The state’s unemployment insurance agency got encouraging news — and potentially lots of money — from Gov. Gavin Newsom’s revised budget proposal.

Gavin Newsom wants to give millions to state’s struggling unemployment agency. Will it help?

Newsom proposed a $276.3 million one-time infusion of state money in his budget revision last week so that the Employment Development Department can better handle its current workload and plan for the future.

EDD estimates that it has more than 11 million “work items” associated with claims from early in the COVID pandemic. Addressing those items would take 3 ½ years to complete, work EDD says is routine and does not affect payments of claims.TOP ARTICLES

The budget summary says the new funding should allow it to complete that mission in about a year.

In the meantime, EDD grapples with other problems, and it’s unclear just how the new spending can fix the immediate situation. Claims backlogs have been growing and people are having trouble getting through to the EDD call center.

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Among the planned spending:

▪ Help for non-English speakers. There’s $21 million over two years to “improve education and outreach in communities requiring multilingual access to EDD services and programs.” Among the proposals is to establish a multilingual access unit and expand interpretive services.

The agency now provides services and information in several different languages, but this funding will “help us greatly expand those offerings online and by phone, as well as in our forms and publications and community outreach,” said EDD spokeswoman Loree Levy.

▪ Help for people dealing with the EDD. The budget has $11.4 million over the next two years to help staff at the America’s Job Centers of California to aid people filing claims. They’d particularly help people unable to access EDD’s online resources.

▪ Direct deposit. There’s $11 million over two years for EDD to develop and implement the ability for people to get direct deposit in their accounts for unemployment insurance, disability insurance, and paid family leave.

▪ The deferred workload. Levy said that’s related to EDD temporarily suspending some actions earlier in the pandemic so it could determine eligibility for potential claimants.

It’s not preventing any payments, and Levy called the workload “routine work that EDD needs to complete.” The funding will allow EDD to bring in some additional resources to help with this work as well as drive down the current backlog that can impact payments.


Newsom was somewhat contrite as he discussed EDD as part of the May budget revision. ”I’m mindful that we’re dealing with the unprecedented,” he said.

Newsom explained that “It’s not an excuse. It’s just a point of reference and context” that the unemployment system was not designed to handle the huge volume that deluged it as the COVID pandemic ravaged the economy. EDD has paid out $143 billion in claims since the pandemic began 14 months ago.

“It just was not designed for the challenge this nation-state has faced and so we have to reimagine it. We have to support it and once we move through this pandemic,” he said.

Newsom said EDD’s woes have given him and the state government “the ability to learn lessons from this experience of the past.”

As a result, he said, “I can assure you the next administration will not have to struggle through what all of us had to struggle through at EDD.”Play VideoDuration 7:43Newsom takes you on budget journey from pandemic to today’s proposalCalifornia Governor Gavin Newsom introduces his proposed state budget for the upcoming fiscal year, and tells how the state went from the onset of the coronavirus pandemic to a 2021 fiscal plan.

Legislative watchdogs were split on the value of the initiatives. “While it will likely take more reforms and resources to address problems at EDD, I am very happy to see new funding for EDD in this budget,” said Assemblyman David Chiu, D-San Francisco. “Anything we can do to get benefits in the hands of struggling Californians is a positive step.”

Assemblyman Jim Patterson, R-Fresno, was less optimistic.

“Making promises and spending money are easy to do. Californians have heard all this before,” he said. While he liked the idea of direct deposit, Patterson said “it should have been done long before now. The governor seems to be very slow in adopting obvious solutions.”

In the longer term, he was concerned that modernizing the technology is crucial, but “I doubt those that got us in this mess are the ones to get us out.”


Independent analysts and watchdog were a bit more upbeat.

“There are long-term improvements that are needed, too, but I think overall the budget reflects the current needs of the department,” said Daniela Urban, executive director of the Center for Workers’ Rights in Sacramento.

At the California Policy Lab, Faculty Director Till von Wachter found that “allocating these additional resources to deal with existing problems will make an important difference, especially in terms of getting benefits to impacted workers as quickly as possible.”

EDD has been struggling since the COVID pandemic began 14 months ago to keep up with unprecedented demand. Unemployment claims soared overnight, as the jobless rate spiked from 3.9% in February 2020 to 16% two months later.

As constituents complained they couldn’t reach the agency and that their payments were often delayed, Newsom last year ordered a special strike force to recommend immediate ways to improve service.

Many constituents still don’t see those changes. The backlog of unemployment claims, or claims more than 21 days old, is up about 76% over the last month and stood at 195,585 during the week ending May 8.

Calls to the call center have jumped 38% over the past month, and a smaller percentage is being answered.

The agency is dealing with claims that need to be renewed as well as several programs created by Washington.

A big part of the agency’s problem is that its technology and staff were not ready for an abrupt, deep economic downturn and all the new programs.

The new budget has a one-time $11.8 million general fund allocation to “re-engage the planning and modernization of the department’s information technology systems.”

Such an effort is crucial, said von Wachter, an effort that requires not just state but national attention.

“There’s also a pressing need to simultaneously think through more long-term updates to our country’s unemployment insurance system so that it’s better able to respond to the next unemployment crisis,” he said.