Lawmakers urge changes to improve EDD handling of claims, fraud

Sacramento, State Capitol Building

In a four-hour oversight hearing Wednesday, California lawmakers called for immediate changes to improve the state’s unemployment benefits processing, following two independent state audits that highlighted a series of issues with the Employment Development Department. 

A bipartisan group of lawmakers met for the hearing held by the Joint Legislative Audit Committee and the Assembly Insurance Committee and heard from State Auditor Elaine Howle and EDD Director Rita Saenz. 

“I believe Californians are frustrated, they’re infuriated, they’re fed up. They want a system that works for them,” said Audit Chairman and Assemblyman Rudy Salas, D-Bakersfield, who later added that legislators would “make sure that EDD is reformed so that working families are never denied the relief they need during a crisis again.” 

The hearing comes a week after a group of Republican state senators, including Sen. Scott Wilk, R-Santa Clarita, penned a letter to a Senate budget subcommittee and the Joint Legislative Audit Committee, urging members to “quickly hold a hearing on these audit results,” read the letter. 

“The concern for what is going on at EDD has no party lines. Republicans may have been first to call attention to it last spring, but there isn’t an office in the Capitol that is not inundated with constituents needing assistance,” said Wilk in a prepared statement regarding the letter. “This is truly appalling. When future generations look back on the pandemic, the governor’s complete disregard for the dysfunction at EDD will go known as one of its biggest tragedies.”

One of the audits that reviewed EDD’s response to the effects of the pandemic deemed the department’s planning “poor” and its management “ineffective,” despite recommendations made in previous years to face instances, such as a recession.  

“The federal government was expecting EDD to improve. We made some recommendations to EDD and clearly they continue to struggle and the issues they had historically, certainly were exacerbated during this pandemic, unfortunately,” said Howle. 

A 2011 state audit found that the department had answered 15%-16% of calls. Recommendations were made to implement automated changes, but the issue only worsened during the pandemic, according to the report. 

“The call center performance was dismal. It was down to 1% even after (Gov. Gavin Newsom) put a strike team in, they hired additional staff,” according to the report. “The performance improved but not enough to really serve Californians well.”

Howle then issued a series of recommendations for EDD, such as conducting a risk-assessment analysis so the agency can use its resources as best as possible to improve the claims-processing system and tackle fraud, as well as increasing staffing and improving training. 

Saenz, who started with the department in January, described the information as “very sobering,” and said the department has taken the recommendations seriously. 

“There’s a lot of work to be done and we want you to know, we want to remind you that we’ve heard each of the auditor’s recommendations and we’re already making changes to our service to our customers and improving our ability to fight the onslaught of fraud facing our system,” said Saenz. “I am confident that through the implementation of the recommendations we will find solutions to problems that have been brought on by this once-in-a-lifetime pandemic and the changing economic recession it has caused.” 

A Senate budget subcommittee and the Senate Labor Committee are expected to hold a joint hearing on Monday to also discuss the recent audits of EDD. Wilk, who is a member of the Labor Committee, is expected to be present, according to his spokeswoman Eileen Ricker. 

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