Emergency Audit Faults EDD Backlog on Calls, Claims

The California Employment Development Department(EDD), battered by a surge of jobless claims during the COVID-19 pandemic, took some more lumps Tuesday in a new report from State Auditor Elaine Howle.

The auditor regularly monitors the operations and efficiency of state and local government agencies and reports to the Legislature and the governor with recommended remedies. The EDD has been a focus of the auditor numerous times in past years; most recently, reports have noted that the state has been bilked out of billions of dollars in fraudulent claims, another challenge for the beleaguered agency.

In September, a task force led by Government Operations Agency Secretary Yolanda Richardson and Code for America founder Jennifer Pahlka issued a report citing some of the same concerns cited in Howle’s new report. Also in September, the Joint Legislative Audit Committee ordered an emergency audit of EDD; Tuesday’s report summarizes the audit’s findings.

In the report, Howle’s staff digs into, among other issues, the claims backlog that began last spring. The auditor’s report contains four primary findings:

• “Significant weaknesses in EDD’s claims processing and workload management leave it at risk of a continuing backlog of claims.”
• “Because EDD responded to the claim surge by suspending certain eligibility requirements, many Californians are at risk of needing to repay benefits.”
• “EDD took uninformed and inadequate steps to resolve its call center deficiencies.”
• “Despite multiple warnings, EDD did not prepare for an economic downturn.”

The audit is summarized in a letter from Howle outlining the scope of EDD’s problems: “In mid-March 2020, UI (unemployment insurance) claims surged to unprecedented levels, and elevated claim levels persisted through October 2020. Although it would be unreasonable to have expected a flawless response to such an historic event, EDD’s inefficient processes and lack of advanced planning led to significant delays in its payment of UI claims,” she writes. “EDD has begun to modify its practices and processes to increase the rate at which it automatically processes online claims, but the automation it has gained during the pandemic is not fully sustainable. In addition, EDD responded to the claim surge by suspending its determinations of eligibility for most claimants, thereby compromising the integrity of the UI program.”

Howle’s letter concludes: “Moreover, EDD struggled to provide claimants assistance with their claims. At the beginning of the claim surge, EDD’s call center answered less than 1 percent of the calls it received. EDD quadrupled its available call center staff to more than 5,600 people in response to its call center problems, but these staff were often unable to assist callers and only marginally improved the percentage of calls it answered. Despite knowing for years that it had problems with call center performance, EDD has not yet adopted best practices for managing the call center, leaving it ill prepared to assist Californians effectively.”

The section of the report on call center operations is especially blunt:

“The claim surge exacerbated EDD’s struggles at answering calls to the point at which the call center effectively stopped providing service to almost all callers” from January to mid‑March 2020, the report says. And from mid-March through the end of April, “individuals attempting to reach EDD’s call center were almost universally unsuccessful in speaking to an agent — hundreds of thousands of callers were unable to speak with an agent each week, and EDD answered an average of only 0.5 percent of total calls per week. In fact, based on the number of unique callers and total calls at the end of April 2020, the average unique caller attempted to reach EDD at least 10 times.”

EDD’s efforts to handle the crush of claims, including the hiring of several thousand additional employees, didn’t fully pay off, either, due to different levels of training for agents and the months it takes to train them to be able to resolve eligibility questions and other complex matters. The shift to remote work — and to a Virtual Call Center — created additional logistical problems.

The audit further faults the agency for not following a “best practice” followed at commercial and government call centers — “collecting and analyzing call data to understand the specific reasons why customers are calling.”

The report notes: “Although EDD has data that tracks the specific reasons why people call, EDD’s staff confirmed that it has not yet begun analyzing these data or using them to better manage its call centers. If EDD analyzed call data that show the specific questions driving the highest volume of calls — such as questions about filing a new claim or verifying identity — it could adjust call center operations to better address these concerns.”  

The report continues: “Further, EDD’s UI branch is also not tracking one of the most critical performance indicators for call centers … tracking the number of callers whose questions were answered on their first call. This indicator is referred to as first-call resolution. … (EDD) has no clear plans to begin tracking this metric.”

The audit recommends that EDD begin:

• Identifying and resolving weaknesses or problems with the ways in which it provides assistance to UI claimants through self‑service and non-call-center options.
• Developing specialized training modules to quickly train its call center staff on the most commonly requested items with which callers want assistance.

And the audit says the Legislature should require EDD to do two things:

• Report at least once every six months on its website the amount of benefit payments for which it has required repayment and the amount repaid.
• Develop a recession plan so that it is well prepared to provide services during economic downturns. The planning process should consider lessons learned from previous economic downturns, including the recent pandemic-related claim surge.

EDD Director Rita Saenz, who was appointed this month to succeed the retired director, Sharon Hilliard, agrees in the report with many of the audit’s recommendations. The full report, along with appendices and EDD’s response, is available online. The ongoing problems with EDD were among the topics of a legislative hearing Tuesday afternoon.