Business: New EDD chief tries to balance stopping fraud with paying benefits.
The new head of California’s Employment Development Department said Thursday that she’s trying to balance stopping fraud with paying benefits to people who need them.
“My priority is getting unemployment benefits as quickly as possible into the hands of eligible Californians and stopping fraud before it enters the system,” Rita Saenz said in a conference call with reporters.
The agency has struggled with both during an extraordinary surge of unemployment caused by the pandemic. Officials admit that EDD has paid at least $11 billion to scammers, including prison inmates and organized criminals, a figure that could rise to $30 billion. At the same time, millions of legitimate claimants say they’ve waited months to receive benefits and spent hundreds of frustrating hours try
ing to contact EDD.
Saenz took over as director of EDD in late December at a salary of $204,864. Previous director Sharon Hilliard resigned after spending 37 years at EDD — but less than a year as its head.
California’s state auditor, a task force appointed by Gov. Newsom, and state lawmakers all say the agency urgently needs reforms. Saenz said she has strategies in place to make that happen.
Among changes she cited: The agency is now hiring 900 new call center staff to handle the millions of calls it receives. It has engaged consulting firm Accenture to analyze its fraud prevention. It has stopped using Social Security numbers on two highvolume forms, after the state auditor warned that doing so made claimants vulnerable to identity theft. It plans to improve the way it shows information about a massive backlog of claims in the system for longer than 21 days. It’s coordinating with federal authorities and other states to identify and stop fraud.
Still, Saenz and spokeswoman Loree Levy struggled to answer some pointed questions on the call.
For instance, they were unable to provide specifics about how much money is made by private contractors EDD hires, such as Bank of America, which administers the debit cards used for benefits.
Some questions had answers, but ones that may not hearten those struggling to get benefits.
EDD froze 1.4 million accounts in December over fears of fraud. It’s notified those people that they need to confirm their identities, although many of those notified have not opened the emails. Almost 400,000 claims have been validated and paid. But those who didn’t validate their identities this week face disqualification. They have the right to appeal, but that process takes months.
Even those who successfully proved their identities via ID.me, an outside vendor EDD started using late last year for verifications, still may have to wait because the agency has to look at other forms of eligibility, Levy said.
The agency will have to set up new accounts for claimants who had already exhausted benefits before a Dec. 26 federal cutoff. It said some 185,000 people fell into this category. It previously had said that because of programming issues they would need to wait until early March to begin applying for extended federal benefits, meaning they will have a 2 ½month gap in that income.
The wave of fraud linked to identity theft is hitting another group besides the unemployed. People are now receiving a federal tax form, Form 1099G, from EDD for their 2020 taxes. The state does not tax unemployment compensation but the IRS does. Californians whose identities were stolen may receive the form even if they didn’t receive any benefits. The agency has an online information center to help.
Saenz said she has compassion for the many Californians who are desperate to get benefits.
“It’s our intention that this never happens again,” she said, presumably referring to agency’s inability to handle a huge increase in claims. “Decisions were made at certain times with the best information the department had. We’ve brought on people to ensure we do a much better job in the future. The people who are suffering are our neighbors and friends. We don’t want them to be suffering.”