Serine
A federal grant designed to bolster unemployment fraud prevention in Kansas has been abruptly terminated by the U.S. Department of Labor, following the Trump administration’s crackdown on Diversity, Equity, and Inclusion (DEI) initiatives.
The Kansas Department of Labor (KDOL), led by Secretary Amber Shultz, has expressed disappointment and confusion over the federal decision, which eliminated funding for critical identity verification and fraud detection tools—not DEI programs.
$400 Million National Rescission Linked to DEI Language
In May 2025, the Department of Labor rescinded $400 million in unemployment insurance grants nationwide, citing the inclusion of language related to equity studies and positions such as “equitable access director.”
Officials described the move as part of efforts to remove what they consider “unlawful DEI programs” across government entities.
However, Kansas officials say the rescinded funding had nothing to do with DEI in practice. The state forfeited $1 million out of a $1.7 million grant intended specifically for fraud prevention, not equity-focused initiatives.
Kansas Officials Slam Decision as “Counterproductive”
In a letter to U.S. Labor Secretary Lori Chavez-DeRemer, Shultz called the decision both “confusing and contradictory”, adding:
“Revoking this support now leaves states more vulnerable to the very threats we were all called to confront.”
Shultz emphasized that the now-defunded program had played a key role in identifying and recovering fraudulent unemployment claims, particularly those exacerbated during the COVID-19 pandemic by international crime rings.
Impacts on Employers and Claimants Expected
Without these critical fraud-prevention tools, claims processing may slow, and fraud risk could increase. The U.S. Department of Labor claimed in its statement that the Biden administration had failed to fix the system, focusing on “equitable access” instead of “advancing access for all Americans.”
Kansas, however, maintains that no part of the fraud prevention funding was allocated toward DEI efforts. The federal equity grant, separate from the canceled program, provided over $4.5 million to help rural Kansans gain access to the unemployment system—particularly those without broadband access.
Kansas Recovers Millions, but Faces Setback
With the support of the now-canceled funding, Kansas recovered $11 million in fraudulent claims, a small portion of the $460 million lost during the pandemic.
Despite pressure from the Government Accountability Office and the Office of Inspector General to increase fraud protections, states like Kansas are now left with fewer resources.
“We are asked to do more with fewer tools, fewer resources, and less federal support,” Shultz concluded in her letter.
The abrupt termination of Kansas’ unemployment fraud prevention grant is a major setback in the fight against unemployment fraud.
Though intended to root out fraudsters and protect public funds, the program was canceled due to its perceived ties to DEI language.
Kansas officials are now sounding the alarm on the increased vulnerabilities this move could cause, not only in their state but across the country.