City, county, state officials address EDD’s ‘troubling’ UI program management
Local and state leaders spoke up about a recent report by a state auditor, claiming that the Employment Development Department’s management of its unemployment insurance program was “inefficient” and “ineffective.”
The report was released Tuesday and written by California State Auditor Elaine Howle.
She addressed the following issues with the EDD’s management of its insurance program: 1) the EDD’s “inefficient processes and lack of advanced planning” led to significant delays; 2) the EDD responded to the surge by suspending determinations of eligibility for most claimants; and 3) the EDD’s call center answered less than 1% of the calls it received.
“Hundreds of thousands of claimants waited longer than 21 days — EDD’s measure of how quickly it should process a claim — to receive their first benefit payment,” she wrote in the report. “EDD was unable to automatically process nearly half of the claims submitted online between March and September 2020. Instead, many of these claims required manual intervention from staff.”
Then Ms. Howle wrote that in March 2020, the EDD halted most of its work determining whether unemployment insurance claimants were eligible for benefits in order to deliver payments to individuals in need in a more timely manner. However, this action resulted in 12.7 million deferred eligibility issues that affect up to 2.4 million claimants.
She added that now, nearly 1.7 million Californians are at risk of needing to repay benefits.
The directive to the EDD from the agency secretary was to “temporarily pay all claims without determining whether claimants met key eligibility criteria: being able to, and available for, work.”
Finally, the state auditor wrote that even before the surge of claims, the department struggled to answer a high rate of calls, and when it added thousands of staff members in response to the surge, it didn’t truly solve the issue due to the department’s “lengthy training program” and “because it has not collected critical information about why claimants call for help.”
“EDD has for years been aware of many of the problems in its UI claims processing and customer assistance efforts that this report identifies,” Ms. Howle wrote. “In fact, key problems related to its management of the UI program in 2020 were also present during the Great Recession of 2008 and 2009. Nonetheless, EDD did not take adequate steps to address these deficiencies.”
In response to the audit, the EDD wrote that it recognizes “there is much work to be done to improve our state’s unemployment system” and that it will implement all recommendations provided by the audit.
However, the EDD attributed many issues to federal guidance, writing, “States have seen complex, coordinated and aggressive attacks by national and international criminals. Without coordinated assistance from the Trump administration, states were left to deal with this extraordinary influx of fraud on their own while also endeavoring to distribute benefits to people in desperate need.”
Assemblymember Steve Bennett, D-Ventura, told the News-Press that his office gets new calls daily from constituents asking for assistance with EDD and their benefits. “Ensuring the timely payment of unemployment benefits is one of the most important jobs of EDD, especially during a pandemic.”
“While the initial onslaught of claims understandably overwhelmed California’s system last spring, it has also exposed systemic issues within the department that should have been addressed years ago,” Assemblymember Bennett said. “I appreciate that at least the department agrees with, rather than disputes, the findings of the audit. The governor and the legislature must ensure that the department addresses these issues to allow them to serve the people better.”
Santa Barbara Mayor Cathy Murillo told the News-Press that she has personal friends who have had trouble interacting with the agency and securing benefits.
“I saw firsthand how unemployed or underemployed people were impacted,” she said. “Yes, the pandemic and the problems it created are unprecedented, so I can understand various agencies and systems had to catch up with all the demand.
“I look at this audit and its findings as the beginning of fixing these problems, reforming the system and ultimately creating a system by which Californians can receive the benefits they need and deserve.”
Newly-elected 4th District Supervisor Bob Nelson referred to the report as “troubling, especially seeing the amount of waste, fraud and inefficiencies in the system.”
“These dollars are meant for California’s hard-working residents,” Mr. Nelson, the chair of the Board of Supervisors, told the News-Press. “For every dollar that is misallocated or wasted, it represents a dollar that is not in a bank account for a single mom who has lost her job during the pandemic.
“It is time for the governor to stop abusing the Emergency Services Act and allow oversight and participation in state government, from the DMV and EDD to schools reopening and pandemic response,” Mr. Nelson said. “We have a system of checks and balances, and it is about time that courts and the people of California remind the governor of that.”
State Sen. Monique Limón, D-Santa Barbara, told the News-Press the audit is “unnerving and distressing” and that it’s failing Californians in dire need of financial assistance.
“California needs a new EDD structure that prioritizes Californians who have been neglected due to the recent EDD faults,” she said. “It is unjustifiable that constituents have yet to receive their expected EDD assistance due to the lack of logistical planning and preparation from the department and continue to have their accounts frozen.
“Multiple times, I have joined my colleagues urging Gov. Newsom to improve EDD operations. With these findings, I will continue to do so while working on legislative solutions in the legislature.”
Dr. Peter Rupert, an economics professor at UCSB, is also director of the UCSB Economic Forecast Project, which has been monitoring unemployment rates and job losses during the pandemic. He told the News-Press that he doesn’t agree that the EDD’s decisions to remove the eligibility determinations jeopardizes the department’s integrity.
He compared that decision to that of the state government’s decision to close all non-essential businesses when the pandemic hit.
“Were they caught off guard? Of course. No one can say they weren’t, and they’ll be the first to admit they were overrun,” Dr. Rupert said. “Do I blame them? No more than anyone else who was surprised by the pandemic.”
The professor also referenced the fact that many Americans who received the stimulus checks probably didn’t actually need them, but he doesn’t believe it compromises the integrity of the government.
“It was a choice to be made to get money out there as fast as they could, given their constraints,” Dr. Rupert said. “You want more speed? You’re going to have to cut some corners. It happens all the time when people want to do things quickly.
“If we told the EDD, ‘Listen, we want you to prepare from now on for a pandemic,’ they would have such excess capacity.”
This is not the first time the EDD has been under scrutiny for its management.
In November 2020, local authorities began investigating allegations that at least 157 Santa Barbara County jail inmates stole more than $1 million by filing bogus claims through the EDD, resulting in what could be the largest taxpayer fraud in California history.
The investigation is still under way, but the widespread fraud could possibly be linked to the fact that, at the time of the fraudulent claims, the state did not have a process to cross-reference the names of people receiving benefits with inmates behind bars.
In addition, three individuals — one Santa Barbara resident and two San Diego residents — are being sentenced March 19 in Santa Barbara Superior Court for charges of felony unemployment insurance benefit fraud filed through the EDD. The Santa Barbara woman will be given probation for two years, and the other two are facing between 15 and 18 years in state prison.