Modernization

(a) In general Beginning with fiscal year 2027 and annually thereafter, not less than $225,000,000 of amounts available in the Artificial Intelligence Horizon Fund under section 101(b) shall be transferred from such Fund to the Unemployment Trust Fund, for activities related to the detection and prevention of fraud, the promotion of equitable access to unemployment compensation benefits, and ensuring the timely payment of benefits with respect to unemployment compensation programs, including for— (1) Federal administrative costs related to implementation of the amendments made by sections 501 through section 504; (2) systemwide infrastructure investment and development related to implementation of such amendments; and (3) awarding grants to States to assist such States in complying with such amendments, including through the establishment of procedures or the building of infrastructure to— (A) verify or validate the identity of claimants; (B) calculate unemployment compensation amounts; (C) implement Federal guidance regarding fraud detection and prevention; (D) accelerate the processing of unemployment compensation claims or any backlog of such claims; and (E) issue subgrants to entities— (i) which may include labor organizations, community-based nonprofit groups, and other entities that are capable of carrying out the duties described in clause (iii); (ii) who shall demonstrate existing relationships, or the ability to readily establish relationships, with employers and employees, consumers, and other individuals; and (iii) to assist individuals in navigating enrollment in unemployment compensation programs, health insurance enrollment, and workforce training opportunities. (b) Restrictions on grants to States As a condition of receiving a grant under subsection (a)(3), the Secretary of Labor may require that a State receiving such a grant shall— (1) use such program integrity tools as the Secretary may specify; and (2) as directed by the Secretary, conduct user accessibility testing on any new infrastructure developed by the Secretary pursuant to subsection (a)(2). (c) Allocation of grant funds (1) In general Funding for grants under subsection (a)(3) shall be allocated according to a formula established by the Secretary of Labor. (2) Requirements In establishing the formula under paragraph (1), the Secretary of Labor shall ensure that— (A) each small State receives 48 percent of the amount allocated to each large State; (B) each medium State receives 65 percent of the amount allocated to each large State; (C) each large State receives the base allocation determined by the Secretary of Labor; and (D) each extra large State receives an amount equal to 133 percent of the amount allocated to each large State. (3) Definitions In this subsection: (A) Covered employment The term covered employment means employment subject to contributions under State unemployment compensation law. (B) Extra large State The term extra large State means a State with an average covered employment of at least 7,000,000 employees. (C) Large State The term large State means a State with an average covered employment of at least 2,000,000 but less than 7,000,000 employees. (D) Medium State The term medium State means a State with an average covered employment of at least 1,000,000 but less than 2,000,000 employees. (E) Small State The term small State means a State with an average covered employment of less than 1,000,000 employees. (F) State The term State means the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, and the United States Virgin Islands.