Logo courtesy of California Senate Republicans

Second State EDD Audit Report Reinforces Need for UI Fraud Prevention Legislation

Senate Republican Leader Shannon Grove (R-Bakersfield) responds to the release of secondary audit results by the non-partisan State Auditor on the mismanaged Employment Development Department (EDD). Last summer, Senate Republicans called for a comprehensive audit of the EDD.

Today’s audit results documented egregious failures of the EDD to prevent fraud including the department taking six months to even become serious in deterring fraud in the unemployment insurance system and not having a process in place to unfreeze much needed unemployment claims once the claims were deemed to not be fraudulent. The auditor found that these failures resulted in over $10 billion in fraudulent claims being paid, including almost $1 billion being sent to incarcerated individuals. Among the top recommendations from the State Auditor is to require EDD to regularly cross-match its claims with inmate data, which would be accomplished by Senate Bill 39 authored by Leader Grove and supported by members of the Republican Caucus.

Two days ago, Leader Grove and a group of bipartisan Senators called on legislative leadership to immediately convene an oversight hearing to discuss ways to implement the auditor’s recommendations, bring help to Californians, and prevent future fraud. Media can read the request for an oversight hearing here.

Senate Republican Leader Grove issued the following statement:

“While unemployed Californians weren’t receiving the assistance they desperately needed, Governor Newsom allowed one of the biggest fraud schemes in American history to take place so convicted murderers, rapists, and fraudsters could collect billions in unemployment benefits. The Governor and his failed unemployment department may play the blame game and say it was the former Federal Administration’s fault, but this audit confirms these failures took place within the Democrat-run EDD and on a Democrat governor’s watch despite warnings from the federal government to enact fraud prevention measures.

“The Governor must be held accountable for these glaring issues and the Legislature must take corrective action immediately. I have introduced legislation to prevent further fraud, continue to support our District Attorneys in their prosecution of these fraudsters, and strongly urge my Legislative colleagues to immediately convene an oversight hearing to enact the Auditor’s recommendations.”

Timeline of Senate Republican EDD Actions:

  • April 2020: Senate Republicans wrote a letter warning Governor Newsom about the failures of the EDD after hundreds of thousands of jobless Californians reached out to legislative offices seeking help with their unemployment claims.
  • June 2020: Republicans asked for an independent audit of the EDD through the Joint Legislative Audit Committee (JLAC). Democratic members of JLAC canceled a crucial hearing in August, which would have been an opportunity to review the EDD audit request.
    • Signed by Republican members from both the Assembly and Senate, the letter to JLAC was a bicameral effort to demand answers from EDD. 
  • July 2020: Members of the Senate Republican Caucus requested that Governor Newsom staff EDD 24/7 to help clear the backlog.
  • August 2020: Senate Republicans joined a coalition of legislators delivering another letter to the Governor demanding that he take action to improve EDD operations.
  • September 2020: Members of JLAC approved an audit of the EDD that Senate Republicans joined in requesting.
  • November 2020: District Attorneys announced a major unemployment fraud scheme operating in and around California’s prisons. In a letter to Governor Newsom, Leader Grove requested adequate support for DA’s across the state so they can investigate and prosecute the high number of EDD fraud cases.
  • December 2020: Senator Grove introduced SB 39 to mandate crosschecking of prisoner information with unemployment claims and Senator Wilk introduced SB 58 to require EDD to stop including full social security numbers on their mail, which have put tens of millions of citizens at risk or identity theft.
  • January 2021: Senate Republicans led an effort to call for an immediate oversight hearing on the EDD following a scathing State Auditor report.

This article was released by the Office of Senate Republican Leader Shannon Grove.