Lawmakers on both sides of the aisle are pushing to determine what happened with the state’s Employment Development Department (EDD), which has paid millions on fraudulent employment claims, and failed to use tools as advised by the federal government like cross checking identification against inmate records.
In addition to state prosecutors’ investigation of prisoner payouts, the Bank of America has sought to reclaim funds paid to fraudsters, leading to the freezing of many genuine claimants’ debit accounts.
Lawmakers are expected to schedule more fact-finding hearings when the legislature gets new committee membership assignments next month, Jen Kwart, communications director for Assemblymember David Chiu, D-San Francisco, told the Northern California Record by email.
“We obviously believe there is a need for further hearings on fraud, Bank of America, social security numbers on mail, and a number of other issues,” Kwart said. “We don't see any reason why those wouldn't occur when the legislature reconvenes in Sacramento in January.”
California is one of only a few states not offering direct deposit for unemployment benefits, which Assemblywoman Lorena Gonzalez, D-San Diego, said should be addressed through upcoming legislation.
The difficulties have impacted many of California’s most vulnerable residents.
“We are also learning that there's a huge presence on social media up and down the state of California that are frustrated, and desperate, and falling into this black hole where they are being rejected for no reason. They can't get their application to be approved and they are part of huge backlog,” state Sen. Jim Patterson, R-Fresno, told KCRA.
The cost to taxpayers has been estimated at as high as $2 billion.
“I think we can safely expect that a fact-finding process will begin pretty quickly,” Matt Horton, a director at the Milken Institute’s Center for Regional Economics and California Center, told the Record.
“As an outside observer, I anticipate a rightful demand to know about the accountability process,” Horton said. “Who knew what and when, and what precautions were in place at the time.”
While it’s clear there are a multitude of issues at the EDD that still need to be addressed, Kwart noted that following recommendations implemented by the Governor's strike team, the backlog of unpaid claims has been reduced by nearly 1 million claimants.
“The Governor also announced a task force on fraud,” Kwart said. “Given that his previous strike force did result in some positive change at EDD, we are hopeful this new task force will be able to get to the bottom of the fraud that has occurred.”