Lawmakers winnow bills requiring fixes to California’s troubled unemployment agency

SACRAMENTO —  Seven months after the state auditor recommended an overhaul of California’s unemployment benefits system, a bill to speed up action on the changes by the state Employment Development Department fizzled Thursday when it was sidelined by lawmakers in a partisan dispute.

The measure by state Sen. Jim Nielsen (R-Red Bluff) had previously won unanimous approval by the Senate but was one of a handful of measures that were put on ice Thursday by a Democrat-controlled Assembly panel.

The decision of the Assembly Appropriations Committee to hold Nielsen’s bill was not explained during the hearing by its chairwoman, Assemblywoman Lorena Gonzalez (D-San Diego), who later said on Twitter that other reform bills have been passed by the Assembly and are pending in the Senate.

“These were duplicative,” she wrote of the measures held by her panel.

The Senate Appropriations Committee on Thursday approved similar legislation by Assemblyman Rudy Salas (D-Bakersfield) that would create working groups to beef up the EDD’s anti-fraud process and, by June 1, identify how the agency can improve its benefits system. Changes would be subject to the Legislature allocating money to pay for them.

EDD officials have said they are already enacting the changes recommended by State Auditor Elaine Howle in January, but the auditor’s office says only eight of the 26 recommendations have been fully implemented. Nielsen’s bill would have set a May 31 deadline for the EDD to implement the auditor’s recommendations aimed at reducing delays in paying benefits, prioritizing modernization of its technology, assessing its call center operations and improving its tracking of claimants’ problems.

“Governor Newsom and the Democrat-controlled Legislature don’t have the courage to take on powerful bureaucracies, like the EDD — clearly a failed agency,” Nielsen said in a statement. “It’s unconscionable. This shows a callous disregard for the suffering of hundreds of thousands of Californians who are unemployed because of the governor’s lockdown orders.”

The bill, SB 232, was shelved as Californians have started voting by mail in a Sept. 14 election to decide whether to recall Newsom from office. Proponents of his removal have made the delays in providing unemployment benefits and rampant fraud in the program a key part of their campaign against the governor.

EDD officials did not immediately respond Thursday to a request for comment on the implementation of the audit’s recommendations.

The agency has been overwhelmed by an unprecedented 23.9 million claims for unemployment benefits since the COVID-19 pandemic triggered shutdowns in the state’s economy in March 2020. Jobless Californians have complained of months of delays in payments and computer glitches, and the state admits $11 billion was paid on fraudulent claims.

Gonzalez’s committee also acted Thursday to place a hold on legislation by Sen. Tom Umberg (D-Orange) that would have created an Unemployment Insurance Integrity Enforcement Program within the state Department of Justice to coordinate the prosecution of fraudsters and the recovery of stolen benefits.

“I am very disappointed that the legislature … has decided that my bill to recapture stolen EDD funds is not worth the cost,” Umberg said in a statement. “However, I remain committed to recapturing EDD funds stolen by organized crime-rings.”

Newsom announced in November that the California Governor’s Office of Emergency Services would work with county and federal prosecutors to go after those who filed fraudulent claims, thousands of which were filed in the names of prison inmates. The state also has named a former federal prosecutor as special counsel to coordinate investigations.

Until late last year, the state prison agency had withheld from EDD the personal information on inmates that could have been matched against unemployment claims, even though 35 other states provided such a process.

Although the prison agency has agreed to share the data, the Senate Appropriations Committee on Thursday sent to the full Senate a bill that would require the permanent sharing of the data to prevent unemployment fraud. The measure by Assemblywoman Cottie Petrie-Norris (D-Laguna Beach) would spend up to $5 million to create a new automated system to receive and store the data.