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Coronavirus Unemployment: Will Another Audit Fix the EDD?

SACRAMENTO (CBS13) —  From catastrophic call center failures to missing unemployment payments, California's Employment Development Department (EDD) has faced widespread criticism amid the unemployment crisis, and it's not the first time. Lawmakers are now calling for another EDD audit — the last one was prompted by an ongoing CBS13 investigation — but is another audit enough to fix the agency?

CBS13 Investigative Reporter Julie Watts asked that question in a series of interviews with various lawmakers.

"Thank you for your stories and your coverage," Assembly Member David Chiu (D-San Francisco) said before responding to our questions during a recent press conference. "I have read now dozens of (your) stories about EDD, both just in the last few weeks, but also stories from years ago. And to your point, it is Groundhog Day."

Echoing the sentiment in a separate interview, Congressman Josh Harder (D-CA 10th District) noted, "It shouldn't take a member of Congress or an investigative reporter in order to get real results."

"The auditor is our best and most effective tool," said Assemblyman Jim Patterson (R-Fresno). He is calling for yet another EDD audit.

Let's recap:

The Last EDD Audit

The most recent State Audit of the EDD was prompted by a multi-year KPIX/CBS13 investigation into the agency compromising millions of Californians by exposing full Social Security numbers (SSNs) in the mail.

After five years, dozens of reports, a joint legislative hearing and a state audit, a bill that would finally force the EDD to stop printing Social Security numbers is still awaiting a vote in the senate and the EDD is still violating state law by mailing full Social Security numbers.

CONTINUING COVERAGE: "California Un-Confidential"
CBS13 Investigates: EDD Identity Theft Concerns

Deja Vu? 

Even back in 2015, viewers told us their concerns were dismissed by EDD phone representatives when they called to complain about identity theft concerns and the agency's practice of mailing full SSNs.

"She kind of laughed a bit and said 'yea a lot of people complain,'" Maxine Hines said about the EDD phone rep who answered her call. Hines, a former IRS employee, was among the first to bring the EDD identity theft risk to our attention.

Now, five years later, we're hearing similar complaints about dismissive call center staff from people who are dealing with EDD errors amid the pandemic. Though, the most common call center complaint in 2020 is the inability to get through to anyone at all.

Back in 2015, our EDD investigation revealed that the agency was violating state law by printing full Social Security Numbers on mailed documents, then compromising claimants' identities by exposing the number in the clear envelope window or repeatably mailing the sensitive documents to the wrong people.

Several viewers told us they found strangers' EDD documents in envelopes addressed to them. The documents contained enough sensitive information to steal the person's identity and in many cases the potential identity theft victim never knew they'd been compromised.

Now, five years later, we're beginning to hear similar identity theft concerns from people who are filing for unemployment amid the pandemic as their sensitive EDD documents are stolen or "lost in the mail."

Following our reports in 2015, lawmakers demanded the agency stop mailing full SSNs. In response, the EDD agreed to remove SSNs from mailed documents by the end of the year.

However, in 2018, CBS13 Investigative Reporter Julie Watts discovered the agency had not followed through with its promise to lawmakers as the reporter found her own Social Security number printed on EDD documents she received while on maternity leave.

The series of follow-up reports, including an interview with now EDD Deputy Director Loree Levy, prompted lawmakers to order an audit of the agency in 2018.

When the state auditor finally issued her report in 2019, she independently confirmed many of the CBS findings, including that EDD spokespeople repeatedly made false claims to CBS and to lawmakers.

Now, 5 years after the EDD claimed it had removed full Social Security numbers from mailed documents, the agency continues to print them on documents mailed to millions applying for unemployment amid the pandemic.

The practice, which is still illegal under state law, has the potential to compromise any one of the 7 million Californians who have applied since March — and now the agency has new problems to fix.

EDD Pandemic Problems

From millions forced to wait months, not weeks, for their pandemic unemployment, to catastrophic EDD call center failures, the EDD's response to pandemic unemployment has been widely criticized by everyone from the unemployed to lawmakers.

Even after the agency increased its call center staffing to try to meet demand, data showed three-quarters of calls for help went unanswered.

Governor Gavin Newsom and California Labor Secretary Julie Su have commended the agency for paying more than 4 million people nearly $50 billion since March.

Though, the EDD will not say how many of those people have been paid *all* of their eligible weeks. Many tell us they only received a few of their payments, while others have not received any payments at all.

The EDD tells CBS13 it does not track how many of the 8.7 million claims filed since March have been approved, how many have been denied and how many have actually received all of their eligible payments.

ALSO READ: EDD Missing Data - How Many Still Waiting for First Payments?

Many of those who are still waiting for payments are dealing with identity verification issues or penalties for past claims.

However, there are a variety of other problems including the costly date errors that EDD representatives blamed on claimants and refused to fix until a CBS13 investigation revealed that EDD staff was likely to blame for the errors.

As a result, the EDD added a new online feature to help expedite fixing the date errors. Weeks later, many are still waiting for their claim dates to be corrected.

ALSO READ: EDD Acknowledges Staff May Be Responsible For Costly Date Errors

Lawmakers vs. EDD

CBS13 has heard from hundreds of unemployed Californians who are desperate for help getting their money from the EDD, and we're not alone.

From Congressional Representatives to State Assembly Members, lawmakers tell CBS13 they're also overwhelmed trying to help the people who come to them with EDD problems.

Many we spoke with were shocked when the EDD recently limited lawmakers to expediting just one EDD constituent complaint per week. In response, Assembly Member David Chiu (D-San Francisco) started the hashtag #EDDFailOfTheDay to highlight the many cases the EDD would not help them fix.

Now, weeks later Congressman Josh Harder (D-CA 10th District) tells CBS13 that EDD reps are telling people to contact his office instead of helping the claimants themselves.

"We've heard from several constituents that EDD is directing people to me to then have my office help them get back in contact with EDD – that's completely backwards." Harder said in an email.  "These folks were told EDD couldn't access their information and they would have to come to our office."

The EDD has not yet responded to our request for comment regarding Harder's assertion, but the agency previously told CBS13 they "developed a template" for lawmakers' staff to submit older claims, specifically "cases where the individuals filed for unemployment in March or April and have not received an Unemployment Insurance (UI) benefit payment recently."

ALSO READ: EDD Limits Lawmakers' Efforts To Help Californians Collect Unemployment

Will Another Audit Fix EDD?

If lawmakers vote to approve another audit of the EDD, that would make more than 10 EDD audits and investigations in as many years at an agency with a long history of problems and little change at the top.

"It's been amazing to me that many of the leaders who run this agency were the ones making excuses a decade ago," said Assembly Member Chiu.

The current EDD Director, Sharon Hilliard, was Chief Deputy to the previous EDD Director, Patrick Henning Jr. who is the son of a previous EDD director, Patrick Henning Sr.

Also notable, many of the current EDD complaints can be traced back to projects and staffing by Deloitte Consulting. EDD signed at least two no-bid contracts with Deloitte Consulting, worth more than $16 million, amid the pandemic. Deloitte was brought in to handle the increased pandemic call volume and help the EDD process increased claims, despite Deloitte's long history of cost overruns and past problematic IT projects at the EDD.

ALSO READ: Inside EDD's $11.1 Million Call Center Contract As Calls Go Unanswered

Most notably, Deloitte's 2013 system upgrade resulted in "disastrous consequences" according to Assembly Members. They also cited a spike in call center problems and a drop in answered calls following an EDD/Deloitte software glitch that impacted more than 300,000 claimants.

Then, like now, lawmakers and reporters were flooded with desperate calls for help from those who were impacted. Yet years later, lawmakers point out that legacy EDD executives keep hiring the same firm with similar results.

"We need, really, transformational leadership, systemic reform leadership within EDD," Assemblyman Chiu said. "While I'm supportive of an audit, our constituents do not have the luxury of time. They needed benefits months ago."

Congressman Harder agreed. "I think an audit is a good start to make sure everybody's on the same page with where the problems lie, but we need a real sense of urgency here," Harder said. "These problems (have) been going on for years and so we need to force change through. If that requires an audit and then a bill that the governor would sign... Ultimately, the buck stops at the governor's desk."

"When we learn the facts, we're going to act on those facts," Assemblyman Patterson said, stressing the need for another audit.

Long-Awaited Results From The Last Audit

It's been nearly a year-and-a-half since the State Auditor released her most recent EDD audit, prompted by five years of our reports.

A bill, introduced as a result of the audit by Assembly Member Chad Mayes (I-Palm Springs), unanimously passed the Assembly early this year and is awaiting a vote in the Senate.

While it is already illegal to mail someone's Social Security number, AB-499 would add a financial penalty for state agencies that chose to ignore the existing law.

If passed, any time the EDD prints someone's full Social Security number on a mailed document, the agency would be required to pay for identity theft protection and mitigation services for that person — whether or not the document is compromised.

The act of mailing the SSN would trigger the penalty and, considering the EDD has mailed millions of SSNs in just the past few months, it is unlikely the agency could afford the penalty and would be forced to finally stop printing SSNs.

However, even if the bill passes, the governor could choose to veto the bill. The governor has been publicly supportive of the agency's efforts amid the pandemic, despite the widespread criticism.

EDD Response

The EDD has denied CBS13's repeated requests for an interview with EDD Director Sharon Hilliard, as they did under the previous EDD Director, Patrick Henning.

In response to the criticism by lawmakers and the audit request, the agency points to the billions of dollars it has paid since the beginning of the pandemic. Here is their full email response:

The staff at the Employment Development Department care deeply about serving those impacted by this unprecedented pandemic, which hit at a time when the state was seeing record low unemployment with correspondingly low federal administrative funding and therefore reduced staffing levels. We continue to work around the clock, seven days a week to expand our capacity for processing this unprecedented demand for unemployment benefits as quickly as possible.

We are enhancing our technology systems to increase efficiencies, and have already hired or have offers extended to more than 4,000 new staff needed as part of an expedited mass hiring effort with the increased federal funding we've received. We also put in place a chatbot and text message service to help provide Californians answers to their most common questions and help reduce the high demand for the call center.

EDD paid $4 billion in benefits just last week – providing critical financial support to families and communities throughout California. According to the latest data, the state's Employment Development Department (EDD) has processed a total of more than 7 million claims in just a few months, almost doubling the claim total over the worst full year of the Great Recession (3.8 million claims in 2010).

In total, EDD has paid more than $37.5 billion in critical unemployment benefits to impacted workers over just the last 3.5 months, and we pledge to continue doing everything possible to fully meet the needs of Californians seeking our help.

The agency declined to comment on the Social Security number bill.

Follow our continuing coverage as CBS13 works to get answers to your Coronavirus Unemployment Questions: 

CBS13 Investigates: Coronavirus Unemployment

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