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California’s Unemployment System Problems Trigger Audit

The system meant to supply Californians with unemployment benefits has been rocked by a series of high-profile problems, including glitches and what appear to be widespread cases of fraud.

by George Avalos, The Mercury News / September 4, 2020
Shutterstock/Uladzik Kryhin

(TNS) — The state’s Employment Development Department, already jolted by mammoth failures in its payment system, now faces a widening fraud problem and demands for an audit at the same time it is scrambling to launch $300 in extra unemployment payments within days.

Despite the welcome development that the EDD expects to soon start rolling out $300 in extra unemployment payments made possible by an executive order signed by President Donald Trump, the embattled state agency is facing the prospect of an official audit amid revelations that widening fraud problems have begun to afflict the EDD payments system.

“Can we get serious about the absolute disaster that is the EDD?” said state Sen. Melissa Melendez. “Millions of Californians are waiting for their state assistance and have not received anything or even spoken to real people. These kinds of actions are unacceptable.”

In what appears to be just one example of possible fraud that could be affecting people who await payments from the EDD, state Sen. Melendez, a Republican who represents parts of Riverside County, related the experience of a constituent that occurred recently.

The state senator’s Southern California constituent was astonished to receive 116 envelopes from the EDD that all were addressed to his home — even though he was employed and hadn’t applied for jobless benefits.

Two of the envelopes contained debit cards, the official means by which the embattled state agency can actually issue benefits to an unemployed worker.

The envelopes were addressed to 33 different people who reside all over California, including locations quite distant from each other, such as San Jose, Sacramento, and the San Diego suburb of Chula Vista.

“Fraud attempts have increased during the pandemic,” the EDD stated in a prepared release.

Problems with the EDD began to surface months ago when the state agency was overwhelmed by an avalanche of applications for first-time unemployment benefits in the wake of coronavirus-linked business shutdowns that were ordered by state and local government agencies.

It soon became clear that a broken call center and glitch-ridden website that was based on a primitive computer language had coalesced to hobble the EDD’s efforts to issue payments to California workers who had lost their jobs by the millions amid the coronavirus outbreak.

This news organization has analyzed federal statistics and determined that, as of May, as many as 1.8 million unemployed California workers were trapped in the EDD payment backlog while they awaited their first benefits to be released from the state agency’s bureaucratic limbo.

The EDD said that number was too high and claimed that any backlog was far less, perhaps no more than a fraction of the estimate of 1.8 million.

However, an official estimate from the chair of the Legislature’s Joint Legislative Audit Committee was at odds with the assertions from the EDD, which has issued vague and incomplete assessments about how far behind the agency is in making payments.

“Approximately 1 million to 1.2 million potentially eligible applicants, including those that filed in March, are still waiting on payments for unemployment insurance,” according to an estimate released Sept. 2 by Assemblymember Rudy Salas, chair of the Joint Legislative Audit Committee, and a Democrat who represents parts of Kern County.

Alarmed by the EDD’s apparent inability to remedy its nagging failures to issue benefit payments, a Salas-led group of 18 state lawmakers, including assemblymembers, senators, Democrats, and Republicans, formally asked the Joint Legislative Audit Committee to demand that the California Auditor investigate and analyze the EDD’s woes.

“Californians are hurting and need immediate relief from EDD,” Assemblymember Salas said. “An emergency audit of EDD will shine light on the department’s shortcomings and help us chart a path forward.”

Since the business shutdowns began in mid-March, 8.13 million California workers have filed initial claims for unemployment benefits. The huge number of jobless workers has intensified the pressure on the EDD and brought the agency’s inadequacies out in the open.

The EDD vows to begin the first payments of the extra $300 in federally financed jobless benefits starting on Sept. 7. The state agency didn’t say how many workers will receive enhanced payments during the initial days. Workers must receive at least $100 a week in state unemployment benefits to receive the extra $300.

The second phase of the EDD effort begins Sept. 15, when the EDD will use email, text messages, and paper mail to attempt to alert an estimated 1.2 million California workers that they must attest they are fully or partly unemployed as a result of the coronavirus.

The $300 supplement means a worker with the maximum state payment of $450 a week could receive $750 a week. A worker receiving the average EDD payment of $287 could receive a weekly payment of $587.

Gov. Gavin Newsom has deployed a strike team to analyze the EDD’s difficulties and chart a path for the state agency to extricate itself from its payments quagmire.

“The governor needs to take responsibility to fix EDD that goes beyond a strike team,” Sen. Melendez said. “The taxpayers of this state expect more from their government.”

©2020 the San Jose Mercury News, Distributed by Tribune Content Agency, LLC.

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