A major upgrade to the state's unemployment insurance computer system delayed benefits to thousands, but new information reveals the state knew about, yet underestimated, how many would be affected.
Officials overseeing California's unemployment insurance program were celebrating the completion of a major computer system upgrade over the Labor Day weekend when an employee in a Southern California call center sent headquarters a worrisome note.
"Don't pat yourself on the back don't congradulate (sic) yourself nor others," the employee, Adolfo Jimenez, told Employment Development Department Deputy Director Sabrina Reed in an email a day after new system went live.
The computer system, he said, "does not work."
Over the next month, a problem converting old unemployment claims into the state's new processing system would overwhelm EDD, delaying jobless benefits for nearly 150,000 Californians and focusing attention on yet another state information-technology breakdown.
Publicly, EDD apologized for the delay and said on its website that employees were "working around the clock and through the weekends" to process backlogged claims.
EDD may have been surprised by the severity of the problem, but officials knew the new computer system was vulnerable before they initiated the upgrade, according to internal correspondence obtained by The Bee in response to a California Public Records Act request. They badly miscalculated how many claimants would be affected by a glitch in the data-conversion process, going ahead with the upgrade because they believed it would affect only a small number of people whose claims they could approve by hand.
"The UI (unemployment insurance) program knew this situation would occur, however, they believed the number of claims that would be routed for manual processing would be much less, so they planned on handling it as a manual workload," Gail Overhouse, EDD's deputy director for information technology, told state IT officials in a Sept. 11 email. "Well, it turns out we have a high number of claims getting routed into the queue."
Overhouse estimated the number of affected claims at 270,000 to 300,000, though EDD officials said some of those claims had not been backlogged longer than 10 days, the period after which they would be considered delayed. Other people may have had more than one claim in the queue, and some claims were held for manual review for valid reasons.
The officials Overhouse notified appeared to recognize the potential fallout. The state has had difficulty for years with big technology projects, including the abandonment of a quarter-billion-dollar upgrade to the state payroll system earlier this year.
Carlos Ramos, director of the California Department of Technology, asked Overhouse, "Do you know if the Governor's communications people have been alerted to the media attention this has or may receive?"
By early October, when EDD announced it had finally cleared the backlog of claims, the state estimated 148,000 Californians had unemployment checks delayed at some point over the previous month, representing about 19 percent of all Californians receiving jobless benefits. The problem was so significant it skewed reporting of initial jobless claims by the U.S. Department of Labor, and residents complained of running out of money.
"Knowing there was a problem, why didn't they fix the problem ahead of time?" said Michael Krigsman, an industry analyst with Boston-based Asuret Inc. "It's an issue of poor judgment."
Loree Levy, an EDD spokeswoman, said tests conducted in preparation for the computer system-conversion over the Labor Day weekend suggested the problem would be manageable and that if any test suggested otherwise, the department would have backed off.
However, she said, "You can only simulate so much."
Confident in the new system, EDD administrators went into the Labor Day weekend in high spirits. On the Friday before the holiday, James Duckens, a project director, wrote EDD administrators in an email that "all is ready" for the conversion, and EDD Chief Deputy Director Sharon Hilliard replied, "Let the fun begin!!! Can't wait."
EDD officials had been working for months to overhaul the department's 30-year-old unemployment insurance system -- part of a nearly $188 million system upgrade designed to let Californians submit certifications for unemployment insurance benefits online or by telephone -- and the switchover appeared initially to be a success.
On Labor Day, Hilliard told colleagues in an email, "I think we all have very big smiles on our faces today," and she wrote to a former EDD director the next day that "the conversion weekend could not have gone better."
When state offices reopened on Sept. 3, Reed wrote unemployment insurance staff, "Today marks a major milestone in the history of the Employment Development Department (EDD) with the implementation of the California Unemployment Benefit Services (CUBS) system."
Problems with the computer system became apparent within days, but administrators initially minimized them. In an email to branch staff on Sept. 6, Reed said, "As expected, we have
experienced a few bumps, but nothing that cannot be overcome with time and commitment."
Ten days later, with reports of problems becoming increasingly negative and more public, Reed told branch employees that "while the CUBS system is working, there is a transition period that comes with any automation upgrade of this magnitude."
She said, "Unfortunately, the complaints and media focus continue."
It would be another eight days before the Brown administration ordered EDD to begin paying backlogged claims immediately, putting off a determination of whether they are eligible for payment.
But the governor's press office became involved earlier, including in an effort to "start pushing messages" about the effect of federal funding reductions on staffing at EDD, according to Levy.
In one email, Levy told Overhouse the governor's "Comms team" wanted cost estimates for employee overtime used to address the delayed payment backlog.
"They think the info will help us start pushing messages about the funding part of our problem," Levy said.
Jimenez, a front-line employee at a customer-service center in Buena Park, said in his email to Reed that the new computer system had left employees unable to open new claims or help claimants and that "everyone is having problems." He said he raised the issue in an email to Gov. Jerry Brown.
Reed forwarded the message to Maria Rutherford, a division chief.
"Who is this guy?!" Reed asked.
The next morning, EDD's Donald Owens apologized to Reed for Jimenez's email and said he had been "counseled regarding the nature of the email and the proper chain of command regarding concerns or issues with CUBS or any other work related items."
Owens said Jimenez had been asked how he was doing and "he stated he was fine with CUBS."
Jimenez did not respond to a request for comment, and Owens declined to comment.
As EDD moves forward with the new computer system, Owens told Reed, "the Buena Park Office morale is high."
This article originally appeared in The Sacramento Bee.