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Auditor Says EDD Has Implemented Remedy for Risk Assessment

The state unemployment department got help from a contractor to assess the risks related to a change in eligibility for benefits as a result of the COVID-19 pandemic.

Elaine M. Howle speaking into a microphone.
State Auditor Elaine M. Howle
The state Employment Development Department (EDD) got a passing grade Tuesday from the California State Auditor in a follow-up report on the department’s steps toward resolving a backlog of claims.

EDD was deluged with unemployment claims beginning with the COVID-19 pandemic in March 2020, and State Auditor Elaine M. Howle’s department issued a report in January 2021 titled “EDD’s Poor Planning and Ineffective Management Left It Unprepared to Assist Californians Unemployed by COVID‑19 Shutdowns.” Those problems were compounded by other woes at EDD, including the staffing level of its call centers and the expertise of those working in those positions.

Due to the spike in claims as well as a surge in fraud, a backlog at EDD resulted in a suspension of some eligibility determinations and a deferral of some other work, the report notes. In January, the auditor’s staff issued a recommendation to EDD: “Perform a risk assessment of its deferred workloads, including deferred eligibility determinations and retroactive certifications. EDD’s assessment should take into account the relative likelihood that it issued payments to ineligible claimants by considering historic overpayment trends as well as the new or altered eligibility requirements the federal government adopted in response to the pandemic. If necessary, EDD should either partner with another state agency or contract for assistance in performing the analysis in support of this assessment.”

EDD responded by contracting with Accenture to perform that risk assessment. As part of that work, what EDD refers to as the Deferred Workloads Population was subdivided into three subgroups: claims subject to suspended determinations, retroactive certifications and employer protests.

“Accenture performed a risk assessment framework to segment the overall population and subpopulations into low, high-medium, and high risk of potential ineligibility,” the new auditor’s report says. “Qualitative guidance from field offices and case workers was incorporated to inform the quantitative analysis. The use of historical data since 2008 was included to compute ineligibility risk and then applied findings to the current population as appropriate. The Deferred Workloads population consists of claimants of both UI (unemployment insurance) and PUA (pandemic unemployment assistance) programs, and each subpopulation was assessed for estimated risk of potential ineligibility for these programs.” The audit report notes that state and federal extension programs were considered as part of this assessment.

“Based on the different availability and granularity of data for each respective population, the risk assessment consists of deterministic and probabilistic approaches, and in some cases population sizing, where data may be limited in availability,” the auditor’s report says. “The risk assessment outputs then estimates the upper and lower bounds of likeliness of ineligibility of claims and of the associated dollar amounts paid out to said claims. As part of this assessment, reference and operational tables have been produced to support the prioritization of determination efforts.”

The assessment was reported as completed in August, according to this week’s report.
Dennis Noone is Executive Editor of Industry Insider. He is a career journalist, having worked at small-town newspapers and major metropolitan dailies including USA Today in Washington, D.C.