New Audit Slams EDD Failures

Unanswered calls, unclear data, rampant fraud, and a decade-long failure to prepare

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California’s State Auditor on Tuesday harshly criticized the Employment Development Department for its poor handling of unemployment claims during the COVID-19 pandemic. 

“Although it would be unreasonable to have expected a flawless response to such an historic event, EDD's inefficient processes and lack of advanced planning led to significant delays in its payment of [unemployment] claims,“ Auditor Eliane Howle wrote in the summary of a new report.

Letters from the EDD.
NBC Bay Area
Letters from the EDD.


The report sheds light on a variety of complaints that many NBC Bay Area viewers have shared since the beginning of the pandemic: call backlogs, payment glitches, benefit fraud, and unexpected fees. The audit also builds upon a previous report in September 2020 that was equally critical of the agency.  


Many viewers complained that calling EDD was a waste of time. The new report concurs. 

“At the beginning of the claim surge, EDD's call center answered less than 1% of the calls it received,” the report said. “EDD quadrupled its available call center staff to more than 5,600 people in response to its call center problems, but these staff were often unable to assist callers and only marginally improved the percentage of calls it answered.”

Jason Fishman, an unemployed worker, personifies that finding.

“I spend most of my day calling EDD," he said. "Just to be told after two minutes that they’re too busy to take my call and they hang up on you.” Fishman, whose benefits suddenly paused in December, said he had called EDD 200 times Tuesday alone -- unsuccessfully.

In addition to phone problems, criminals later subverted the EDD system, overloaded it, and stole an undetermined amount of benefit dollars. The report says EDD’s response  -- at first tightening certification, but later postponing some eligibility steps because legitimate claims were being delayed in the sweep -- did not help matters. 

“Although both directives were designed to provide Californians with benefit payments as quickly as possible, the U.S. Department of Labor has not waived these requirements and, consequently, EDD now faces a very large impending workload of eligibility certifications that threatens its ability to operate effectively,” the report said.    

And, as a result, the auditor noted that now many claimants might soon face the prospect of having to repay benefits if EDD mistakenly approved them.   


The auditor's report arrived with a thud in the state legislature.

“EDD has been a mess and today’s audit confirms that,” said State Senator Shannon Grove, a Bakersfield Republican. Grove said another audit is rightly in the works. She and other Republicans are calling for an immediate oversight hearing.

MORE QUESTIONS: CA Republicans Request EDD Oversight Hearing

“We want to make sure there’s transparency, to make sure that these issues are addressed," Grove said. "When we ‘look under the hood,’ per se, we want to make sure we fix everything that’s going on.”

Assemblymember Phil Ting, a San Francisco Democrat, identified a few possible fixes.

 “One is to ensure they [EDD] have proper leadership," Ting said. "Two is to take a hard look at their technology. It’s very old. It’s COBOL.” 

Ting noted that EDD did not request additional funding in its newest budget request -- something he vows to explore.

Many people who live paycheck to paycheck desperately sought help from NBC Bay Area Responds to get paid. EDD repeatedly trumpeted that it was living up to a key internal metric: paying legitimate claims within 21 days of application. But the auditor’s report casts doubt on the EDD’s measurement of its backlog. 

The auditor says more than 800,000 claims were paid later than the agency deadline -- a far more grim assessment than EDD’s news releases. 

“EDD has presented unclear information about its claim backlog,” the auditor concluded. “EDD's presentation of backlog information has led to confusion about its performance during the pandemic.”   


Fundamentally, the auditor said EDD failed to adequately prepare for the pandemic -- even though it had ample opportunity to do so.

“During the Great Recession of 2008 and 2009, EDD experienced many problems similar to those we note in this report,” the auditor noted. “Nonetheless, in March 2020, EDD had no comprehensive plan for how it would respond if California experienced a recession and [unemployment] claims increased correspondingly.” 

In a response to the audit, EDD Director Rita Saenz said the challenges EDD faces are not unique to California. Still, Saenz committed to correcting the issues the auditor identified. 

“There is much work to be done to improve our state's unemployment system and [EDD] will implement all recommendations provided to EDD in this audit,” she said.

Jason Fishman said the fixes cannot come soon enough for people like him -- who reply on unemployment benefits as a lifeline.

“We need it right now," he said. "We’re getting kicked out of our houses. Our electric bills are overdue. Our refrigerators are empty. And we need it right now.”

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