California’s slow handling of appeals from workers denied unemployment benefits is getting worse

California is so slow in handling appeals from workers denied unemployment benefits that it may take years to catch up, state officials say. And the backlog is getting worse.

With unemployment now at 11.6% in California and rising, there is a record backlog of more than 82,500 Californians who have appeals pending on their eligibility for checks of as much as $475 a week. At the same time, the state is about to furlough for three days a month the judges and support staff who handle the appeals.

As a result, a June report to the California Unemployment Insurance Appeals Board predicted that the target for eliminating the backlog would be pushed back from June 2010 to February 2012.

California’s poor record of handling appeals has caught the attention of the U.S. Department of Labor. This year the federal government is providing about three-fifths of the estimated $28 billion in benefits to be paid to 2.1 million unemployed workers. The federal government also pays most of the salaries of state workers who administer unemployment insurance programs.

Labor Secretary Hilda Solis, a Californian who previously served in the House of Representatives and the state Legislature, is concerned that Gov. Arnold Schwarzenegger’s furlough order could make a big problem even bigger. The federal government has officially told California to exempt its unemployment program from any furlough mandate.

“States do not save money by furloughing employees from federally funded positions, and these actions can lead to serious consequences for laid-off workers, who are in need of timely unemployment compensation payments,” Solis said in a statement to the Los Angeles Times. “States need to ensure that benefits get to eligible workers on time, period.”

The Labor Department is sending a team of officials to visit appeals board offices in California this week. The department said it would be looking into appeals board plans to improve its performance, whittle down the backlog and deal with “long-standing appeals timeliness issues.”

California is one of about three dozen states swamped by a wave of recession-spawned unemployment insurance claims. Delays at the appeals board already average about two months, ranking the state the third worst in the nation. Last year, the Labor Department put California under a “corrective action plan.”

Federal law requires that at least three-fifths of all appeals be resolved within 30 days. But in California, less than 5% meet the deadline, according to federal reports. The number of unresolved appeals cases has about doubled since the start of the recession in December 2007.

Schwarzenegger is committed to “helping California’s unemployed during this difficult time,” spokeswoman Rachel Cameron said. But, “with the state facing a cash crisis and a $26-billion budget deficit, all areas of state government” -- including the appeals board -- “must cut back and do more with less.”

The governor has given the appeals board special flexibility so it can remain open five days a week even while meeting its furlough obligations, Cameron said. At the same time, the Schwarzenegger administration said it had made the appeals board more efficient and approved the hiring of 55 new judges, increasing total appeals board staffing to 205 judges out of 720 total employees.

Schwarzenegger’s February order furloughing state workers for two days a month reduced the number of cases handled by the appeals board by 4%, reducing its monthly total by 685. A third furlough day, scheduled to start next month, could slow things down even more, board Chairwoman Bonnie Garcia wrote in a May 12 letter to the administration.

“We have an average of about 35,000 new appeals a month,” Garcia said in an interview. “We can only reach so many thousands of them.”

California’s handling of appeals could spur a strong response from Washington, Garcia warned in her letter. The Labor Department could place the California unemployment insurance program into receivership and jeopardize billions of dollars in federal financial support, she said.

Critics charge the governor with openly defying U.S. laws that require speedy handling of appeals from employees and employers about a laid-off worker’s eligibility for unemployment insurance.

Schwarzenegger’s actions are “a flagrant violation of your policy directives regarding furloughs of state employees paid by unemployment insurance administration funds,” said a July 20 letter from state labor union officials to Solis.

The appeals board’s $78-million annual budget is almost entirely funded by the federal government, they note, so furloughing judges and other staff doesn’t create any real savings for the state Treasury.

The appeals board estimates that as a result of the furloughs, California could actually lose about $700,000 in federal funding that’s pegged to the number of cases heard.

The damage done to low-wage workers is far worse, advocates said.

A lawsuit filed against the state two weeks ago by California Rural Legal Assistance on behalf of unemployed workers complained about the long waits.

“Extensive delays during this period of economic decline,” it said, “leave thousands of applicants throughout the state without critically needed funds to provide for the necessities of life for themselves and their families.”

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marc.lifsher@latimes.com