Estados confundidos ante la amenaza de la administración Trump de cortar fondos de desempleo ● UPDATING

The Department of Labor's unprecedented threat to withhold administrative funding from state unemployment insurance programs has left several states in the dark, according to reports. Acting Labor Secretary Keith Sonderling sent a letter Wednesday warning that, for the first time in modern history, the federal government would cut off funding to states failing to address waste, fraud, and abuse in their unemployment systems.

The letter specifically named six states led by Democratic governors—California, New Jersey, New York, and others—while omitting any Republican-run states, and blamed the Biden administration for allowing widespread fraud.

However, confusion has emerged over whether states actually received the directive. A spokesperson for the Virginia Employment Commission stated they were still trying to determine if the letter had been received within the commonwealth.

New Jersey's Department of Labor and Workforce Development asked NOTUS for more information, saying they had no insight yet. The Labor Department did not respond to requests for clarification on whether the warnings had been sent out as announced.

Some states were aware of the letter. Andrea Cyr, a spokesperson for the New York State Department of Labor, confirmed the state knew of the communication and highlighted ongoing efforts to combat fraud and abuse since the pandemic.

The Trump administration has prioritized rooting out waste, fraud, and abuse in social services, and this threat to cut a main source of operational funding for unemployment insurance is unprecedented. A former high-level state labor office executive, speaking anonymously, warned it would be a disaster and questioned how states could operate without that funding.

The unemployment system faced significant fraud during the COVID-19 pandemic, which began under the first Trump administration. The Government Accountability Office estimates at least $60 billion was lost to fraud, though exact figures are hard to determine.

The federal government covers states' administrative costs through employer taxes, and most states rely entirely on this funding. The Labor Department has not specified what states must do to avoid cuts, but the letter promises detailed directives soon.

Critics see the letter as political bluster. A spokesperson for Illinois Governor JB Pritzker accused the administration of governing by press release, threatening states without providing information while eliminating resources for modernization and fraud prevention.

Last May, the Labor Department terminated millions in grant funding for state system upgrades, and Pennsylvania, named in the letter, rejected claims of systemic issues, calling itself a national leader despite the funding cuts.

Typically, compliance issues are resolved through a back-and-forth process with regional Labor Department offices. The federal government can withhold all administrative funding for noncompliance, but this rarely happens.

The last near-loss of funding occurred in the 1970s, according to Michele Evermore, a former Labor Department official under Biden. Currently, many states fail to meet standards for timely benefit payments, but the letter focused on fraud and improper payments, leaving out Florida, which ranks second in improper payment rates.