Tier Selected as a Key Subcontractor for Indiana Unemployment Insurance Modernization Project

Tier Technologies, Inc. (Nasdaq:TIER), a leading
provider of transaction processing and packaged software and systems
integration solutions for public sector clients, today announced that
it has been awarded a subcontract as a member of a project team to
develop, implement and maintain the Indiana Department of Workforce
Development's (IDWD) new unemployment insurance processing system. The
value of Tier's fixed price subcontract is expected to be a
significant portion of the approximately $24 million prime contract
over the approximately three-year term.
   Under this contract, Tier is serving as a major subcontractor to
Haverstick Consulting, Inc., a technology services and business
consulting firm based in Carmel, Indiana. The project team will
modernize IDWD's unemployment insurance computer system, delivering a
solution designed to automate processes for both collecting and paying
unemployment insurance. This project is expected to save taxpayer
dollars by reducing overpayments, and improve customer service by
providing users with around-the-clock access to unemployment
information.
   "We are pleased to work with Haverstick's project team that will
assist Indiana in the important work of modernizing its unemployment
insurance systems," said James R. Weaver, Tier's Chairman and Chief
Executive Officer. "Tier's Unemployment Insurance Practice has
established a track record of success in helping states transform
their unemployment insurance operations and increase efficiencies
through the use of leading-edge technology solutions. With
approximately 40 government customers in the state, Tier's commitment
to Indiana is strong. We look forward to extending that commitment
through our participation in this team, for the ultimate benefit of
the employers and citizens of Indiana."
   "We will be managing an exceptional project team whose members
have implemented numerous successful unemployment insurance systems in
other states, and we're pleased to count Tier as a member of our
team," said Howard Bates, Haverstick's President.
   Tier's Unemployment Insurance Practice provides systems
integration and services for state unemployment insurance
administration programs. The Indiana Unemployment Insurance
Modernization Project will be developed using Tier's UI Connect(SM)
framework - a completely integrated unemployment insurance tax,
benefits and appeals solution. UI Connect(SM) offers states a
significant head start advantage in modernizing their legacy
unemployment insurance computing environments.

   About Tier

   Tier is a leading provider of transaction processing and packaged
software and systems integration services for public sector clients.
We combine our understanding of enterprise-wide systems with domain
knowledge enabling our clients to rapidly channel emerging
technologies into their operations. We focus on sectors that we
believe are driven by forces that make demand for our services less
discretionary and are likely to provide us with recurring long-term
revenue streams. More information about the Company is available at
www.Tier.com.

   Statements made in this press release that are not historical
facts, including statements regarding expectations for future
revenues, earnings, and expenses, are forward-looking statements that
are made pursuant to the safe harbor provisions of the Securities
Litigation Reform Act of 1995. Tier undertakes no obligation to update
any such forward-looking statements.
   Each of these statements is made as of the date hereof based only
on current information and expectations that are inherently subject to
change and involve a number of risks and uncertainties. Actual events
or results may differ materially from those projected in any of such
statements due to various factors, including but not limited to the
potential loss of funding by clients, including due to government
budget shortfalls or revisions to mandated statutes; failure to
achieve anticipated gross margin levels with respect to individual
projects, including due to unanticipated costs incurred in fixed-price
or transaction-based projects; the timing, initiation, completion,
renewal, extension or early termination of client projects; the
Company's ability to realize revenues from its business development
opportunities and achieve cost savings from its restructuring
activities; and unanticipated claims as a result of project
performance, including due to the failure of software providers or
subcontractors to satisfactorily complete engagements.
   For a discussion of these and other factors which may cause our
actual events or results to differ from those projected, please refer
to the Company's annual report on Form 10-K for the year ended Sept.
30, 2004, our most recent quarterly report on Form 10-Q for the
quarter ended June 30, 2005, as well as other filings with the SEC.