EDD Budget Ask Tops $145.5M for Ongoing Modernization Efforts

The budget change proposals (BCPs) for all state agencies and departments this cycle totaled more than $881 million, with the single largest ask — some $145.5 million — coming from one high-profile department: the Employment Development Department (EDD).

The department’s budget request makes sense given its multiyear push to modernize the systems and services that underwent a brutal stress test during the pandemic. That effort is known as EDDNext.

Notably, the department is shifting its project priorities. Whereas before it planned to tackle unemployment insurance first within its integrated case management system, EDD is now prioritizing disability insurance and paid family leave.

In the request, the department outlines that the larger pot of money would come from two sources — just under $61 million from the general fund and $84.5 from the Unemployment Compensation Disability Fund.

“The resources requested in this proposal will enable the department to continue supporting the modernization of benefits systems and services through the next phase of the EDDNext life cycle,” the document reads. “This project is not only replacing aging benefit systems with flexible, user-friendly services, but is also aiming to change the processes and culture across the Unemployment Insurance, State Disability Insurance and Paid Family Leave benefit programs.”

Projects include the Integrated Claims Management System/Integrated Data Management (ICMS/IDM), Shared Customer Portal (SCP), Document Management System (DMS), Integrated Contact Center (ICC), fraud prevention and data analytics, and forms redesign and research and analysis.

Those projects have all been in flight since the 2022-23 budget cycle, and many have moved into the maintenance and operations (M&O) phase, with the following exceptions:

• The ICMS/IDM work for 2026-27 will include the award of an RFP (expected in February) and the continued multiyear replacement of the legacy claims systems.
• DMS work for this budget cycle is expected to include the completion of tax form and remittance system replacement and data migration, with M&O, consolidated data services and licenses for the system.
• The ICC, meanwhile, will see the implementation of changes to the interactive voice response (IVR) system and ongoing M&O and licensing for previously implemented features.
• Lastly, the fraud prevention and data analytics work is expected to include the implementation of an identity proofing solution geared toward Disability Insurance (DI) claimants as well as M&O. The document notes that this work will include the “incremental rollout of logging and data analytics integrations for new solutions.”

“In 2026-27, EDDNext will continue with the modernization of UI, DI, PFL and Tax program operations, business processes, and technology,” the BCP reads. “This approach is consistent with recommendations from the Strike Team, California State Auditor (CSA), and U.S. Department of Labor (DOL).”

More than $30 million of the requested $145.5 million will go toward vendor payments for automated batch review, identity risk analytics, business solutions and managed security services, among others.