EDD crisis could have been avoided
The action most emblematic of Gov. Gavin Newsom’s nearly five years in office is the collapse into chaos of the California Employment Development Department as COVID-19 struck in the spring of 2020.
Beginning with the estimated $20 billion in fraud perpetrated on the system, a new, year-long investigation by Calmatters uncovered how, “The agency was primed for disaster, records and interviews show, by years of missed red flags, failed reforms, a fleeting anti-fraud effort and inconsistent funding and oversight.”
As Newsom ordered massive lockdowns of business, 1.7 million workers were thrown into unemployment lines, the California Budget & Policy Center reported at the time. The new CalMatters inquiry, based on internal EDD documents, found unemployment claims to EDD soared by 2,300%. Of the jobless calling EDD to get the benefits they had been paying for from taxes taken from every paycheck, only one in 1,000 got through. State senators and assemblymembers also were inundated with pleas for help. CalMatters added, “To this day, no one knows how much was lost to fraud.”
The state still suffers $19 billion in unemployment insurance debt to the federal government. According to the Legislative Analyst’s Office, that will cost an average of $945 per employee in higher UI taxes from now until 2031. Incompetence has a price.
On the positive side, the UI crisis led Newsom to veto Senate Bill 799, which would have paid unemployment benefits to striking workers. In the message for his Sept. 30 veto, Newsom wrote the bill “could increase California’s outstanding federal UI debt projected to be nearly $20 billion … significantly increasing taxes on employers.”
Finally, this is another example of how in California, still the world’s leader in computers and the internet, the government can’t get its systems right. Just last April, a report by state Auditor Grant Parks criticized the California Department of Technology’s faulty oversight of state information technology projects. He found that “has led to delays, cost overruns, and systems that do not function as intended.”
Instead of taking junkets to China, Newsom should make fixing perennial problems like EDD his top priority.