CA Halts New EDD Claims For Two Weeks To Reset Outdated System

CALIFORNIA — Gov. Gavin Newsom called the COBAL system used by the Employment Development Department "old and dilapidated" Monday as he announced plans to revamp the department's old technology. During the two-week reset, no new claims will be processed while Newsom's "strike team" investigates fraudulent claims and begins to sort through a massive backlog of cases.

After reports of a possibly widespread fraud scheme raised alarm weeks ago, coupled with delayed payments to tens of thousands of Californians, Newsom assembled a strike team to expedite new cases and revamp the entire system.

The EDD's outdated system became overwhelmed just as a catastrophic amount of Golden State residents lost their jobs after COVID-19 devastated the U.S. in March. Since then, California has paid $86 billion in unemployment benefits and processed some 12.6 million claims.

As more than 600,000 backlogged cases were discovered by the strike team over the weekend, Newsom said it was time for the EDD's old system to be "strewn to the waste bin of history."

Workers in the backlog had not received benefits they applied for at least three weeks ago. Another 1 million Californians who were getting benefits suddenly stopped receiving payments.

"We inherited a bit of that waste bin and we're trying to patch it together," Newsom said.

The biggest factor driving the backlog up at EDD was the excessive number of claims that were flagged for manual processing.

The Strike Team determined that a disproportionate number of claims were being flagged for fraud when they might have been a simple matter involving the length of a name or addition of a middle initial, according to the report.

Just during the week ending Aug. 22, the department received an average of 60,368 new electronic claims each day, and 40 percent of those claims were routed for manual processing: 24,147 manual claims per day, which is a tenfold increase.

The reset process is set to end Oct. 5 the strike team aims to determine which of the 7.7 million claims filed in 2020 are fraudulent and to modernize the technology systems. By October, the strike team aims to "dramatically lower the growth of EDD's backlog."

"We started that process this weekend we didn't want to delay it even a day," Newsom said.

A possible widespread fraud scheme affecting the system caught the attention of officials in early September. Californians who hadn't previously filed unemployment claims began receiving bizarre amounts of letters from the Employment Development Department in August, many of which were regarding claims of other people.

"We are concerned about fraud in this space," Newsom said at a Sept. 2 news conference. "We are working with local authorities as well as state agencies across every jurisdiction to weed that out."

The strike team was assembled shortly after to "get under the hood" of the possible fraud activity.

During the reset, continuing claims are to remain unaffected, according to the report. Anyone already receiving benefits will still be able to both re-certify each week and receive payments.

New claims will be diverted to a "pre-application" web form that will collect workers' information and instruct them on how to submit documents after reset is completed in October.

Newsom also added during his Monday news conference that the systems used by most of the state departments, much like the rest of the country, were largely outdated.

"It's not just issues with disability insurance, it's not just issues with unemployment insurance — it's across the spectrum, including the department of motor vehicles," Newsom said.

The strike team also included in the weekend report that "the state needs hybrid tech-policy teams who actively bring the worlds of regulations, requirements and programs together with operations, technology and systems to better serve Californians."

The full report conducted by the state of California can be found here.