The State Worker

Chronicling civil-service life for California state workers

August 26, 2013
Employment Development Department staff told to look for work

edd-office.jpgAs they grapple with a severe federal funding cutback, Employment Development Department staff have been told that they need to look for work.

The news came in an internal memo from EDD Chief Deputy Director Sharon Hilliard earlier this month that employees forwarded to The State Worker. A department spokeswoman verified the authenticity of the memo and said that downsizing will eventually affect some customer services.

Hilliard said the Congressional sequestration spending reductions and ongoing underfunding of the Unemployment Insurance program by the federal government translates into a more than $150 million budget shortfall for the department through June 2015.

"While we have been faced with such shortfalls before in the EDD's history, never has our shortfall been so large," Hilliard said in the memo. In response, the department is doing everything from cutting phone service hours and moving staff to more dependably-funded programs to squeezing operational spending and limiting overtime.

"With less federal money available to support staffing in UI programs, we strongly encourage staff to explore other employment opportunities within EDD that don't rely on UI funding," Hilliard's memo says, "such as Disability Insurance and Workforce Services, or with other state agencies."

With the economy recovering from the recession, demand for unemployment benefits is coming down, said EDD spokeswoman Patti Roberts. In the second quarter of 2013, UI claim numbers decreased 37 percent compared to the same three-month stretch at the height of the recession in 2010. (Demand is still 116 percent higher than the same period in pre-recession 2007.)

"And when you couple that with an unprecedented shortfall in our federal UI funding," Roberts said, "we have a situation where we cannot maintain staffing levels and services to the point needed to keep up with demand."

EDD's call center workers have been answering more calls and hold times have been declining, owing to a reorganization of the department's business operation, "however, over time we anticipate call center service levels to decrease given EDD continues to lose staff every day," she said in an email, "and will not be backfilling positions given the UI funding shortfall."

Here's Hilliard's memo:


Fellow members of the EDD Team:

During the recession, the Employment Development Department (EDD) Team has faced many challenges with a professionalism and dedication that is truly remarkable. Yet there are still hurdles ahead that will involve difficult decisions by both managers and staff as the Department faces a serious federal funding shortfall in the next two years. Because a significant amount of the EDD's budget relies on federal funds, this shortfall will affect us all.

image003.jpgThis federal funding shortfall, estimated to be more than $150 million through June 2015, is due to a combination of factors. However, it's primarily a result of sequestration spending cuts by Congress and the continued administrative underfunding of the Unemployment Insurance (UI) program by the federal government.

With such a severe shortfall in future federal funding, the EDD faces challenges in maintaining our current staffing and service levels. While there are EDD programs that are supported by other funding sources, we'll have to look at the Department's overall budget while making tough decisions. So, all Department expenditures must be carefully examined and managed to best support the EDD's overall strategic priority of fiscal stewardship, while at the same time maintaining acceptable service levels for our customers.

While we have been faced with such shortfalls before in the EDD's history, never has our shortfall been so large. Throughout the past year, our Executive Leadership Team (ELT) has assessed and implemented a number of steps to cut expenditures at all levels, but further action is still necessary. In the simplest terms, every dollar we save helps save a staff position and preserves the vital services that we provide to our customers.

Reducing costs and finding revenue

Fortunately, we've never experienced layoffs at the EDD, and the ELT is continuing to work hard to avoid that option of last resort. The EDD initially faced a federal funding shortfall of about $250 million. However, the ELT has been able to mitigate that initial figure to an estimated $150 million through numerous efforts to reduce costs and find further revenue such as:

· Reduced UI phone service hours: Though our UI funding has dwindled, demand for UI benefits remains double what it was before the recession. Recognizing that we must deliver services as efficiently as possible with fewer resources, we reduced the hours that UI representatives are available to take calls to the morning. In addition, we continually promote the many convenient self-help options that are available for our customers to use instead of calling into our centers.

· Cut back on expenses: Stringent limits on travel, training, and procurements that don't meet critical needs for the Department have been initiated.

· Implemented hiring restrictions: Our hiring has been restricted to filling only critical needs within the Department. And when hiring is done, it's only from within our existing workforce.

· Reduced facility expenses: Wherever possible, we've worked to condense our office operations and move staff into more solidly funded programs. We recently shut down our Hollywood UI Call Center operation, for instance, and offered staff employment opportunities in other local offices. This has allowed for the proposed sale of the property, bringing in additional revenue for essential services.

· Limited overtime: While some overtime has been approved so the Department can keep up with critical demands, most overtime hours have been cut back throughout the Department. Future overtime will only be approved for needs deemed to be critical and urgent.

· Efficiency review teams: Teams with representatives from various branches have been formed to identify potential savings and greater efficiencies in specific areas, such as facilities management; postage and printing; Personal Services contracts; charges by specific funds; and Human Resource Services Division processes. In addition, reviews of information technology assets and expenditures have also been conducted.

How you can help in these efforts

The EDD Leadership Team will continue to pursue other funding avenues, identify priority budget needs, and develop efficiencies within the Department's operations. However, we also need your assistance and support to further reduce costs and identify greater efficiencies within your individual areas of operation by:

· Promoting self-service options: With the dramatic reduction in federal funding, our staffing levels are going down. As outlined in our EDD Strategic Plan, we must urge our customers to use self-help options whenever possible so our limited staff can be available to help those with more complex needs. Greater use of self-help options will help us gain efficiencies and help customers avoid the time-intensive follow up that must occur when they make errors on their paper forms.

· Reducing all expenses: We all must commit to cutting back on expenses, including purchases of supplies, furniture, non-critical training, and any other costs that can be eliminated, or at least postponed, for the near future. Remember - any expense must be justified because any money spent is less money that can be used to sustain staff levels and help preserve services.

· Identifying further efficiencies in operations: There are already some business processes we're implementing that will help identify the bottlenecks that slow down operations, or procedures that require more time and staff to complete. This will help us redesign the way we do business, which will save the Department on overall costs and staffing. Establishing greater efficiencies is one of the key factors in maintaining service levels while facing a funding shortfall. We encourage staff to keep an eye out for opportunities to streamline workloads and to share your ideas with your management team, including your Branch Deputy Director. You can also submit suggestions through our "Improve EDD" program at Often, the best ideas come from the people who are personally involved in providing services to our customers.

· Exploring job opportunities: With less federal money available to support staffing in UI programs, we strongly encourage staff to explore other employment opportunities within EDD that don't rely on UI funding, such as Disability Insurance and Workforce Services, or with other state agencies. We recommend that you visit the EDD Career Explore site on SharePoint, which offers valuable information on position openings, links to essential employment tools, and a detailed breakdown of EDD classifications by branch and location.

While the Department's funding is in flux at this time, with your support and assistance, and the commitment of our ELT, we can work together to address these challenges and best preserve staff and services. Every one of our team members is important and valued for the talents and skills they contribute to the EDD. I appreciate your continuing efforts and dedication, and I'm committed to keeping you informed of all developments in the coming year with regular monthly updates.

Chief Deputy Director

PHOTO: Binders full of resources at the Employment Development Department office in Sacramento on Thursday February 14, 2008. The Sacramento Bee/Randall Benton


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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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