Fraud problems plague EDD as agency faces audit
Even with extra $300 payments coming, one lawmaker calls department ‘absolute disaster’
The state’s Employment Development Department, already jolted by mammoth failures in its payment system, now faces a widening fraud problem and demands for an audit as it scrambles to launch $300 in extra unemployment payments within days.
Despite the welcome development that EDD expects to soon start rolling out $300 in extra unemployment payments made possible by an executive order signed by President Donald Trump, the embattled agency is facing the prospect of an official audit amid revelations that widening fraud problems have begun to afflict its payments system.
“Can we get serious about the absolute disaster that is the EDD?” said state Sen. Melissa Melendez, R-Lake Elsinore. “Millions of Californians are waiting for their state assistance and have not received anything or even spoken to real people. These kinds of actions are unacceptable.”
In what appears to be one example of possible fraud that could be affecting people awaiting payments, Melendez related the experience of a constituent who was astonished to receive 116 envelopes from the EDD all addressed to his home — even though he was employed and hadn’t applied for jobless benefits.
Two of the envelopes contained debit cards, an official means by which the embattled state agency can issue benefits to an unemployed worker. The envelopes were addressed to 33 different people all over California, including locations distant from each other, such as San Jose, Sacramento and the San Diego suburb of Chula Vista.
“Fraud attempts have increased during the pandemic,” the EDD stated in a prepared release.
The EDD said it is working with an unspecified number of local, state and federal agencies to halt the fraud and identify potential crooks who are behind the incidents.
“While specific details cannot be shared at this time at the risk of jeopardizing investigations, recent schemes have triggered multiple mail items with different names sent to addresses throughout the state,” the EDD stated.
Problems with the EDD began to surface months ago when the agency was overwhelmed by an avalanche of applications for firsttime unemployment benefits in the wake of coronavirus-linked business shutdowns ordered by state and local governments.
It soon became clear that a broken call center and glitch-ridden website based on a primitive computer language had coalesced to hobble the EDD’s efforts to issue payments to California workers who had lost their jobs by the millions.
This news organization has analyzed federal statistics and determined that, as of May, as many as 1.8 million unemployed California workers were trapped in an EDD payment backlog while they awaited their first benefits to be released from the state agency’s bureaucratic limbo.
The EDD said that number was too high and that any backlog was far less, perhaps no more than a fraction of that figure.
However, an official estimate from the chair of the Legislature’s Joint Legislative Audit Committee was at odds with assertions from the EDD, which has been criticized for issuing vague and incomplete assessments about how far behind the agency is in making payments.
“Approximately 1 million to 1.2 million potentially eligible applicants, including those that filed in March, are still waiting on payments for unemployment insurance,” according to an estimate released Sept. 2 by Assemblymember Rudy Salas, chair of the Joint Legislative Audit Committee, and a Democrat who represents parts of Kern County.
A Salas-led group of 18 state lawmakers, including assemblymembers, senators, Democrats, and Republicans, formally asked the Joint Legislative Audit Committee to demand that the California Auditor investigate and analyze the EDD’s woes.
“Californians are hurting and need immediate relief from EDD,” Salas said. “An emergency audit of EDD will shine light on the department’s shortcomings and help us chart a path forward.”
Since business shutdowns began in mid-March, 8.13 million California workers have filed initial claims for unemployment benefits. Those huge numbers have intensified pressure on the EDD and brought inadequacies out in the open.
The EDD has vowed to begin the first payments of the extra $300 in federally financed jobless benefits starting Sept. 7. The agency didn’t say how many workers will receive enhanced payments during the initial days. Workers must receive at least $100 a week in state unemployment benefits to receive the extra $300.
The second phase begins Sept. 15, when the EDD will use email, text messages, and paper mail to attempt to alert an estimated 1.2 million California workers that they must attest they are fully or partly unemployed as a result of the coronavirus.
The $300 supplement means a worker with the maximum state payment of $450 a week could receive $750 a week. A worker receiving the average EDD payment of $287 could receive a weekly payment of $587.
Gov. Gavin Newsom has deployed a strike team to analyze the EDD’s difficulties and chart a path for the state agency to extricate itself from its payments quagmire.
“The governor needs to take responsibility to fix EDD that goes beyond a strike team,” Sen. Melendez said. “The taxpayers of this state expect more from their government.”