California EDD unemployment claim backlog is growing again

A flier titled "Coping with Unemployment" with people in the background

May 5, 2021 5 AM PT

SACRAMENTO — State lawmakers have rejected a proposal by the governor to create a new state agency to improve working conditions in California, with opponents saying the state should first resolve serious problems that have delayed payment of unemployment benefits to many of those left jobless by the COVID-19 pandemic.

An Assembly panel recommended Tuesday against creating the new department at a hearing where lawmakers noted that a backlog of delayed claims has grown in the last month. Assemblyman David Chiu (D-San Francisco) and others said unemployed Californians are still facing frustrating delays in getting benefits.

“This month, my office has been receiving countless calls from desperate constituents, many of whom are in tears, some of whom are on the brink of homelessness and even some who have threatened suicide,” Chiu told leaders of experiences with the state Employment Development Department. “This is just a completely untenable situation for our constituents.”

The Assembly Budget Subcommittee on State Administration’s unanimous bipartisan recommendation, which next goes to the full budget committee, signaled continuing frustration with problems at the EDD that Director Rita Saenz acknowledged need further action.

“We are making progress,” Saenz told the legislators, but, she added, “We are not satisfied with the progress we have made to date. These stories are terrible.”

Gov. Gavin Newsom’s budget for the fiscal year starting July 1 proposed the creation of a new Department of Better Jobs and Higher Wages within the California Labor & Workforce Development Agency, but state officials said Tuesday that the move is premature while the agency struggles to resolve problems with the unemployment claims system.

The EDD, which approves claims for unemployment benefits, is part of the labor agency that would expand its role with a new department.

“The Assembly believes that the Labor Agency must focus its attention on fixing the Unemployment Insurance backlog and enforcing labor laws and regulations,” said a committee report prepared by legislative staff. “The Agency has not made sufficient progress on either of these goals so far in 2021.”

The Newsom administration had proposed the new department saying it would “integrate policy development and workforce innovation with existing employment, training, and data collection services” currently provided by the labor agency and EDD. The tasks of the new department, which would include efforts to “improve equity for all workforce participants” are already within the responsibilities of the existing labor agency, noted the state’s independent Legislative Analyst’s Office.

The LAO analysis said the proposal would shift about 1,600 employees of the EDD to the new department, although they are assigned to workforce services and not responsible for processing unemployment claims.

Still, the LAO said the reorganization would require considerable attention from leaders of the EDD and labor agency “at a time when the state’s urgent goal is to eliminate the backlog of unemployment insurance claims and prevent further fraud.”

“In our view,” the LAO added, “the administration’s decision to move forward with a complex reorganization during the pandemic poses a potentially serious risk to the state’s ongoing efforts to eliminate the backlog of unemployment insurance claims.”

Assemblyman Phil Ting (D-San Francisco), the Assembly’s Budget Committee chair, agreed the time wasn’t right to create “a new bureaucracy” in the labor agency.

“Given the multitude of ongoing problems at EDD, now is not the time to transfer numerous employees from the Labor and Workforce Development Agency to a newly created department,” Ting said. “They’re desperately needed to resolve the tremendous backlog in unemployment claims, prevent fraud and implement job training programs to get people back to work.”

Legislators noted that efforts to reduce the backlog of claims not paid after 21 days have stalled in the last month. On April 3 there were 1.03 million claims in the backlog, but the number rose on May 1 to 1.08 million. The portion of delayed claims that are awaiting EDD action has also gone up, from 122,000 at the start of April to 166,208 as of May 1, the agency said.

The remaining claims in the backlog are awaiting action by claimants, although many say they have been prevented by EDD’s jammed phone lines and bureaucratic red tape from resolving issues with claims.

“The Agency must first address these key concerns for the most vulnerable Californians before a conversation about expanding its role, as envisioned by this new department, could even begin,” the subcommittee report said.

EDD officials said factors in the rise in the backlog include a requirement that many unemployed people file new claims as their old ones expire after a year, and a return to the department requiring interviews to determine eligibility of many claimants.

Lawmakers said the rising backlog is alarming.

“It’s starting to creep back up. That is an overall concern,” Ting said.

The EDD’s problems go beyond the backlog. Ting told Saenz that people are still spending hours without success trying to get through to the EDD call center for help with claims.

“Our constituents are mad at us because they can’t get ahold of you,” Ting told Saenz, who said more staff is being added to help with claims and a new function will be available in June allowing people to more easily have their calls returned by EDD staff.

In December, the agency suspended 1.48 million claims based on suspicion of fraud until the identity of those seeking benefits could be verified.

On Tuesday, the agency said about 37% of the claims had suspensions lifted after people proved their eligibility. The other 932,000 claimants “were disqualified and were provided appeal rights,” the agency said.

Assemblyman Tom Lackey (R-Palmdale) said his office continues to be flooded with calls from unemployed people asking for help because their benefits have not arrived.

“These are people that are extremely desperate,” Lackey told Saenz. “They don’t have any other way to eat.”