get My Payment” portal which frequently failed to properly display information — delayed payments for millions of Americans.^[1] The IRS refuted claims that their portal had crashed, instead stating that a “Status Not Available” message was caused by other factors, such as user information still being processed.^[2] Nonetheless, thousands of checks were mistakenly sent to incorrect bank accounts. A separate technical glitch caused the IRS system to fail to locate the information of up to 21 million clients of tax preparers such as TurboTax and H&R Block, further complicating relief efforts.^[3]

Concerns surrounding IRS computer systems are not new. In 2017, David Powner, the director of IT management issues at the Government Accountability Office, testified that the IRS “maintains over 20 million lines of assembly code,” a low-level, often processor-specific language that is rarely used by programmers today, and that the “archaic software and hardware” is no longer supported and increasingly difficult to maintain each year.^[4] The CARES Act stimulus program has itself required several coding changes to keep up with the volume of recipients. As the IRS struggled in April to efficiently centralize and locate direct deposit information, an anonymous senior IRS official reported to the Washington Post that the agency has over 16 databases with taxpayer information, many of which are coded in outdated languages and are unable to easily communicate with each other.^[5]

Second, the expansion of unemployment benefits under the CARES Act, which is federally funded but implemented by individual states, was also accompanied by a plethora of technological errors. A June 2017 report by the New York State Department of Labor discovered a “pressing problem of maintaining, modifying, and extending outdated and expensive mainframe-based UI [unemployment insurance] benefits and contributions systems that were written in the 1970s and 1980s and remain constrained by the technology of that era.”^[6] In March 2020, these systems failed when thousands of workers attempted to access the department’s website and phone lines for jobless benefits.^[7] Similarly, a 2019 audit of Florida’s Department of Economic Opportunity found a slew of technical errors on the department’s website.^[8] The state failed to heed the warnings, and as Florida workers attempted to claim expanded unemployment benefits in March 2020, the website crashed.^[9]

Lastly, the Paycheck Protection Program (PPP) also faced several technical issues that delayed the processing of loans for small businesses. E-Tran, the Small Business Administration’s (SBA) loan portal, not only experienced crashes and delays, but also required some banks to manually enter each borrower’s information, a process that can take up to 75 minutes per application.^[10] For the second round of PPP loans in April 2020, the SBA prohibited the use of Robotic Processing Automation (RPA), or automated data entry systems, for PPP loan submissions, in hopes that the move would make their portal “more reliable, accessible, and equitable” by reducing the burden on its technology systems.^[11] The SBA also imposed a new 350 per hour per lender limit on loan applications, after warning that “unprecedented demand” was slowing down its loan-processing technology.^[12] These moves may have delayed the delivery of loans by weeks, preventing small businesses from quickly obtaining desperately needed funds to keep workers on the payroll.

Conclusion

Throughout April 2020, more than 20 million U.S. jobs were lost, bringing the unemployment rate close to 15%.[13] As millions of Americans attempt to seek economic relief through the CARES Act, software and technology issues have persisted, often delaying payments, loans, and unemployment benefits. The current pandemic and economic fallout may finally signal to policy makers across the country that upgrading and maintaining much of the outdated technology used by state and federal government agencies is long overdue.

References

^[1] https://www.washingtonpost.com/business/2020/04/16/coronavirus-cares-stimulus-check/

^[2] https://www.irs.gov/newsroom/irs-statement-on-get-my-payment-application-status-not-available

^[3] https://www.washingtonpost.com/business/2020/04/17/stimulus-unemployment-checks-delays-government-delays/

^[4] https://www.govinfo.gov/content/pkg/CHRG-115hhrg33655/html/CHRG-115hhrg33655.htm

^[5] https://www.washingtonpost.com/business/2020/04/17/stimulus-unemployment-checks-delays-government-delays/

^[6] https://www.labor.ny.gov/agencyinfo/contracts/uiss/rfp-unemployment-insurance-system-solution-v17.pdf

^[7] https://www.nytimes.com/2020/04/04/nyregion/coronavirus-ny-unemployment-benefits.html

^[8] https://flauditor.gov/pages/pdf_files/2019-183.pdf

^[9] https://www.tampabay.com/news/health/2020/03/31/ron-desantis-was-warned-about-floridas-broken-unemployment-website-last-year-audit-shows/

^[10] https://www.wsj.com/articles/small-business-loans-face-delays-even-as-coronavirus-program-expands-11586511002

^[11] https://www.naggl.org/page/PPPResourceArchive