Sacramento, Calif. (AP) – California Governor Gavin Newsom on Tuesday signed new law to strengthen the security of the state’s unemployment system after approving billions of dollars in fraudulent payments during a pandemic.
Pressed to approve unemployment benefits during a pandemic shutdown that left millions unemployed, state officials approved billions of dollars on behalf of those in jail.
Meanwhile, thousands of legitimate claimants waited months for benefits to be approved and were often unhappy that they couldn’t reach anyone at the Department of Employment Development’s overwhelming call center.
Earlier this year, an audit blamed the Department of Employment Development for “serious failures and negligence,” which have cost taxpayers billions of dollars. Newsom has held the federal government responsible for the dramatic increase in unemployment benefits and the significant risk of fraud.
Prisoners are not entitled to unemployment benefits. However, the Department of Employment Development did not know who was in prison. At least 35 other states have systems that compare unemployment benefits to a list of inmates. But California was not one of them.
Newsom on Tuesday signed a law to amend it, requiring the California prison system to share the prisoner’s name and social security number with EDD.
The author of the Democratic bill, Cotti Petrie Norris, said last month when the bill was passed by the state legislature: “The government needs to do a better job as the guardian of the money. hard earned by our taxpayers. It doesn’t have to be. “” Hundreds of millions of dollars have been lost because of the flaws in the current system. “
In March 2020, Newsom issued the country’s first stay-at-home order for a coronavirus pandemic. The order helped California avoid the resurgence of early incidents, but millions of people were unemployed.
As of March 2020, California has collected 25.2 million unemployment benefits and paid out over $ 176 billion in benefits. However, authorities have admitted that at least $ 11 billion of those payments are fraudulent and an additional $ 19 billion is suspected of fraud.
Many states have engaged in unemployment fraud during the pandemic.
In neighboring Arizona, state officials said last week that fraudsters pocketed nearly 30% of the $ 16 billion in unemployment insurance claims sent since the start of the pandemic.
Office of the Inspector General of Nova Scotia By the end of September 6, the state had unduly paid more than $ 87 billion of its $ 873.0 billion COVID-19 special unemployment benefit, estimated by the US Department of Labor in June.
This is not the first time in a few years that California unemployment agencies have been overwhelmed by the upsurge in complaints. The agency was overwhelmed during the Great Recession 10 years ago. Driven by the collapse of the housing market.
However, state audits earlier this year found that government agencies did not yet have plans for another recession that would leave millions of people unemployed. A new law signed by Newsom obliges EDD to plan and implement future recessions.
“The inability of the EDD to respond quickly and effectively to the growing number of plaintiffs is a problem in the administrations of the three governors of both parties,” Democrat and lawmaker John Laird said in a draft. law last month. .. Passed the parliament. “But it’s our responsibility to make sure these issues are resolved. “
Newsom also signed a law by an independent member of the House of Representatives, Chad Maze. The law requires government agencies to provide people with additional notice before disqualifying them from benefits.
Earlier this year, state lawmakers agreed to give the Department of Employment Development hundreds of millions of dollars to process outstanding claims. Lawmakers also ordered the ministry to start offering claimants the option of direct deposits to prevent criminals from stealing benefit checks from mailboxes.
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