EDITORIAL: California's unemployment disaster lingers

Feb. 21—It's never good news when 1,500 staff, including some top leaders, flee a flailing state agency. But cleaning house at the beleaguered Employment Development Department might be the best thing for California. The governor now can try to find a team that can overhaul the state's broken unemployment system.

The travails at EDD are well known to millions of Californians who lost their jobs during the pandemic but had to wait weeks or months longer than expected to receive unemployment assistance. The safety net frayed under the strain of economic upheaval and coronavirus shutdowns. The backlog of unemployment claims has reached 1.2 million.

Government watchdogs estimate that unemployment fraud has cost at least $11 billion. Criminals impersonated regular Californians, even Sen. Dianne Feinstein, to secure fraudulent payments. Who ultimately pays for those losses remains unknown.

The problems were years in the making. EDD had a pretty good anti-fraud system in place, but dismantled it in 2016. During the pandemic, the department had to balance fraud prevention against getting payments out quickly. It wound up bungling both. State Auditor Elaine Howle recently released a report documenting EDD's poor planning and decision-making.

More than 1,500 employees have fled the department since March of last year. As the number of unemployment claims ramped up, people with the experience to handle it headed for the door. EDD has hired nearly 5,000 people during the same period, but training takes months.

Sometimes it feels like not even a week can pass without more calamity at EDD.

Meanwhile, many of the people who matter most are deflecting and dissembling.

California Labor Secretary Julie Su tried to shift blame for EDD's failures onto the Trump administration. She wasn't very successful, as audits and fact-checkers called her out. President Joe Biden has nominated Su to become deputy secretary of labor. In that job, she'd have a role in leading federal unemployment programs. Hopefully she will do better than she has here.

In December, Gov. Gavin Newsom appointed Rita Saenz to lead EDD. A couple of months isn't very long for an overhaul, but signs of progress remain hard to find. On a recent conference call with reporters, she struggled to explain the details of lucrative deals EDD has with private contractors.

State lawmakers have introduced reform bills intended to help EDD prevent fraud and deliver service to struggling Californians more quickly. They are welcome, but real reform rests with the Newsom administration.

New laws won't matter if Newsom doesn't find the right people with the courage to ruffle feathers and enact change at EDD. The jury is still out on Saenz, and there are some high-level vacancies. If the U.S. Senate confirms Su, that will be a crucial job to fill. The next state labor secretary will set the tone for everything.

This is a crucial test for Newsom. Californians are rightly infuriated that EDD has fallen so hard, that so much money has been fraudulently taken and that things only appear to be getting worse. For a governor staring down a possible impeachment vote, restoring some confidence in the unemployment system with quality appointments might just win him back some votes.

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