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Looking behind California’s unemployment snafu

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 “Because a majority of these systems still run outdated programming languages, there is a significant cost to their ongoing maintenance.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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Labor Dept. releases $7.96 mil for NUMMI workers

The U.S. Department of Labor today announced it’s releasing the remaining $7.96 million from a National Emergency Grant to keep providing re-employment and training services to about 4,455 workers affected by the closure of Fremont’s New United Motors Manufacturing Inc. (NUMMI) and 39 of its supplier companies.

the former NUMMI plant“Today’s grant will result in continued support services and job training for auto industry workers in Fremont who lost their jobs through no fault of their own,” Labor Secretary Hilda Solis said in a news release. “As our economy continues to improve, this grant will benefit employers, too, by providing grant participants with the skills and credentials that match 21st century needs.”

A grant of up to $19,042,012 was approved in June 2010, with almost $11.1 million released at that time. Awarded to the California Employment Development Department, this second release provides dislocated workers – many of whom also are eligible for Trade Adjustment Assistance – access to services including dependent care and transportation assistance. Workers of supplier companies whose TAA petitions were denied have access to a full array of training and employment-related services under this grant.

“It has been more than a year since the NUMMI plant’s closing and unemployment is still unacceptably high,” Rep. Pete Stark, D-Fremont, said in his own release. “In this difficult economy, I am committed to creating jobs and providing the assistance that laid off workers need to hone their skills and remain competitive. The East Bay is a hub for innovation and green manufacturing and the funding announced today will help ensure that our workforce is prepared to fill new jobs in these areas.”

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Assembly chairs move to shore up EDD

The chairs of several Assembly committees said today they’re providing $2 million in new aid – freed up by a 10 percent cut in the Assembly’s operating budget – to California’s beleaguered Employment Development Department, which is being swamped by an average of two million calls per day during peak times.

“These tough economic times require shared sacrifice,” said Assembly Labor and Employment Committee chairman Sandre Swanson, D-Alameda. “We are committed to doing all we can to help Californians in need.”

“Our job is to help people maintain in between their employment, become gainfully employed and contribute to the economy by being consumers and then supporting business and the growth of the economy.”

With California’s unemployment rate at 9.3 percent — and apparently climbing — EDD will use the money to conduct unemployment-insurance seminars in major rural and urban areas; provide personal computers to One-Stop partners; buy remote-access equipment; and support a public information campaign with new outreach technologies.

“When people are out of work in these trying economic times, we need to be responsible by funding programs that create jobs and help Californians find jobs,” said Assembly Insurance Committee chairman Joe Coto, D-San Jose, whose panel oversees unemployment compensation. “This new funding will be critical in getting people the benefits they earned.”

Meanwhile, the state’s coffers continue to ring hollow. More on that, after the jump…
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Does Schwarzenegger’s veto rationale hold up?

Gov. Arnold Schwarzenegger is holding a news conference in Fresno right now “to highlight the economic ramifications of the legislature’s failure to pass a real budget solution that would create jobs and provide mortgage relief.” Yesterday, he vowed to veto bills sent to him by the Legislature which would’ve narrowed the state’s staggering budget gap by about 18 billion.

“By exploiting a legal loophole over the definition of taxes vs. fees, Democrats had hoped to sidestep the state’s two-thirds majority hurdle for raising taxes,” my colleague Mike Zapler put it in his article today. “But the part of the package that offended the governor most did not involve the end-run on taxes; instead, Schwarzenegger said the proposal did not go far enough to trim spending and stimulate the economy.”

The governor yesterday accused the Legislature of “playing games.” Hmmm.

“I think the governor is sort of disrespecting the difficulty that both the Senate Pro Tem and the Speaker have had within their caucuses holding together a coalition of agreement over some very difficult choices,” Assemblyman Sandre Swanson, D-Alameda, told me this morning.

Like many Democrats, he said, he wasn’t entirely comfortable with provisions to expedite California Environmental Quality Act (CEQA) reviews to speed up infrastructure construction projects, or with the $2.5 billion in education cuts (though it’s better than the Republicans “draconian $10 billion cut,” he noted).

So this plan “was extremely difficult to put together,” Swanson said, and the governor has some nerve trying to “push this package further to his liking and still have confidence that leadership can still hold its caucuses together without the governor bringing any votes to the table.”

And this wasn’t meant to be a complete fix, Swanson noted – only a stop-gap measure to keep the state’s cash flow moving, with negotiations to continue over the remaining $28 billion gap. If Schwarzenegger vetoes this, he said, the governor will just have to come back not only with a timely counterproposal, but also with a larger package that addresses the whole problem plus three Republican Assembly votes and two Republican state Senate votes.

“He’s playing Russian roulette with the lives of so many working people in the state of California and California’s economy itself,” Swanson warned. “I really think this is a legacy moment from the governor.”

Assembly Speaker Karen Bass, D-Los Angeles, noted in a statement the bills sent to the governor “did $3 billion worth of bond acceleration to get job-creating infrastructure projects moving for transportation, drought relief, park restoration and green technologies;” Swanson had noted to me that every billion in infrastructure spending creates an estimated 18,000 jobs.

But California’s Pooled Money Investment Board has just pulled the plug on 2,000 transportation projects in the state because of the state’s cash crisis, which can’t be solved without a balanced budget in place.

“California’s Treasurer warned today that there would be further dire consequences from Wall Street if Governor Schwarzenegger threw away the solutions passed by the legislature. I am surprised that warning alone didn’t give the governor pause enough to thoughtfully consider bills that haven’t even reached his desk yet,” Bass said. “The governor’s haste is a waste of $18 billion in solutions that could have helped with our cash crisis and our budget deficit. The governor claims he wants to negotiate but then says things must be exactly as he wants. That is astonishing given the crisis we face. We are now waiting anxiously to see what the next step will be from a governor who has consistently been unable to produce even a single vote for a single budget solution.”

And state Senate President Pro Tem Darrell Steinberg, D-Sacramento, said Democrats acted responsibly when nobody else has been willing to do so, and while “it would be easy to fire back at the Governor for his insults,” he remains “damn proud of what the Legislature did today.”

The California Employment Development Department this morning announced that the state’s unemployment rate rose to 8.4 percent in November, up from 8.2 percent in October and well above November’s national rate of 6.7 percent. Schwarzenegger quickly issued a statement saying this “reinforces the need for the state legislature to pass a real budget solution that includes aggressive economic stimulus — because we must do everything in our power to help Californians affected by the economic downturn get back to work. I’ve said countless times that any budget plan sent to my desk must include real stimulus that creates jobs, keeps Californians in their homes and provides strong, long-term recovery solutions for our state’s diverse economy.”

Yet it seems part of a solution was sent to him yesterday, and he turned his back on it. So who’s playing games?

UPDATE @ 12:02 P.M. FRIDAY: “It would be absolutely impossible to create jobs in 2009 from infrastructure projects with what they sent us,” Schwarzenegger spokesman Matt David insisted to me just now. “What they replaced CEQA with was more stringent and more burdensome than CEQA.”

“On public-private partnerships, the same thing – they added a line that would’ve led to countless, endless lawsuits over public-private partnerships and made it impossible to expedite any of these state projects,” he added. “They absolutely refused to eliminate any state holidays, even though state workers have 14 holidays – which is, I would guess, more than any private citizen in California gets. They left $300 million in CalWORKs cuts that the governor asked for on the table. They left about $800 million in cuts on the table when it comes to dealing with state workforce, and over $100 million in IHSS (In-Home Supportive Services) cuts.”

I asked him about the fact that Legislative Democrats already agreed to deep cuts to break this summer’s budget deadlock in September, and have agreed to more since, without any meaningful movement from Republicans. He maintained that “a fair package from the Democrats can’t be to increase the amount of revenues in taxes and fees, reduce the amount of cuts and water down the economic stimulus the governor is asking for and do nothing for mortgage relief. That’s unacceptable to the governor.”