California Lawmakers Roll Out Plans to Overhaul Flailing Unemployment Department

The reform package calls for stricter oversight, a streamlined application process and new fraud prevention systems to prevent more unemployment benefits from reaching inmates and imposters.

The California Employment Development Department. (Courthouse News photo / Nick Cahill)

SACRAMENTO, Calif. (CN) — Inheriting a mounting bureaucratic disaster that has floated lifelines to inmates but left newly jobless Californians broke, lawmakers on Thursday called for a reboot of the state’s Employment Development Department.

Pressed to act after a series of criminal investigations and audits revealed inmates and fraudsters took the department for at least $10 billion during the pandemic, a group of Assembly members say sweeping changes are needed to make the troubled department functional once again.

“We want to fix it,” said Assemblyman Rudy Salas, D-Bakersfield. “EDD needs to be reformed, it needs to more responsive to Californians especially during a time of need.” 

The bills call for improvements to the department’s identity verification process, an oversight board to monitor unemployment claims, a task force to further investigate fraud, simplified application processes and direct deposit options for claimants.

The reform package comes one day after the department’s leadership received a lashing from an Assembly committee.

During a marathon oversight hearing, flummoxed and angry lawmakers on both sides of the aisle spent five hours recounting stories of people forced to live in their cars while waiting for unemployment benefits that never came.

During a virtual press conference Thursday, California resident Laurel Carter told the lawmakers she has gone six weeks without assistance because EDD mistakenly froze her account. Desperate to fix the error, Carter said she’s slept multiple nights with her computer on, hoping to finally hear back from an EDD representative.

While Carter acknowledged it is important for EDD to investigate the rampant fraud, she said it shouldn’t come at the expense of her and other deserving Californians.

“I need some answers,” said Carter, who is still waiting for assistance with her frozen account. “What about all of us that are who we say we are?”

One of the proposals, Assembly Bill 110, attempts to prevent benefits from going to inmates by requiring EDD to cross-check all claims against state and local incarceration records. Lawmakers also want to spend $55 million on a task force to aid ongoing fraud investigations as well as a new oversight board to ensure unemployment benefits are being distributed swiftly and accurately.

Assemblywoman Cottie Petrie-Norris, D-Laguna Beach, said many of the EDD’s troubles are systemic and far from new.

“The truth is this department has been failing for years and this pandemic really has brought those failures into sharp focus. It has become a crisis for our state.”

In addition to cracking down on past and future fraud, the lawmakers want to make the system easier to use and more accessible.

As highlighted in the recent state audits, while unemployment skyrocketed last year EDD answered fewer than 1% of phone calls made by confused residents. Unable to get through to the department, residents have instead flooded their local elected officials with requests to help with unemployment applications.

Assembly Bill 402 would give people an official avenue for help by creating a sort of consumer advocate arm to sift through application issues. Related proposals would allow claimants to receive benefits via direct deposit, require EDD to offer more options for non-English speakers and a streamlined application process. 

San Diego Assemblywoman Lorena Gonzalez said her direct deposit bill is a common-sense proposal born from an incident last summer when Bank of America froze benefit cards amid the spike in fraud. She noted California is just one of three states that doesn’t let people get benefits via direct deposit and that her bill would “cut out the middleman” in reference to the state’s contract with Bank of America.

The collection of bills will be heard in Assembly policy committees in the spring.

According to lawmakers, EDD has been the main source of constituent complaints and that their staffs have turned into EDD liaisons over the last year. 

“It’s mind-blowing that the one job, the one and only job EDD has, it has failed,” said Assemblyman Miguel Santiago, D-Los Angeles. “We could have paid for everyone’s rent, paid for utilities and probably could have given groceries to everyone at the poverty level. That’s how much money we blew.”

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