California Lawmakers Grill Officials Over Botched Unemployment System Upgrade

While responsible officials faced questions from lawmakers, local EDD employees report being overwhelmed by major backlogs that continue to delay jobless benefits.

As officials in charge of a computer problem that delayed jobless benefits for nearly 150,000 Californians appeared for the first time before an Assembly committee Wednesday, front-line employees testified the department is still buckling under a backlog of calls.

Irene Livingston, an employment program representative for the Employment Development Department in San Jose, said it remains "nearly impossible" for out-of-work Californians to reach an employee at EDD. She told members of the Assembly Insurance Committee the department is overwhelmed with telephone calls and an email system that remains backlogged.

"There's literally hundreds of thousands of messages that have yet to receive a response," she said.

The hearing came two months after a problem converting old jobless claim data into a new computer system engulfed EDD, leaving thousands of unemployed Californians without money and focusing attention on the state's long record of information-technology failures.

"This whole situation put a big black eye on how our constituents see the state of California," said Assemblywoman Lorena Gonzalez, D-San Diego.

In a sometimes-tense exchange with lawmakers -- the first public airing of the issue at the Capitol -- EDD officials apologized for the blunder but said they have largely resolved a problem that first became apparent two months ago.

"The system is working," EDD Chief Deputy Director Sharon Hilliard said, "and a majority of our customers are receiving benefits without interruption."

Assemblyman Curt Hagman, vice chairman of the committee, accused Hilliard of minimizing the impact of the problem, while other lawmakers lamented its effect on public confidence in the state.

"I think the fundamental issue for the state is we are the home of Silicon Valley, we are seen as the most technologically adept state in the nation," said Assemblyman Ken Cooley, D-Rancho Cordova. "To have this sort of thing happening is a colossal problem."

Hilliard and a representative of Deloitte Consulting, the contractor on the computer project, both said they should have run more thorough tests on the time needed to address "stop pay" flags associated with some claims converted into the new system over the Labor Day weekend.
"For this, we are very sorry," Hilliard said.

The data conversion, part of a multiyear, nearly $188 million upgrade of EDD's 30-year-old unemployment insurance processing system, has not only embarrassed the department, but served to focus attention on broader customer service issues within it.

According to a legislative report prepared ahead of the Wednesday hearing, EDD has consistently fallen below federal standards for timeliness in issuing initial jobless benefit payments, and the percentage of continuing, or subsequent, claims paid within two weeks of being filed has worsened since May 2012.

The department is hampered by a staffing shortage brought on by federal budget cuts.
In response to claims about a backlog of messages at EDD, Loree Levy, a department spokeswoman, said in an email that the department has addressed "core issues" related to a computer system problem that originated over Labor Day weekend and is "now redirecting staff attention to once again monitoring our email system for more recent emails so we can ensure any lingering questions as well as any new questions are addressed."

Representatives of the National Employment Law Project and the California Rural Legal Assistance urged the creation of an independent panel to oversee the state's unemployment benefits program, while members of Service Employees International Union Local 1000 said the EDD had dismissed employees' concerns about the project.

"This has been an enormous tragedy, and it could have been prevented," the union's Margarita Maldonado said.

Nicholas Lee, 33, of Sacramento, told lawmakers he lost his job as a merchandiser in September and has yet to receive help with unemployment benefits despite repeated calls and visits to a local office.

"I have two autistic kids, I have a wife, I have a house, and I am barely making it right now," he said, his voice quivering. "And this system is not working."

Gov. Jerry Brown told reporters last week "it seems like there's been multiple screw-ups" and that his administration is seeking to fix them and install "sustainable leadership" within EDD.
The department has been without a director since June.

The Governor's Office announced separately Wednesday that Marty Morgenstern, a longtime adviser to Brown, is retiring as secretary of the state Labor and Workforce Development Agency. Morgenstern, 78, will stay on as an unpaid senior adviser.

Morgenstern had been an adviser to Brown since he was governor before, from 1975 to 1983, serving as chief labor negotiator in Brown's first administration.

Brown spokesman Jim Evans said Morgenstern had been planning to retire and that his departure is unrelated to the problems at EDD.

Brown appointed David Lanier, his chief deputy legislative affairs secretary, to replace Morgenstern.

(c) 2013 McClatchy News Service