It highlighted what it called “several concerning steps taken by EDD in recent years that suggest that ensuring eligible workers get benefits is not among its top priorities.”
LAO detailed the trouble consumers have had: “The department’s phone lines were routinely overwhelmed by the number of frustrated callers,” the report said. “These failures caused hardship for unemployed workers and their families, held back the economic recovery … and spurred frustration among Californians with their state government.” It noted that payments were delayed for about 5 million workers during the COVID-19 pandemic, which began in March 2020. An estimated 1 million people had their benefits improperly denied.
The report specifically addresses the department’s challenges with technology. In a section titled “Antiquated Computer Systems Also Contribute to Difficulties,” the report states: “Like many state departments, EDD’s reliance on outdated technology limits its ability to respond swiftly to changing circumstances or even manage routine tasks quickly and automatically. Although the key factors that make getting benefits difficult are operational — that is, departmental policies, practices, and actions — the use of outdated and inefficient technology adds further complication, delay, and frustration for eligible workers trying to get benefits.”
EDD’s chief information officer, Rita Gass, addressed how the department is addressing these and other challenges recently during an Industry Insider — California Member Briefing.
Unemployment exploded during the pandemic, reaching 15.9 percent in California in April 2020. Last month’s rate was 4.2 percent. During the pandemic, EDD was tasked with not only managing the state program, but new federal unemployment programs. The maximum state benefit is $450 a week, though that increased during the pandemic because of the federal aid. The key problem during the pandemic, LAO said, was that the unemployment system’s basic design encouraged the agency to focus on fraud and costs. Key features of that design, LAO said, “have encouraged the state to adopt policies that make getting benefits difficult.”
EDD officials have cited progress in recent years to make the system more efficient. It is upgrading its technology and hiring more workers. Gov. Gavin Newsom created a “strike team” in July 2020 to take a close look at EDD and recommend ways to make it more responsive. In October, he signed legislation aimed at making the agency more efficient.
The analyst’s office still had concerns. “Today’s problems do not call for fundamental reforms that could upend longstanding tenets of the state’s labor market,” the report said. “Instead, targeted changes to state practices could improve the experience unemployed workers have when they need UI.”
Among the problems the analyst’s office found:
- Too much emphasis on businesses. The state operates the unemployment insurance program “with an orientation toward businesses, which have a clear incentive to contain costs.” Policies formed under this orientation tend to emphasize holding down business costs. Businesses help fund the program.
- Federal government influence. Pressure from the federal government to avoid errors encourages the state to conduct lengthy reviews. “These steps probably catch some mistakes, but make getting benefits challenging and time-consuming for everyone else,” LAO said.
- Trust fund concerns. The state’s unemployment insurance trust fund “does not build large enough reserves during normal times to weather downturns.” The program was plagued with delays and frustrated consumers throughout 2020 and 2021. The report found that EDD improperly denied many applications for benefits, as more than half the denials are overturned on appeal, a far higher percentage than denials in the rest of the nation. Claims are often “delayed by weeks and often months, especially during downturns.” The analyst’s office estimated between 30 percent to 50 percent of workers faced delays.
