Jobless benefit appeals pile up

Tens of thousands of jobless Californians, rejected for unemployment benefits of up to $450 a week, are awaiting action by a state appeals board swamped with cases, hindered by delays, mired in bureaucracy and tinged with scandal.

Although the Unemployment Insurance Appeals Board is supposed to decide within 30 days whether the state wrongly denied an individual’s jobless benefits, less than 4% of complaints are finished by then, the U.S. Department of Labor says.

In all, a record 68,135 appeals filed by out-of-work people and employers were awaiting action by the board as of Jan. 23.

California takes longer to resolve unemployment appeals than any other state except Virginia, according to Labor Department data, and the federal government has demanded that the state come up with a plan to fix the mess this month.

State officials acknowledge that they are overwhelmed by the massive backlog. The number of those appeals has increased steadily since last summer as California’s unemployment rate climbed to 9.3% in December, when 1.7 million Californians were without jobs.

“The workload has been horrendous because of the economic times we are facing,” said Jehan Flagg, the board’s acting executive director. She also blamed “mismanagement under the previous head of the organization” for a backlog that is now 81% higher than when she took over Aug. 1.

Critics partially blame the board’s performance on the failure of Gov. Arnold Schwarzenegger’s administration to let the board hire enough people to handle cases in a timely manner -- even if the federal government pays the bill.

About 9 out of 10 appeals come from the newly unemployed who are denied benefits by the California Employment Development Department.

Applicants for unemployment assistance are turned down by EDD for many reasons. In some cases, EDD caseworkers determined that they voluntarily quit their jobs or were fired for alleged misconduct such as absenteeism or drinking on the job.

Others are denied benefits for incorrectly filling out application forms.

Employees won 44% of their appeals in 2008.

A much smaller number of employers appeal, arguing that their former employees should not receive benefits. They prevailed 36% of the time last year.

The mounting appeals backlog comes during a period when the appeals board also has been racked by internal strife that led to the firing of its executive director last summer and complaints of nepotism among staffers.

A November report by the state auditor found that widespread “familial relationships among appeals board employees appear to have a negative impact on many employees’ perceptions of their workplace.”

The board itself has seven members, mostly ex-politicians who lost elections or were forced out of office by term limits. Members earn $128,109 a year.

The board has a dozen regional offices and a staff of about 650, including 150 administrative law judges who hear appeals involving unemployment insurance, disability benefits and payroll taxes paid by employers. The board’s $78-million annual budget is almost entirely funded by the federal government.

The board’s former executive director, Jay Arcellana, was removed July 22 on a 4-1 vote by appointees of the Republican governor. The agency now operates without a permanent executive director or a permanent chairman.

Arcellana was ousted partially because the board under his leadership managed to resolve only about 6% of its cases within 30 days, said Flagg, the acting executive director. The Labor Department has a goal of resolving 60% of the cases in that time period.

Newly unemployed Californians submit initial applications for jobless benefits with the state’s Employment Development Department. Most get approved within several weeks. EDD, mainly funded with taxes paid by employers, officially ran out of money to pay unemployment benefits last Monday and has already secured a $1.86-billion federal loan to keep checks going out to the state’s jobless.

Benefit denials and appeals add to an out-of-work person’s anxiety.

“There’s too much paperwork,” said Lamia Gamble, 19, who was fired from a job as a shift manager at a Sacramento Taco Bell restaurant Oct. 13. Last week, Gamble told a Sacramento appeals board judge that she had been unfairly denied unemployment benefits after missing work to rush to a hospital after her cousin had been shot. “They should have given me another chance,” she said between sobs.

For the last year, the appeals board has been in trouble with the federal government.

At a December meeting, the state was asked to provide this month a detailed breakdown of how it planned to fix the situation.

“We want a report that outlines specific actions and timelines,” said Deanne Amaden, a spokeswoman for the Department of Labor’s regional office in San Francisco.

California’s subpar record compared with other states also has caught the attention of legislators.

“I’m anxious to have a hearing and am interested in hearing from people why we’re second to last and what we need to do to fix this,” said state Sen. Mark Desaulnier, the new chairman of the Senate Labor and Industrial Relations Committee.

Flagg’s first attempt to deal with the backlog suffered a setback last summer when an executive order from the governor forced the layoffs of some state workers. Many have since returned to work.

Flagg failed to move quickly to ask the governor for an exemption, appeals board judges complained in a Sept. 15 letter. “We have no confidence in the ability of Ms. Flagg to competently and adequately handle the duties and responsibilities we have assumed,” the 15 presiding judges wrote.

Flagg said she now had authorization to hire 60 new people, including administrative law judges to hear appeals and support staff. In the meantime, Flagg said, she has asked the Schwarzenegger administration to exempt the board from another executive order requiring most state workers to take two unpaid Fridays off work each month, beginning Friday.

The governor has not granted a blanket exemption but has given the appeals board flexibility to shift its staffing to stay open Fridays, said Camille Anderson, a Schwarzenegger spokeswoman.

The appeals board needs every staffer it can get if it wants to begin making a dent in its case backlog, said board member Liz Figueroa, a former Democratic state senator from Alameda. “Even if we hired thousands of new judges, it would take awhile to catch up.”

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marc.lifsher@latimes.com

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Panel’s makeup

Seven full-time members of the California Unemployment Insurance Appeals Board are appointed to four-year terms by the governor, the Senate Rules Committee or the Assembly speaker. Annual pay is $128,109.

Chairman -- Vacant

Acting chairman -- Fred Aguiar, Republican, of Chino. Former state Assembly member, San Bernardino County supervisor, Chino mayor and aide to Gov. Arnold Schwarzenegger. Appointed by governor.

MEMBERS

Liz Figueroa, Democrat, of Alameda. Former state senator and former Assembly member. Appointed by the Senate Rules Committee.

Bonnie Garcia, Republican, of Cathedral City. Former Assembly member. Appointed by governor.

Cindy Montanez, Democrat, of San Fernando. Former Assembly member. Appointed by Assembly speaker.

George Plescia, Republican, of La Jolla. Former Assembly member. Appointed by governor.

Ann M. Richardson of Sacramento, declined to state political party. Former Schwarzenegger aide. Appointed by governor.

Sources: Governor’s office, California Unemployment Insurance Appeals Board