The State Worker

Chronicling civil-service life for California state workers

March 24, 2011
Audit: EDD has problems, but don't blame furloughs

110118 Bureau of State Audits seal.jpgThe Bureau of State Audits says that the state Employment Development Department, squeezed by soaring unemployment rates and funding problems, has struggled to meet federal standards to process first-time benefits claims. While a hiring spree and allowing employees to work more overtime eased the crunch to degree, the department is still dealing with technical issues -- phones, software -- that are slowing the public's access to services and has put federal stimulus funding at risk.

Furloughs? Not an issue, auditors said:

We also found that the former governor's furlough orders, which affected program representatives, had minimal impact on the department's performance because the average overtime hours worked by program representatives generally exceeded their average number of leave hours.

A few highlights from the report, which you can read in full by clicking here:

  • The department's initial claims workload grew by 148 percent from July 2007 to June 2010.
  • California's unemployment rate soared -- showing a 132 percent increase over those years.
  • The federal government granted extensions of unemployment benefits, thus, individuals received benefits for longer periods of time.
  • The State's Unemployment Fund became insolvent in January 2009 -- federal loans were needed to pay benefits.
  • The department projects the State's Unemployment Fund deficit could rise to $13.4 billion by the end of 2011.
  • If the State defaults on the federal loan, California employers could eventually face $6 billion in higher federal unemployment taxes annually.
  • Because the department consistently failed to meet certain core performance measures, the United States Department of Labor classified the State as being "At Risk" for fulfilling requirements.
  • The department increased staff and allowed them to work overtime to improve performance--these efforts substantially increased the volume of initial claims it processed.
  • Other efforts intended to improve its performance have been mixed.
  • The new scheduling system's impact--which the department indicated would result in more timely nonmonetary determinations--appears negligible.
  • Other automation projects have the potential to improve performance, but have not been implemented.
  • The new phone system--developed to increase the public's timely access to unemployment services--provides enhanced voice response options; however, access to agents may continue to be a challenge.
  • The State may forfeit $839 million in federal stimulus funds if the department does not meet the federal deadline for implementing certain changes to its unemployment claims process.
  • The department has taken an average of four or more weeks to determine the eligibility of claimants trying to qualify for the California Training Benefits program, during which time the claimants did not receive unemployment insurance benefits.

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About The State Worker

Jon Ortiz The Author

Jon Ortiz launched The State Worker blog and a companion column in 2008 to cover state government from the perspective of California government employees. Every day he filters the news through a single question: "What does this mean for state workers?" Join Ortiz for updates and debate on state pay, benefits, pensions, contracts and jobs. Contact him at (916) 321-1043 and at


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