Report finds big problems at California's EDD: 600,000 callers a month 'on hold for hours'

The California unemployment agency's two call centers to field questions about jobless benefits had two major problems as millions of people sought help due to the pandemic: One had nobody on site to answer calls and the other had hundreds of untrained new hires who didn't know how to help callers. 

The result was about 600,000 callers each month "waiting on hold for hours without a statistically significant chance of being served," according to a review of the Employment Development Department that found widespread problems that greatly hindered its ability to deal with record jobless claims. 

The report detailed the problems that have plagued the agency since March, when the government suddenly ordered businesses to close and people to stay in their homes to slow the spread of the coronavirus. To date, more than 13 million claims have been filed and the agency has doled out about $86 billion in benefits.

The problems at the call centers are indicative of the outdated technology and lack of oversight the review found. 

One of the call centers is in a field office with phones that can't be forwarded. So when the pandemic hit and employees began to work from home, there was no one to answer millions of calls at the office.

The phone number that routed callers to the center averaged 6.7 million calls per week in July. A recorded message sent callers to a second call center for help, but that center was staffed by the new hires who did not have the training or the experience to help them.

Frustrated claimants are finding and sharing other agency phone numbers not meant for the public, including the phone line for the hearing or speech-impaired. 

"If this pattern continues, every employee with a telephone will be overwhelmed with calls," the review noted. 

Meanwhile, about 1.6 million people are waiting for EDD to process their claims — a number that is growing by about 10,000 claims per day. The agency had set a goal to resolve that backlog by the end of this month, but now says it won't happen before the end of January. 

"I am concerned this is too little, too late for Californians experiencing extreme financial stress as a result of EDD's failures," Democratic Assemblyman David Chiu said Monday.

The review, ordered by Gov. Gavin Newsom in July, showed how the agency made things worse as it tried to make things better. The agency either hired or redirected more than 1,300 people to process claims. But the agency pulled away its most senior employees to train the workers, causing productivity to decline.

Plus, it takes years to train workers to do the specialized work required to process claims. The agency has hired 515 new workers to recalculate disputed claims, but so far none of them have had any work to do.

EDD has a computer system to automatically process claims. But the agency is diverting about 40% of those claims to a much slower manual review process to identify and stop fraud. The agency can handle about 2,400 manual claims per day, but it's getting more than 20,000.

Meanwhile, the manual reviews are not stopping fraud. Most of the fraudulent claims are so sophisticated they sail right through the computer system and are never marked for manual review. The team reviewing the agency urged them to turn off conditions that would unnecessarily flag claims for manual review. But the agency delayed, worrying it would be inappropriate to do that when the risk of fraud was so high.

If the agency had followed the recommendation, it "could have avoided sending hundreds of thousands of claims to manual processing during the spikes in new claims that occurred at the end of August."

"There has developed at EDD a culture of allowing fear for fraud to trump all other considerations," according to the review that was made public Saturday night. 

About 60% of the state's unemployment claims are automated. The review team said if the agency can improve that number to 94%, it would reduce the number of claims requiring a real person to review it to about 3,622 per day — "a number which it has the capacity to complete."

The agency is already working on this, announcing a two week "reset" on Saturday, during which the agency would halt processing all new claims until it can install a new identity verification system by ID.me, a Virginia-based company. The review said once this system is in place "potentially hundreds of thousands" of unemployment claims will have their identity verified immediately without being flagged for a manual review.

Newsom on Monday said the reset won't cause a delay for people applying for benefits for the first time.

"You otherwise would have gone into a manual process that can take upwards of 60 days. Unacceptable," Newsom said. "This reset will not only make this process better in medium and long term but begin to substantially address the backlog over the next 90 to 100 days."

Republicans criticized Newsom for releasing the report on a Saturday night, with Assemblyman Jim Patterson saying it "smacks of a political effort to basically try and bury some of the tougher points in all of this."

Shannon Grove, the Republican leader in the California Senate, said the "mismanagement" at the agency is "insulting."

"The constant delays and failures at the EDD highlight Governor Gavin Newsom's inability to properly prepare for shutting down California's economy," she said.