California’s system for providing jobless benefits is quickly running out of money even as state government scrambles to keep up with the highest level of unemployment in almost 15 years.
Meanwhile, other state services for the jobless are stretched thin as the state’s unemployment rate rose in November to 8.4%, up from 8.2% the month before.
Millions of calls to state unemployment insurance processing centers continue to go unanswered, a problem first reported by The Times in April. A 30-year-old computer system is overloaded, and stressed clerks are swamped by backlogged applications.
California is not alone in dealing with an unprecedented jump in the number of applications for unemployment benefits. With U.S. unemployment at 7.2%, at least 10 other states report strains on computer and telephone networks. Computers recently crashed for short periods in hard-hit New York, North Carolina and Ohio.
“The magnitude of it cannot be overstated. The calls are coming in fast and furious in all the states,” said Ingrid Evans, director of unemployment insurance for the National Assn. of State Workforce Agencies in Washington.
Last month, California issued $1.1 billion in assistance checks to 429,000 claimants. Unemployed workers are eligible for payments of as much as $450 a week for up to 59 weeks.
California’s unemployment insurance fund, which is funded by payroll taxes paid by employers, is expected to run short of cash within two weeks. The state is paying out $30 million to $34 million a day in benefits. During the week of Jan. 5, its balance fell from about $500 million to $270 million.
Jobless benefits will not stop, but the state must seek a federal loan to keep the system afloat. Five other states have already obtained such short-term loans, which must be paid back with interest.
“We must take action now,” Gov. Arnold Schwarzenegger told lawmakers in November, “because the longer we wait, the worse the situation will get for the system and California families who rely on it.”
His comment came as he urged lawmakers to raise payroll taxes on employers and cut benefits to unemployed workers. Despite the urgency, neither Schwarzenegger nor lawmakers have engaged in negotiations aimed at keeping the unemployment insurance fund in the black. They’ve been aware of the problem since at least 2004.
Without action, California’s unemployment fund will be $2.4 billion in the red by the end of this year, said Lorree Levy, a spokeswoman for the Employment Development Department.
The department’s inadequate funding, understaffing and obsolete equipment are adding to the woes of already unhappy claimants.
“They need to be helping out people because it’s a bad time,” said Fred McLane, an out-of-work assistant film cameraman from Pacific Palisades. McLane said he made 59 unsuccessful calls to Employment Development on Friday , trying to deal with a problem that could be resolved only on the telephone.
Chad Boyer, a laid-off newspaper advertising salesman from San Diego, had an even harder time. In November, he called the state’s toll-free number 802 times over a three-week period to check on his claim. He didn’t get through once.
“I think it’s easier to call a radio station and get free tickets to a Pink Floyd show than to get a live person at EDD,” he said. “It’s a nightmare.”
For now, California has avoided a complete breakdown. But officials fear for the worst. Call center employees are voluntarily working on weekends and holidays, and the application backlog at one of the six centers swelled to 72 hours last month from 12 hours in November, according to a Employment Development memo.
On Wednesday, part of Employment Development’s computer crashed for about an hour, though there was no delay in processing applications or issuing checks, the agency said.
Lawmakers concede they’re aware of the increasingly dire situation but say they are too caught up in trying to avoid a bigger financial catastrophe -- the state running short of cash to pay its bills.
“The truth is we’ve been so focused on the $41-billion budget deficit,” said Senate President Pro Tem Darrell Steinberg (D-Sacramento).
Daily closed-door talks between top legislative leaders and the governor have yet to find a way to avoid the state starting to issue IOUs as soon as February.
Both business and labor union lobbyists in Sacramento say they’re frustrated with the impasse but remain reluctant to shift hardened positions. Business leaders agree that some tax increase might be needed because California’s unemployment insurance tax is collected on a wage base of only $7,000 a year, one of the lowest in the nation. But they insist that any tax hike should be accompanied by cuts in benefits and tightening of eligibility.
“This is something that needs to be resolved,” said Jason Schmelzer of the California Chamber of Commerce. “We are more than happy to have this conversation with the Legislature when the conversation is ready to be had.”
Union leaders counter that negotiations are unlikely to be fruitful as long as Republican lawmakers can put up enough votes to keep an unemployment insurance overhaul bill from getting the constitutionally required two-thirds vote to approve a tax hike.
“We have no evidence that the business community or the Republicans want to negotiate on this issue,” said Angie Wei, legislative director for the California Labor Federation. “And we have not heard anything from the administration that it is bargaining.”
Labor and advocates for the working poor say they have no interest in cutting benefits.
“That’s the worst thing you can do in the middle of a recession,” said Maurice Emsellem, a co-policy director for the National Employment Law Project.