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Column: California’s unemployment payment fiasco makes the DMV look like a well-run agency

A correctional officer walks along a corridor at Pelican Bay State Prison.
Many unemployed Californians had trouble claiming unemployment benefits. But the state has paid out hundreds of millions of dollars on claims improperly filed in the names of California prison inmates.
(Rich Pedroncelli / Associated Press)

When Bank of America reported a few days ago that unemployment benefits fraud in California could total $2 billion, a number of questions came to mind.

Is this the biggest heist in history, at least in California? Well, that’s what the Sacramento County district attorney said, and I can’t think of anything that tops it.

Has the California Employment Development Department now surpassed the Department of Motor Vehicles in the ranks of scandalous state government incompetence? It certainly appears that way.

And if California prison inmates were smart enough to swindle an estimated $400 million in state benefits, even as thousands who were thrown out of work by the pandemic still can’t get their money, shouldn’t we hire the inmates to run the agency and lock up the officials who allowed it to become a national laughingstock?

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I jest, but only a little.

The system designed to deliver much-needed aid to struggling Californians has been a disaster. Even an emergency fix of the online benefits system has had glitches, and when that became clear in recent days , the condemnation was double-barreled and bipartisan.

“A rat’s nest of incompetence,” Assemblyman Jim Patterson (R-Fresno) charged, blasting EDD and calling out Gov. Gavin Newsom for a debacle that stands as perhaps the biggest embarrassment of his administration.

Meanwhile, Assemblywoman Cottie Petrie-Norris (D-Laguna Beach) said desperate Californians have “this sense of falling into a black hole” as they continue struggling with a malfunctioning computer system. They can’t get their benefits, spend months in EDD purgatory and can’t get anyone to answer their cries for help.

I felt as if I was falling into a black hole when I watched videos of Petrie-Norris, who chairs the Assembly Accountability and Administrative Review Committee, grilling EDD Director Sharon Hilliard on two occasions midsummer. Petrie-Norris tried in vain to get Hilliard to be specific about the chaos at her agency, where the backlog of claims has reached well over a million at times.

It wasn’t just that Hilliard, who has decided to retire at the end of the year, was evasive. It’s that she displayed no sense of urgency in the midst of a public health and economic emergency. Hilliard seemed unruffled in July when an angry Petrie-Norris noted that while other states have overhauled their services “in a matter of months” in response to COVID-19-related demands, California’s EDD said in 2016 that it would take 11 years to overhaul its system.

Eleven years?

Silicon Valley, the world center of technological innovation, is a couple hours from Sacramento, and the state has a computerized benefits program that appears to have been designed by the Flintstones?

Hire the inmates. Bring in a crack team of tech nerds from any high school in the state. They could probably clean things up in a matter of months.

I asked Petrie-Norris about that and a few other things, but before I get to her answers, let me share a few EDD tales from readers so you’ve got a full sense of the absurdity.

Gerald Freedman of Mt. Washington filed an unemployment claim last month but got no check and can’t get through to the EDD to find out what’s going on.

“It is impossible to contact this agency, as their phone is busy at all times. I have called over 100 times at all times of the day and never gotten anyone to provide assistance,” Freedman said.

Shelly Josias and her husband, who live in Carthay Circle and both were out of work due to the pandemic, banged their heads against the EDD wall of bureaucracy week after week. Josias said it took five months for her husband to begin receiving payments, and three months for her to get hooked up.

“I don’t think it ever would have happened,” Josias said, if she hadn’t pleaded for help from the staff of state Sen. Holly Mitchell, who is now an L.A. County supervisor.

Larry Newnam and Joy Carroll of El Sereno received multiple mailings from EDD in a two-week span, but they didn’t apply for benefits. The mail was addressed to “four separate people,” Newnam said. “These people never lived here.… We’ve sent mail back with notes to them about this. We haven’t opened the mail but these look like unemployment checks.”

They weren’t the only ones to encounter mystery mail from the EDD in what look like cases of incompetence or attempted fraud.

Laurie Adami says her husband, a good Samaritan, was picking up trash on Laurel Canyon Boulevard and came upon “a pile of unopened letters” from the EDD addressed to different people at a nearby address. He delivered the mail to the right location, but before long, he found those same letters and others tossed back onto the street.

Adami says she’s going to turn the mail over to the office of Assemblyman Richard Bloom (D-Santa Monica) for delivery to Sacramento.

In Granada Hills, Marie and Stan Miller keep getting EDD mail addressed to people they don’t know.

“I asked my mailman what’s going on, and he said, ‘I don’t know, Mrs. Miller,’” said Marie, who discovered that neighbors were also getting EDD letters addressed to strangers.

Mrs. Miller returned hers to the state and tried to contact someone to tell them there might be some fraudulent activity going on, but she couldn’t get through. Then she saw the news about the estimated $2 billion in fraud and the millions going to prison inmates.

“The thing that’s so sad is that so many people need that money and can’t get it, and other people have figured out how to jump the line,” said Miller.

These stories go on and on, and it’s hard to imagine that the state could have done a worse job if it had tried.
Benefits were applied for in the names of infants and children, and 76,000 people who got benefit cards were in states far beyond the California border, as my colleague Patrick McGreevey reported.

Bank of America recommended that the state freeze 640,000 accounts that have had suspicious activity, and of course, the thousands of inmates who hit the jackpot are going to be laughing for years to come.

So how could one department have screwed up so monumentally?

Petrie-Norris, first elected to office two years ago, told me it’s a combination of outdated technology, bad leadership and a failure to create a culture oriented toward customers trying to get the services their tax dollars pay for. It was known for years that EDD had problems, Petrie-Norris said, but they didn’t get fixed.

“What was shocking to me and most disturbing was that pre-pandemic, when we were in a period of record low unemployment and the department was not overwhelmed … they were answering only 54% of incoming calls,” said Petrie-Norris.

Dozens of legislators have demanded fixes, Gov. Newsom assembled a team that recommended reforms, some legislation has been introduced and a search is underway for a new EDD director.

Despite some signs of improvement, Petrie-Norris said it’s going to take months to clean up the mess and work through a backlog of hundreds of thousands of claims. And new claims could be added if the COVID-19 pandemic keeps people from returning to work into the coming year.

She was right when she said leadership was a big part of the problem.

Not just at EDD, but through the halls of the Legislature and into the office of the governor.

Steve.lopez@latimes.com


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