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Audit of EDD ordered over thousands of denied unemployment claims

SACRAMENTO — State lawmakers on Wednesday ordered a formal audit of the troubled Employment Development Department and how it may have botched the handling of thousands of unemployment insurance claims.

By a unanimous vote, a legislative committee directed the state auditor to find out the reasons that administrative judges are overturning more than half of EDD caseworkers' initial denials of claims.

In a separate vote, the Assembly-Senate Joint Legislative Audit Committee told State Auditor Elaine Howle to make the audit — requested by Assembly Insurance Committee Chairman Henry T. Perea (D-Fresno) — a top priority.

"When over half of unemployment insurance claimants who appeal their EDD decision win their cases, there is clearly a breakdown in the system," Perea said after the vote.

"This audit will get to the bottom of the breakdown and help us implement practices that will streamline the system so people won't have to go through the difficult process of appeal while having no means to pay their bills or put food on the table."

EDD spokeswoman Patti Roberts said the agency "understands the reason for this audit and is supportive of finding ways to avoid any unnecessary appeals that may delay benefits to our customers."

Howle estimated that her audit would cost $222,360 plus travel and administrative expenses.

The high rate of denials is the latest of the agency's problems highlighted in a series of stories in The Times. Other problems have included a phone system so overloaded that up to 90% of all incoming calls go unanswered. The agency also is struggling to overcome the continuing effects of a massive computer glitch last September that delayed payments to as many as 150,000 people.

Perea's insurance committee in November held oversight hearings into the meltdown at EDD. He followed up with a Jan. 27 request to the Joint Legislative Audit Committee asking for a detailed probe into the "specific EDD policies and practices" that "generate claims decisions that are consistently overturned."

The audit follows an announcement last month that the administration of Democratic Gov. Jerry Brown is committed to a sweeping overhaul of the unemployment insurance system.

David Lanier, the governor's secretary of labor and workforce development, decried the agency's "unacceptable levels of payment delays and unanswered phone calls" and announced a seven-point initiative that he said is aimed at boosting services. The plans include hiring 435 new staffers and retaining or rehiring 300 temporary and former workers. Lanier also called for investing in telephone upgrades, including a "virtual hold" option that automatically returns calls when an operator is freed up.

"The administration is committed to providing the funding necessary to improve service levels," Lanier wrote in a letter to the department.

The department said it is now hiring and training additional staff.

Perea at the time said he was heartened by Lanier's offer of money and manpower to ease the continuing frustration of many EDD claimants, who have been forced to wait for months for weekly benefits of up to $450.

For the unemployed, change can't come quick enough, said Niki Lee, 54, of Los Angeles.

Lee said she is waiting for delayed unemployment insurance payments and unable to get answers from the EDD. Lee said she was laid off from a job with Los Angeles County last April, but her benefits of $355 a week were suspended Dec. 7 after EDD did not respond to her requests to postpone an eligibility interview. As a result, Lee said she wound up homeless.

Lee said she sought help from the office of Assemblyman Richard Bloom (D-Santa Monica), and her denial was reversed by an appeals judge. But she said she still has received nothing from the state. "I still don't have any money," she said.

Twitter: @MarcLifsher

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