California’s EDD faces tough questions at oversight committee

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The embattled Sacramento Employment Development Department faced tough questions from five lawmakers during a joint oversight hearing in Sacramento on Wednesday. This comes after more than two years of questions and concerns about the department’s processing of applications and fraud over the past two years. Nancy Farias, who took over as director in early 2022, testified in person at the hearing, the first of the last three directors to do so since the pandemic. Lawmakers were still very concerned about the amount of fraud paid out by the department during the pandemic. On top of that, Assemblyman Jim Wood, (D) Eureka, read the full text of an email from a woman who said the ID approval process – put in place after the fraud had already started in 2020, was so long that they remained on hold for 11 hours and again another five hours after errors were made during processing. Wood said the problem was not isolated. The EDD was there to report on progress since two state audits looked at the issues inside the EDD. Audits referencing previous work the office had done when reviewing EDD before. Assemblyman Tom Lackey, (R) Palmdale, laid a stack of reports on the dais during the hearing. it’s just another added to the stack. Still, lawmakers were pleased with the progress reported by the auditor, Farias, and AJO. All but two of the audit recommendations have been implemented, according to Farias. However, Bob Harris of the state auditor’s office said, “It’s up to EDD (and lawmakers) to make sure” they keep these recommendations in place permanently. MP Cottie Petrie-Norris said she wanted to make sure the department continued to have regular hearings because it was clear those hearings were one of the reasons progress she believed had been made. made in the department. Wood asked EDD if they were prepared for another economic downturn, with the threat of a recession looming. Farias said unequivocally, yes. “Cliché or not, the lessons learned are what we used to craft the recession plan and what we see could be something that happens in the future,” Farias said. This recession plan was mandated in a bill passed into law by the Legislature last year. EDD released its latest updated fraud estimate in October 2021, which was then $20 billion. KCRA has since spoken with Lexis/Nexis CEO Haywood Talcove about its own analysis. He says paid fraud is more like $32.6 billion. That dollar figure, he says, is based on numbers the EDD sent to the U.S. Department of Labor, the Labor Department’s own numbers, and information from the inspector general. Talcove says that taking into account the unemployment insurance and disability fraud as well as the Pandemic Unemployment Assistance (PUA) money that EDD paid out, taking into account the payments he says have been made and their fraud percentages since 2021, he is confident in that number. Lawmakers asked EDD about the $32 billion figure, particularly Petrie-Norris, who asked if they agreed with the figure. Farias said that, without seeing the documentation themselves, they stick to the $20 billion figure they have, citing the state auditor and the Office of the Legislative Analyst. Reforms are in place. Farias pointed out that the EDD technology and customer service upgrades, which are part of what the governor and department have called “EDDNext,” is a five-year plan that will bring improvements to forms, customer service, and, above all, technology. This first year, the forms are rewritten. Technology could take longer. EDD, like many state departments, works on decades-old servers with a 60-year-old programming language. Making these changes has never been easy. Meanwhile, representatives of the Federation of Labor and members of the public have spoken out saying delays are still happening and the impact on workers and businesses is high. Yet, as lawmakers told members of the public that reps will help them sift through their issues, unlike other previous hearings where testimony was via Zoom, reps met with members who were having issues to try to start solving what could have gone wrong. Farias was leaving town when KCRA 3 asked for an interview, but told our producer that she will make herself available for an interview when she returns in the near future.

The embattled Sacramento Employment Development Department faced tough questions from five lawmakers during a joint oversight hearing in Sacramento on Wednesday. This comes after more than two years of questions and concerns about processing applications and fraud at the department over the past two years.

Nancy Farias, who took over as director in early 2022, testified in person at the hearing, the first of the last three directors to do so since the pandemic.

Lawmakers were still very concerned about the amount of fraud paid out by the department during the pandemic.

On top of that, Assemblyman Jim Wood, (D) Eureka, read the full text of an email from a woman who said the ID approval process – put in place after the fraud had already started in 2020, was so long that they remained on hold for 11 hours and again another five hours after errors were made during processing. Wood said the problem was not isolated.

The EDD was there to report on progress since two state audits looked at issues inside the EDD. Audits referencing previous work the office had done when reviewing EDD before. Assemblyman Tom Lackey, (R) Palmdale, laid a stack of reports on the dais during the hearing.

“These are all the previous EDD audits,” he said, ending his remarks hoping that this legislature does not end with another audit that is just another added to the pile.

Still, lawmakers were pleased with the progress reported by the auditor, Farias, and AJO. All but two of the audit recommendations have been implemented, according to Farias. However, Bob Harris of the state auditor’s office said, “It’s up to EDD (and lawmakers) to make sure” they keep these recommendations in place permanently.

MP Cottie Petrie-Norris said she wanted to make sure the department continues to hold regular hearings, as it was clear that those hearings were one of the reasons she said progress had been made. within the department.

Wood asked EDD if they were prepared for another economic downturn, with the threat of a recession looming. Farias said unequivocally, yes.

“Cliché or not, the lessons learned are what we used to craft the recession plan and what we see could be something that happens in the future,” Farias said.

This recession plan was mandated in a bill passed by the legislature last year.

EDD released its latest updated fraud estimate in October 2021, which was then $20 billion. KCRA has since spoken with Lexis/Nexis CEO Haywood Talcove about its own analysis. He says paid fraud is more like $32.6 billion. That dollar figure, he says, is based on numbers the EDD sent to the U.S. Department of Labor, the Labor Department’s own numbers, and information from the inspector general. Talcove says that taking into account the unemployment insurance and disability fraud as well as the Pandemic Unemployment Assistance (PUA) money that EDD paid out, taking into account the payments he says have been made and their fraud percentages since 2021, he is confident in that figure.

Lawmakers asked EDD about the $32 billion figure, particularly Petrie-Norris, who asked if they agreed with the figure. Farias said that, without seeing the documentation themselves, they stick to the $20 billion figure they have, citing the state auditor and the Office of the Legislative Analyst.

Reforms are in place. Farias pointed out that the EDD technology and customer service upgrades, which are part of what the governor and department have called “EDDNext,” is a five-year plan that will bring improvements to forms, customer service, and, above all, technology. This first year, the forms are rewritten. Technology could take longer. EDD, like many state departments, works on decades-old servers with a 60-year-old programming language. Making these changes has never been easy.

Meanwhile, representatives of the Federation of Labor and members of the public said delays were still occurring and the impact on workers and businesses was high.

Yet while lawmakers told members of the public that reps would help them sift through their issues, unlike other previous hearings where testimony was done via Zoom, reps met with members who had issues for trying to start solving what could have gone wrong. .

Farias was about to leave town when KCRA 3 requested an interview, but told our producer that she will make herself available for an interview when she returns in the near future.

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