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Looking behind California’s unemployment snafu

By Josh Richman
Tuesday, November 5th, 2013 at 1:10 pm in Assembly.

As an Assembly committee prepares to hold an oversight hearing tomorrow to probe how a computer snafu delayed unemployment insurance checks to hundreds of thousands of Californians, a new national report shows many states rely on decades-old, failure-prone technology to run their unemployment systems.

The Assembly Insurance Committee is scheduled to hold a hearing at 11 a.m. Wednesday on what went wrong when the Employment Development Department’s tried to upgrade its 30-year-old computer system at Labor Day. State workers have been struggling ever since to clear the backlog of claims for checks that never arrived.

This is hardly surprising, according to the National Employment Law Project’s new “State of Disrepair” report: California might be the poster child, but this problem is nationwide. The report lays blame at the feet of chronic federal underfunding, and says that since the Great Recession’s start, millions of unemployed workers have suffered unnecessary payment delays and application problems.

“Federal underinvestment in state unemployment IT systems doesn’t save money in the long run. Not only do unemployed workers suffer when systems fail, but the government misses out on productivity gains and cost savings,” Rebecca Dixon, NELP policy analyst and the report’s lead author, said in a news release. “Because a majority of these systems still run outdated programming languages, there is a significant cost to their ongoing maintenance. Worse still, these legacy systems increase the likelihood of problems such as benefit overpayments.”

Congress for decades has failed to adjust state unemployment insurance administrative funding for inflation, employment growth, or continuing capital investments such as computer upgrades, the report notes; instead, states have cobbled together networks of computer programs and hardware that complicate reprogramming and scaling up during surges in claims. The lack of federal funding also has made it hard for states to hire enough staff to process claims fast enough.

And with federal funding cutbacks compounded by budget sequestration, more states are laying off unemployment insurance staff, even though 2012 caseloads were still 155 percent higher than they were when the recession began in 2007, the report says.

The effects seem clear. In 2007, before jobless claims increased with the recession’s onset, 84 percent of states met federal standards for timely UI payments; by 2009, only 43 percent of states met the standard, and in 2012, only 41 percent met the standard, despite a decrease in jobless claims.

Even before EDD’s Labor Day snafu, the report says, California’s FY 2011-12 call volumes were such that 17 million out of 72 million calls – 24 percent – couldn’t even access the automated phone system. Of nearly 30 million callers who asked to speak with a live agent, only 4.8 million were successful.

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