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EDD's Old Tech Blamed for New Problems as Jobless Claims Soar

“I know this sounds crazy since we’re California, we’re the tech capital of the world,” Labor Secretary Julie Su said. “But our system is … inflexible; it’s very hard to change.”

The coronavirus pandemic arrived with little warning in California, but the state Employment Development Department has known for years that it was unprepared for widespread job losses.

The losses have arrived, with 3.2 million people filing unemployment claims in the state in the last six weeks. Many said they have struggled with a clunky online system and maddening delays when they call — often hundreds of times — to try to reach a human at the Employment Development Department (EDD).

The department’s leaders have faced criticism over its outdated computer systems since before the Great Recession. Yet a $30 million modernization project launched four years ago remains in the planning stages, even as a new recession seems to be arriving.

Had the department started the overhaul sooner or worked more quickly, Tim Irish, 62, of San Rafael, might have been able to resolve problems with his claim online. After he was laid off from a design firm three weeks ago, he immediately filed a claim, only to receive a notice of unemployment insurance award two weeks later that contained a mistake related to his wages, Irish said.

When he tried to contact EDD online, he encountered “a nightmare of dead ends, circular links and confusing jargon,” he said. He had no better luck trying to call.

California Labor Secretary Julie Su on Friday acknowledged these concerns and blamed the outdated system for confusion when she spoke on a public Facebook video.

“I know this sounds crazy since we’re California, we’re the tech capital of the world,” Su said. “But our system is … inflexible; it’s very hard to change.”

With a more modern system, applicants might be able to do things like withdraw an application and resubmit, but the outdated systems prevent it, Su said.

Retraining state workers

The department is training 1,340 state workers from other divisions and departments to help with claims and has opened a new phone line from 8 a.m. to 8 p.m., Levy said. The people who answer those calls don’t work directly on unemployment claims, but Levy said they can “help open up access on the clogged lines.”

Many filers are new to the process, Levy said. She said many people who call probably “have not taken full advantage of all of the self-serve tools we have available,” like video tutorials, a checklist to help people prepare to file, and a step-by-step chart describing what to expect. The department has also set up a frequently asked questions page to address common questions.

Filing a claim

The department’s old systems require workers to manually enter commands in green text on black screens to process claims using systems such as COBOL. A more modern system would use more automation and expand online claims access, according to budget documents the department filed with the Governor’s Office in January. 

Those changes would have been the “only way” to meet the increased demand for services of a recession, department officials said in the budget request.

Nonetheless, the department paid out more than $2 billion in unemployment benefits last week and nearly $4 billion since mid-March, Su said in a Thursday letter to EDD Director Sharon Hilliard.

Su on Thursday suspended a requirement for unemployed workers to update their job status every two weeks to reduce staffers’ workload.

The department aims to process claims within 21 days.

“For most people, because of all of the unique measures we’ve taken, it continues to be that they should be able to get their first payment within about three weeks from applying,” Levee said.

But many filers still haven’t received payments after 21 days, they said in calls and emails to The Sacramento Bee.

The department’s aging systems could make it especially difficult to get federal unemployment money to Californians, according to the Legislative Analyst’s Office.

California’s maximum state benefit is $450 a week. Another $600 a week in federal money is available through July. California was among the first states to start paying the $600 despite its technology challenges.

EDD will face a new test Tuesday, when it starts accepting online applications from people who are self-employed, own businesses, work as independent contractors or who have short work histories that exclude them from normal benefits.

The department has been through all this before. A decade ago, the Assembly Insurance Committee hauled the department’s leaders into a hearing and chastised them over IT problems and delayed claims amid the Great Recession.

“I’m shocked at how bad this situation has become,” Charles Calderon, a former Democratic assemblyman from Whittier, said at a 2010 hearing. “If there’s anything that government should be doing in these economic times, it’s to be getting unemployment money to families that need it. If we can’t do that, what else are we going to do? We can’t govern.”

EDD upgraded its systems for unemployment insurance in 2013, but the update caused problems that resulted in a backlog of claims. Former Gov. Jerry Brown ultimately ordered the department to pay claims up front and determine whether people were eligible later.

Lawmakers blasted the department’s leaders again and ordered changes: the department needed to improve call center access, put more information on its self-service website and provide better written explanations for claims problems, rather than simply telling people to call EDD.

The department completed another “partial modernization” in 2015, but the partial fixes contributed to the department’s patchwork of “overly complex and fiscally unsustainable” systems, according to a bid document posted by the department.

11 billion rows of data

Planning started in 2016 on a major technological overhaul that required hiring staff and contractors.

The department’s outdated systems contain 11 billion rows of data, including sensitive information such as Social Security numbers, Department of Motor Vehicles records and tax information, according to budget documents.

EDD’s tax branch is the second-largest tax collection agency in the U.S., collecting $81.5 billion in payroll taxes in the 2018-2019 fiscal year, according to the documents.

The project has been progressing through the state’s involved planning and procurement process. It’s scheduled to start this year and take four years.

The project’s speed is typical of large-scale California IT efforts. A major effort to overhaul the state’s decades-old payroll system came crashing down in 2013, and another attempt will take at least four more years. And the Financial Information System for California (FI$Cal), the state’s main accounting program, still is not fully functional 15 years after its launch.