Aging computer system holds up unemployment checks to 117,000 Californians

An estimated 117,000 Californians haven’t received their unemployment checks -- some for more than a month -- because of what state officials blame on an archaic computer system.

The people whose checks have been held up are among the neediest of the unemployed -- those who have been out of work so long that their benefits have expired.

Under legislation signed by President Obama on Nov. 6, they were supposed to get unemployment checks for an additional 14 weeks or more.

State Employment Development Department officials say they are doing everything they can to issue the checks, even postponing some staff furloughs to deal with the demand for services. But they say the state’s 30-year-old computer system isn’t programmed to recognize the extensions, requiring technicians to write new code.

They hope to start issuing checks of up to $475 a week starting late next week, just days before Christmas.

“We’re trying to fully upgrade the system as it’s moving at a record pace, while being very careful to not risk shutting down the rest of the system,” EDD spokeswoman Loree Levy said. “It’s like keeping the plane in the air while trying to fix the engines.”

This isn’t the first time the computers have failed. In November 2008, the agency dealt with a nearly identical holdup when the antiquated computer system, faced with an extension of benefits, delayed checks for more than 100,000 unemployed Californians.

The U.S. Labor Department, through regional administrator Richard C. Trigg, has also issued several stinging notes to the state agency about its failure to address problems such as a backlog of tens of thousands of unemployment appeals.

“We note that California is already experiencing difficulty in several critical performance areas including first pay timeliness, non-monetary determination timeliness, appeals timeliness and appeals case aging,” Trigg wrote in an October letter to EDD Director Patrick Henning. “Despite Corrective Action Plans . . . performance has continued to decline over the past year.”

The extension money is vital to people such as Sandra Merchant, 46, of Benicia, who said she has been living unemployment check to unemployment check since losing her information technology job in July 2008. Her benefits are running out this month, and she said she would be “devastated” if her money is delayed till January.

“If I don’t have the check, I wouldn’t make it,” she said. “That would be the end for me. Basically, the only thing I can do right now is survive.”

Merchant said she could barely pay the rent and hadn’t seen the doctor for an injured ankle. Luxuries such as a gym membership or a carwash are out of question.

The $950 in benefits she receives every two weeks, and the occasional loan from her parents, is a far cry from the $12,000 she pulled in some months at a previous job working with cellular phone service providers to improve their networks. But the checks from the EDD are keeping her going.

“There’s a really big problem where the EDD is looked at like it’s lower on the scale than the DMV, but it’s a critical function,” she said. “If they don’t get those checks out, it will be anarchy. It’s bad out here.”

The logjam is the latest in a slew of delays, phone system overloads and backlogs as the EDD copes with rising unemployment in California, which stood at 12.5% in October.

The agency has come under intense criticism from lawmakers, social service agencies and the unemployed.

“The ones who suffer,” said state Sen. Mark Leno (D-San Francisco), “are the workers who are deserving of their unemployment checks, who are also trying to make ends meet in the middle of winter.”

About 1.2 million Californians have an open claim for jobless benefits. Those unemployed the longest are eligible for up to 79 weeks of benefits plus the latest extension. Congress is considering approving money to continue some benefits, including an additional six weeks in benefits for the long-term unemployed in California and other states with high unemployment.

Although officials said testing on the state’s reprogrammed computer system is going well so far, some department critics said the software should have been overhauled as early as 2002.

That is when the federal government gave the state $66 million to upgrade the agency’s call center system and payment software.

But, Levy said, to overhaul the entire system would have required roughly $300 million.

She said the updated system would eventually enable electronic benefit payments and be generally more responsive.

Recently, she noted, the state got an additional $60 million in federal money to upgrade to a more modern system intended to avoid holdups and process future extensions, Levy said.

The agency hopes to send out notices and benefit claim forms next week, with checks following soon after if reprogramming of the computer system is completed, Levy said.

The stall in sending out payments was “completely predictable, said Leno, who sits on the Senate Labor Committee that oversees the EDD.

The agency should have anticipated the greater demand for its services along with the surging unemployment rate, he said, though round after round of federal benefit extensions also put a substantial burden on the agency’s aging software.

“At this point, I don’t know that there’s a quick fix,” he said. “There’s a huge backlog of challenges, and the department is overwhelmed.”