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EDD audit finds 'poor planning and ineffective management'

California state auditor Elaine Howle said the review was performed to examine EDD's "response to effects of the COVID-19 pandemic."

SACRAMENTO, California — An emergency audit into California's Employment Development Department (EDD) has found it was unprepared to assist Californians left unemployed by COVID-19 shutdowns due to "poor planning and ineffective management." 

In a Jan. 26 letter, State Auditor Elaine Howle said the review was performed to examine EDD's "response to effects of the COVID-19 pandemic." She said they also "identified as a high-risk issue the management of federal funding in response to the COVID-19 pandemic."

Howle outlined four key takeaways from the audit, which include issues related to delayed payments, eligibility requirements, customer service, and ongoing deficiencies.

Significant delays in payment of UI claims

Between March and September 2020, the EDD couldn't automatically process nearly half of the 9.9 million claims submitted online, according to the audit.  

"In December 2020, EDD reported that it had about 685,700 claims in its backlog. However, EDD has presented unclear and inconsistent information about the backlog leading to the belief that all claims in its backlog were waiting for payment. In fact, fewer than 20,000 of those claims had waited for payment longer than 21 days because of EDD's failure to resolve an issue with the claim," the audit said. 

Many of the claims required manual interventions to resolve issues. This was even after newly adopted modifications and automation measures were implemented.

Eligibility requirements

The auditor found "EDD paid certain claimants without determining eligibility and now must address 12 million deferred eligibility issues affecting up to 2.4 million claimants."

"Because it suspended certain eligibility requirements, EDD now faces huge workload issues and many Californians may need to repay benefits," the audit said.

According to the audit, claimants typically have 48 months to repay the amount they owe for nonfraud repayments. EDD can also waive repayment when cases meet certain criteria, such as when there is no fraud involved. But it's unclear "the extent to which it can do so for the current claims because it has not yet analyzed them." It's unlikely that EDD would be able to recoup funds from fraudulent claims, the audit said.  

EDD also must ensure that nearly 1.7 million Californians, who received more than $5.5 billion in benefits over an eight week period, were still eligible for benefits.

Significant Weaknesses in EDD's Claims Processing and Workload Management

The audit said EDD's call center struggled for years to answer a high rate of calls, and its performance only worsened during the surge in claims. It answered less than 1% of calls and did not answer hundreds of thousands of online assistance requests. 

With about 48% of claims not automatically filed in EDD's online application service, staff had to verify information or resolve issues related to employment information.

"EDD's workload reports indicate that activities like manual identity verification require significant time for its staff to complete when compared to other manual work performed by EDD staff for UI claims," the audit said.

EDD also struggled to efficiently process work related to continued claims during the claim surge, the audit said.

ABC10 reached out to EDD for a comment on the audit.

"The EDD appreciates the auditor’s review and acknowledgment of the immensity of the challenges EDD has faced in this COVID-19 pandemic.  We recognize the work that lies ahead and are committed to implementing all of the auditor’s recommendations," the EDD said in an email to ABC10 Tuesday.

Read the audit here.

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WATCH ALSO: EDD reports nearly 10% of 19.5 million claims paid were fraudulent

California Employment Development Department has paid $114 billion in unemployment claims in the coronavirus pandemic.