Assembly sets oversight hearing for Nov. 6 over EDD troubles

Luis Rodriguez, who has been out of work for a year, fills out forms at the EDD's Sacramento office.
Luis Rodriguez, who has been out of work for a year, fills out forms at the EDD’s Sacramento office.
(Rich Pedroncelli / Associated Press)

The state Assembly has set an oversight hearing for Nov. 6 that will look into what went wrong when the state Employment Development Department launched a computer system upgrade that backfired, delaying unemployment checks to thousands of state residents.

The EDD has been contending with a backlog of claims stemming from a Labor Day upgrade to its 30-year-old system that processes standing jobless claims. The trouble began when old data was transferred to the new software and halted as many as 300,000 claims for payment.

State workers have been working overtime to clear the backlog of claims. Frustrated residents have complained to lawmakers about the financial hardships they are experiencing, prompting the hearing.

“We’re going to look at EDD, the contractors and others to see how the system broke down so we can avoid this in the future,” said Henry T. Perea, chair of the Assembly’s Insurance Committee, which has oversight over the jobless benefits program.


In a statement, Perea said the hearing would also examine the budget impacts of the software problems and the ensuing backlog.

Some blame the EDD’s slow response to the problem that created the massive backlog of claims. Others are pointing fingers at a familiar name around the halls of Sacramento: Deloitte Consulting.

The New York firm is one of the state’s biggest contractors and has a history of delivering projects over budget and with problematic results. Deloitte also has been blamed for similar troubles with upgrades to unemployment software in Massachusetts, Pennsylvania and Florida.

“We keep hiring the same company, and they keep having the same issues,” said Sen. Anthony Cannella (R-Ceres). “At some point, it’s on us for hiring the same company. It’s faulty logic, and we’ve got to get better.”

Cannella and another state senator are calling on the Senate’s Labor and Industrial Relations Committee, which oversees the EDD, to also conduct its own investigation.

Massachusetts’ state Senate next week will hold a hearing about similar problems with that state’s system. Deloitte is blamed there for a $46-million system that was two years behind schedule, $6 million over budget and plagued with many of the same problems California is experiencing.

In 2003, California estimated it would pay $58 million to upgrade its unemployment benefits system. By the time the state awarded Deloitte the contract in 2010, the cost estimate had grown by more than $30 million.

The EDD handles the largest unemployment insurance program in the country, having doled out $6.6 billion to about 1 million unemployed Californians in 2012. The software was expected to ease the agency’s ability to verify who was eligible to receive benefits.

Officials initially thought the backlog would be manageable, but internal emails showed the agency was quickly overwhelmed. Phone lines were jammed with frustrated people seeking answers. For weeks, EDD employees have been working overtime hours to clear the backlog.

Loree Levy, an EDD spokeswoman, said the system is working, processing 80% of claims on time. As for the troubles, she said, “There is a period of transition or adjustment with any large infrastructure upgrade like this one.”


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