California unemployment chief vows changes after missteps

SACRAMENTO (AP) — Irate California lawmakers on Wednesday shared heartbreaking stories of constituents living out of their cars while trying in vain to get their unemployment benefits approved by the state, questioning top officials from Gov. Gavin Newsom’s administration about why they blocked legitimate claims while approving billions of dollars in payments to fraudsters.

Employment Development Director Rita Saenz, who took over last month after the previous director retired, repeatedly said she could not answer questions about what happened before she was hired. But she vowed to lawmakers: “This will never happen again.”

Lawmakers held a marathon public hearing on Wednesday to review two scathing audits of California’s unemployment agency that highlighted the state’s slow response to the mountain of claims that came in during the pandemic and the multiple mistakes it made in a ill-planned effort to catch up. Those mistakes, California State Auditor Elaine Howle said, made it much easier for criminals to get paid from fake claims.

Howle said the problem is with management, noting the department, like a lot of state agencies, is “just entrenched in their traditional processes.”

State lawmakers repeatedly asked Saenz and other top officials at the department to say what their plan was to fix the problems and to make sure they never happen again. But Saenz was light on details, saying “we will be prepared next time.”

“I’m not big on a lot of plans. I’m big on getting action,” Saenz said, adding she would use the audit as a “blueprint” to make changes at the department.

Her response angered some lawmakers, who noted the audit criticized the agency for not having a plan to ramp up operations during a recession, despite having more than a decade to plan for it since the last one.

“I don’t accept that this is the blueprint. This is correcting what should have been corrected before,” said Assemblywoman Tasha Boerner Horvath, a Democrat from Encinitas. “When I hear that, I get very, very concerned.”

California had a historically low unemployment rate of 3.9% at the start of 2020 after 10 years of economic growth coming out of the Great Recession. But that changed quickly in March and April when the state lost 2.6 million jobs after Gov. Gavin Newsom issued the nation’s first stayat-home order because of the pandemic.

Since then, the Employment Development Department has processed more than 19 million claims and paid more than $114 billion in benefits. The department wasn’t prepared to handle that surge, since it relied mostly on a manual process of reviewing claims. Yet the audit shows the agency waited four months before it automated that system. And in the rush to approve backlogged claims, the department relaxed a key fraud prevention safeguard because leaders did not understand how it worked.