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A California State Auditor released her emergency report this month in regards to the California Employment Development Department and its handling of unemployment claims and distribution of unemployment insurance.

The 78-page document, titled "EDD's Poor Planning and Ineffective Management Left It Unprepared to Assist Californians Unemployed by COVID-19 Shutdowns," was authored by State Auditor Elaine M. Howle, who was directed to conduct the report back in Sept. 2020.

The investigation was prompted by the surge of unemployment claims made starting in mid-March 2020 — when the state went into its first "Stay-at-Home" order — and persisted at record numbers until October 2020. During this time, EDD was unable to keep up with the number of claims needing to be processed and performed inefficiently to provide assistance to individuals reaching out to its call center, according to Howle.

"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," Howle said in a letter to Gov. Gavin Newsom and the state's legislative leaders on Wednesday.

"EDD was unable to automatically process nearly half of the claims submitted online between March and September 2020; instead, many of these claims required manual intervention from staff. As a result, hundreds of thousands of claimants waited longer than 21 days— EDD’s measure of how quickly it should process a claim—to receive their first benefit payments."

In addition to its delayed processing, EDD also suspended its "determinations of eligibility for most claimants, thereby compromising the integrity of the UI program." This included a temporary stop to collecting eligibility certifications, which claimants are required to fill out regarding the status of their employment search, in order to stay eligible for UI.

Although this action was made to expedite payment for claims made in the state, verifications still must be made and reported to the U.S. Department of Labor — meaning that EDD now has an additional backlog of eligibility certifications that it will eventually need to complete or else residents may face the brunt of the consequences.

Congressman Josh Harder (CA-10) has been expressing his frustrations with the EDD in a series of press releases and letters, referencing his many constituents that reached out to him about not receiving unemployment benefits over the course of months.

"During this pandemic and recession, Californians need to be able to focus on staying healthy and not on navigating an unresponsive unemployment insurance system," he said in one of his public letters to EDD.

Harder referenced that one of his constituents has contacted EDD over 1,000 times and had still not received their benefits. Another constituent called at least 600 times before they were able to talk to a live person.

"This report confirms what I've heard from thousands of people in the Valley over the past year — the EDD is a complete mess, and we need top to bottom reform," said Harder on Wednesday.

Over 11 million unemployment claims were filed in California in 2020. EDD publicly reported a backlog of close to 700,000 unprocessed claims. Tracy's unemployment rate, as of Dec. 2020, is at 8%, with 3,500 claims made that month.

Howle goes on to say in her letter that, although EDD has since started to make modifications to its processing strategies, the "automation it has gained during the pandemic is not fully sustainable." 

Howle's report lists four key observations in the audit and list of recommendations for legislators to direct toward EDD:

• 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 failed to prepare for an economic downturn.

Among the recommendations listed, Howles strongly advised for EDD to develop a recession plan, something it has been urged to do since the previous recession back in 2008. It was also recommended for EDD to be more transparent online about its amount of incoming and outgoing benefit payments.

"While there are additional improvements that EDD must make, the department has taken steps to increase efficiencies, expedite payment processes and prevent fraud," said EDD Director Rita Saenz in a response letter to the audit.

Saenz said the department plans to carry out all recommendations made in the audit report, including ensuring a robust verification process, enhancing modifications in its automated processes, conducting routine risk assessments and speeding up its response times.

"The leadership team is committed to building an EDD that improves in the short run and can deliver in times of crisis ...Thank you for your assistance and for the recommendations. Please know that we will continue to collaborate with you as EDD moves forward," Saenz said in her conclusion.

In addition to handling the state's unemployment and disability claims, EDD also spearheads four new benefit programs in response to the COVID-19 pandemic, which include Federal Pandemic Unemployment Compensation, Pandemic Unemployment Assistance, Pandemic Emergency Unemployment Compensation and Lost Wages Assistance. 

Harder says he will be watching the agency like a hawk to see if they actually do implement all the recommended changes in a timely fashion.

"I'll believe it when I see it. We've seen more happy talk from the agency than actual results so far," he said. "Their mismanagement has caused hundreds of thousands of California families to miss out on money they need to pay their bills."

• Contact Brianna Guillory at bguillory@tracypress.com or 209-830-4229.

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