The following is an edited excerpt from an article that first appeared Monday in CalMatters.org. The article in its entirety can be found here.
As the ranks of desperate unemployed California workers swell, the state’s Employment Development Department insists that it’s getting things under control. It has help from an ever-expanding roster of private contractors that are staffing up call centers, modernizing tech systems and rooting out fraud, officials stress on social media and at political hearings in Sacramento — an effort that, all told, has so far cost the state at least $236 million during the pandemic, the agency told CalMatters.
The contracts are part of a nationwide unemployment gold rush, as tech companies and consultants pitch overwhelmed public agencies new solutions for fraud and outdated claims systems. … But in California, it’s not easy to track who’s getting paid for what, because there is no easily accessible public list of all state unemployment contracts. The state and its contractors stress that both the demand for benefits and volume of fraud are unprecedented. Still, ongoing confusion adds to what state lawmakers have called EDD’s “very poor history” of paying outside entities to patch holes in the safety net as workers try to survive in financial limbo.
The $236 million in contracts that the department has signed since last March pay for outside companies to help track jobless claims, verify worker identities, analyze records for potential fraud, assist with customer service and more.
“The volume of work was staggering,” EDD spokesperson Aubrey Henry said in a statement. Calls from the public jumped 3,400 percent to 48 million in April 2020 as the state scrambled to process more than 20 million claims, he said, up from 3.8 million claims at the peak of the Great Recession.
“Vendors, mass hiring, redirecting workers from within the department and borrowing workers from other departments, and continued staffing up, were all part of an effort to respond to the historic demand for benefits,” Henry said.