California lawmakers grill EDD head over fraud, unresponsive call center

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A gathering of California lawmakers got a chance to air some of their unemployed constituents’ grievances to the head of the beleaguered Employment Development Department.

The joint hearing between four state committees had been postponed multiple times but finally convened Monday morning to get a status hearing from EDD officials.

The department, responsible for distributing unemployment benefits, has been fraught with technical difficulties after being caught flat-footed when millions lost their jobs in a matter of weeks when the COVID-19 pandemic began. Some waited up to 26 weeks for an initial eligibility meeting.

The Legislature approved $76.3 million in additional staffing help for EDD and millions more in various aid.

State Auditor Elaine Howle outlined the findings of her critical report on EDD that said the department insufficiently processed claims on a widespread level, something Howle’s office initially found in 2011.

“We found that nearly 50% of those claims were kicked out, where they had to manually do some analysis and do some work with the constituent to get them benefits,” Howle said.

The report also found the department’s call center in disarray, often unable to answer most phone calls or return them.

“It was poor before the pandemic, and it just got miserable,” Howle said.

The situation was laid out before EDD Director Rita Saenz, who attended remotely.

Howle estimated at the time more than $10 billion was unaccounted for, likely lost to fraud. In addition, she estimated about 77,000 claims of identity theft.

Lawmakers criticized the department for allowing an estimated $11.8 billion in fraud 18 months into the pandemic.

Assembly Member and committee Chair Wendy Carrillo, D-Los Angeles, said no Californian should fall through the cracks as many did with EDD amid the pandemic.

“Safety net programs like EDD have long needed structural reform,” she said.

Republicans on the committee pointed to the unaccounted for tax dollars that eventually will have to be repaid in the form of taxes.

“I remain seriously concerned about this fraud problem, Assembly Member Tom Lackey, R-Lawndale, said. “If we don’t address this in a serious way, it’s going to be a big big problem. The amount of money we’re losing is enormous and inexcusable, in my opinion.”

Saenz, who took over the department in December, acknowledged the struggles getting unemployment benefits but stressed the situation was improving.

“We are paying benefits faster and in a more secure way,” she said. “What we know is that 2020 was an anomaly, a criminal assault on the unemployment insurance programs across the country.”

Saenz said the department blocked billions of dollars in fraud attempts with new software and significantly cut down its backlog of claimants but admitted “the call center remains a challenge.”

Saenz said weekly calls are down to around 1 million per week, down from 3 million at its height. She acknowledged some wait up to 26 weeks for a response but said half of those were being paid and that “the vast majority never need an interview.”

When pressed, Saenz claimed the failures of EDD were from “systems,” failing, rather than poor management or employee performance.

The criticism comes as California struggles with continued high unemployment. The state gained 47,400 jobs in September. At an unemployment rate of 7.5%, California has the highest percentage of unemployed job seekers in the nation, tied with Nevada. The U.S. rate in September was 4.8%.





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