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State Audit Finds California’s Unemployment Department Failed To Plan For A Recession, Causing Widespread Payment Delays

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A call center worker at California's Employment Development Department (EDD) takes questions from out-of-work Californians about filing for unemployment benefits, March 30, 2020. California Economic Development Department
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In a scathing report published Tuesday, the California State Auditor’s office says the state’s unemployment department failed to plan for a recession, leading to widespread payment delays for jobless Californians during the COVID-19 pandemic.

The audit finds the Employment Development Department (EDD) is plagued with many of the same problems it encountered during the 2008-2009 recession.

Over more than 10 years, the agency did little to address these long-standing issues, according to the report. EDD’s unemployment branch did not begin planning for a recession until 2019, and had no comprehensive plan in place when the COVID pandemic struck.

The audit finds that EDD’s failings led to a number of problems as claims surged between March and September of 2020, including:

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  • Initial payments were delayed on nearly 40% of claims.
  • Nearly half of claims were flagged for time-intensive manual review rather than being processed automatically.
  • The department’s call center answered less than 1% of calls early in the pandemic.
  • Calls that did get through were often unresolved, because new staffers could not answer all claims-related questions until they completed nine months of training.
  • The department failed to answer hundreds of thousands of online questions, marking many as “resolved” without responding.

The audit was released one day after EDD officials held a press call to highlight widespread fraud in the state’s unemployment system. They said at least $11.4 billion in payments since March 2020 have been confirmed as fraudulent, and more payments are currently under investigation.

Department officials said new efforts to fight fraud are helping to weed out scammers early in the claims process. New applicants must complete an identity verification process through the website ID.me.

The audit found that the implementation of ID.me has sped up claims processing, with more than 90% of applications now being processed automatically.

However, the audit also found that the new identification process has been a barrier to many legitimate applicants. The report found that 20% of people who tried to use ID.me couldn’t successfully use the platform to validate their identity.

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