SACRAMENTO – On Tuesday, California’s non-partisan State Auditor released the results of an audit of the Employment Development Department or EDD originally called for by members of the Senate Republican Caucus last summer.

The audit results come after news reports show an increase in the number of backlogged claims and that rampant fraudulent unemployment claims are now at a staggering $11 billion and could rise as high as $30 billion.

“The concern for what is going on at EDD has no party lines,” said California Sen. Scott Wilk (R-Santa Clarita). “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. 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.”

The audit found that “the economic downturn worsened EDD’s already poor performance” and that, even after adding numerous staff, EDD “only marginally improved the percentage of answered calls.”

Last year, Senate Republicans asked for call center metrics to be included in the budget as a way to improve accountability, but the budget approved by the Governor and Democratic leadership did not include that proposal. The audit also found that, due to the inefficiencies and poor management at the EDD, some Californians will have to pay back benefits.

In response to the audit, a bipartisan group of senators delivered a letter to the Chair of the Joint Legislative Audit Committee (JLAC) and the Chair of Senate Budget Subcommittee #5 requesting an immediate oversight hearing.

The oversight hearing should focus on EDD implementing the Auditor’s recommendations to address the backlog of claims and prevent future fraud, the senators said.

Download the bipartisan letter here.

Below is the full letter:

January 26, 2021

The Honorable María Elena Durazo, Chair
Senate Budget Subcommittee #5
State Capitol, Room 2032
Sacramento, CA 95814

The Honorable Rudy Salas, Jr., Chair
Joint Legislative Audit Committee
1020 N Street, Room 107
Sacramento, CA 95814

Dear Senator Durazo and Assemblymember Salas,

We write today to call upon the Legislature to quickly hold hearings to address the continuing mismanagement of our state’s Unemployment Insurance (UI) program by the Employment Development Department (EDD). Since the pandemic began almost 11 months ago, we have heard horror stories from our constituents about unemployment claims being delayed, denied, or just lost in the bureaucracy.

Adding insult to injury, newspapers have reported that fraudulent claims totaling potentially billions of dollars have been paid, even while legitimate claims languish. Unfortunately, we have also seen the Governor’s past plans and initiatives fail to reform these problems, and the recently released Governor’s budget offered no new proposals for strategic changes, systems investment, or management improvements.

The release today of the State Auditor’s report on the EDD backlog confirms that it is past time for the Legislature to do what is needed to help resolve EDD’s chronic issues. We also anticipate that an audit on EDD fraud, set to be released this Thursday, will highlight additional issues that should be addressed. To take that first step, we are specifically requesting that Senate Budget Subcommittee #5 and the Joint Legislative Audit Committee quickly hold a hearing on these audit results.

The hearing should focus on how EDD is implementing the recommendations from the Auditor reports, along with resources and reforms that we can put in place to ensure the quick and orderly processing of legitimate claims along with effective anti-fraud measures.

We cannot stress enough the importance that this oversight begin as soon as possible. While some in our state government may have lost focus on ensuring that Californians can obtain their unemployment benefits, we believe that real oversight needs to begin by the end of next week. Delaying committee hearings until the end of February or March would be a dereliction of our duty and would ultimately tell our constituents that we are content with the status quo.

It is our hope that you will join us in committing to hold hearings by the end of next week to ensure that the Auditor’s recommendations will be implemented and to ascertain what else needs to be done so that EDD pays honest claims quickly while preventing fraud. Californians who are awaiting much-needed assistance deserve no less.

Sincerely,

Brian Dahle
1st Senate District

Jim Nielsen
4th Senate District

Andreas Borgeas
8th Senate District

Anna Caballero
12th Senate District

Shannon Grove
16th Senate District

Scott Wilk
21st Senate District

Rosilicie Ochoa Bogh
23rd Senate District

Melissa Melendez
28th Senate District

Patricia Bates
36th Senate District

Brian Jones
38th Senate District

cc: The Honorable Toni Atkins, President Pro Tempore
The Honorable Anthony Rendon, Speaker
The Honorable Nancy Skinner, Chair Senate Budget Committee
The Honorable John Laird, Vice-Chair Joint Legislative Audit Committee
Mr. Chris Woods, Budget Director to the President Pro Tempore
Mr. Joe Stephenshaw, Staff Director. Senate Budget and Fiscal Review Committee
Ms. Jolie Onodera, Legislative Director. Department of Finance