California lawmakers propose slate of reforms for state’s troubled unemployment agency
SACRAMENTO — After a pair of scathing audits confirmed California’s troubled unemployment agency has been plagued by years of mismanagement, state lawmakers on Thursday announced a raft of new bills to speed up the payment of jobless benefits and reduce fraud.
The package of bills proposed by nine Assembly members is aimed at forcing change at the state Employment Development Department, which was criticized by the state auditor last week for delays in providing unemployment benefits despite having been warned of problems in the system a decade ago.
The proposals would allow benefits to be provided by direct deposit rather than issued with debit cards sent through the mail, would require the agency to check claimants against lists of prison inmates to prevent fraud and would establish an Office of the Claimant Advocate to help people with claim problems.
“Many of the issues EDD is facing today have been known since the Great Recession,” said Assemblyman David Chiu (D-San Francisco). “Almost nothing was done to fix the problems or plan for another economic downturn.”
The EDD has been slow to respond to an unprecedented flood of unemployment benefit applications that resulted from the state shutting down much of the economy to stop the COVID-19 pandemic that began nearly a year ago.
Lawmakers said during a video news conference Thursday that many residents with legitimate unemployment claims have been harmed by an EDD decision to suspend 1.4 million claims in December to make sure they are not fraudulent.
The state auditor’s report was ordered by lawmakers who criticized California’s unemployment agency for a backlog of claims and failing to prevent widespread fraud.
Bay Area resident Laurel Carter joined the lawmakers’ event, saying her legitimate claim was suspended in mid-December with “no other explanation given.” She had difficulty uploading documents to prove her identity and was told she would have a five-hour wait to talk to a representative for help.
“I slept with my computer on for eight days just thinking that maybe in the middle of the night I would hear a ding and it would be someone that would speak to me,” Carter said. “I am now six weeks in without any payment.”
Though EDD Director Rita Saenz told lawmakers on Wednesday that she is committed to implementing improvements to the agency recommended by the state auditor and a strike team of government experts appointed last year by Gov. Gavin Newsom, skeptical lawmakers in both parties have introduced 20 bills in recent weeks in an attempt to more quickly address problems. They include legislation by Assemblywoman Lorena Gonzalez (D-San Diego) that would provide claimants with the option to receive their unemployment benefits via direct deposit to their bank accounts.
Currently, most jobless Californians are mailed a debit card that contains benefit payments, but the cards have proved vulnerable to being stolen or redirected to addresses used by fraudsters — more than 460,000 cards have been frozen by their issuer, Bank of America, pending investigations of possible fraud.
The audit noted that in May 2020, the Employment Development Department was warned that California was likely to see $1.2 billion in potential fraud.
California is one of just three states in the country that does not offer a direct deposit option, which can also help eliminate delays created by sending debit cards through the mail, Gonzalez said.
“Widespread problems with EDD’s debit cards have prevented countless working families from putting food on the table or paying bills during this difficult year,” she said.
A similar bill has also been introduced by a group of Republican lawmakers led by Assemblyman Smitty Smith of Apple Valley. In addition, legislation by Assemblywoman Laurie Davies (R-Laguna Niguel) would provide for chip-enabled benefit cards to further increase security.
After a state audit last week found more than $800 million in benefits were paid to claims filed in the names of prison inmates, many of whom had their identities stolen, Assemblywoman Cottie Petrie-Norris (D-Laguna Beach) introduced a bill that would require the EDD to cross-match claims with lists of incarcerated people. A similar bill has been introduced by Republican Senate Leader Shannon Grove of Bakersfield.
The EDD began cross-checking information late last year, but only after months of saying it could not legally access prison information. Lawmakers want to make the practice permanent in state law.
Legislators recounted stories of constituents made homeless due to benefit delays; Californians who were the victims of fraud may receive an erroneous tax bill.
Petrie-Norris has also introduced legislation to create an Unemployment Insurance Oversight Advisory Board to regularly review the EDD’s operations and make recommendations for improvements.
Legislation from Assemblywoman Buffy Wicks (D-Oakland) would create an Office of the Claimant Advocate within the EDD to help Californians get resolutions to problems with the unemployment system.
Lawmakers have also heard complaints in recent months reporting that people who do not speak English or Spanish have had difficulty filing claims and getting help in languages they speak. Chiu has introduced a bill that would require better language support.
“The lack of language access at EDD is not only upsetting, but it is also a matter of civil rights,” Chiu said.
Lawmakers also said they are pushing a $55-million budget proposal to fund a task force of local and state law enforcement agencies created late last year to address the widespread fraud.
California’s unemployment agency was not prepared for the COVID-19 pandemic, an emergency state audit confirmed this week. Many of its issues with processing claims have been ignored for more than a decade.
Republican lawmakers, including Assembly Minority Leader Marie Waldron of Escondido, have introduced a bill that would set a 30-day deadline for approving claims and require EDD to notify those whose claims are not approved in time how long the delay will be and the reason for the delay.
Jobless Californians also must certify every two weeks that they are eligible to continue receiving benefits, and many have complained that the forms to do so are confusing, noting that a simple mistake can stop benefits.
Assemblyman Chad Mayes, an independent from Yucca Valley, said Thursday he has introduced a bill that would make sure people who accidentally answer a certification question incorrectly and are sent an overpayment are not locked out of their employment benefits.
“Applying for benefits through EDD is a confusing process, and it shouldn’t be,” Mayes said.
All of the legislation will now go through committee hearings in the coming weeks and require approval of the Legislature and the governor.
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