January 26, 2021
The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
Sacramento, California 95814
Dear Governor and Legislative Leaders:
In September 2020, the Joint Legislative Audit Committee directed my office to conduct an emergency audit of the Employment Development Department's (EDD) response to effects of the COVID-19 pandemic. In August 2020, we also identified as a high-risk issue the management of federal funding in response to the COVID-19 pandemic, and EDD is one of the state agencies responsible for managing that funding. For these reasons, we performed this audit of EDD's unemployment insurance (UI) program.
In mid-March 2020, UI claims surged to unprecedented levels, and elevated claim levels persisted through October 2020. 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 UI claims. EDD was unable to automatically process nearly half of the claims submitted online between March and September 2020; instead, many of these claims required manual intervention from staff. As a result, hundreds of thousands of claimants waited longer than 21 days—EDD's measure of how quickly it should process a claim—to receive their first benefit payments. EDD has begun to modify its practices and processes to increase the rate at which it automatically processes online claims, but the automation it has gained during the pandemic is not fully sustainable.
In addition, EDD responded to the claim surge by suspending its determinations of eligibility for most claimants, thereby compromising the integrity of the UI program. In spring of 2020, the secretary of the Labor and Workforce Development Agency directed EDD to pay certain claimants UI benefits without making key eligibility determinations and to temporarily stop collecting biweekly eligibility certifications. 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.
Moreover, EDD struggled to provide claimants assistance with their claims. At the beginning of the claim surge, EDD's call center answered less than 1 percent of the calls it received. 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. Despite knowing for years that it had problems with call center performance, EDD has not yet adopted best practices for managing the call center, leaving it ill prepared to assist Californians effectively.
ELAINE M. HOWLE, CPA
California State Auditor