Leaked Documents: EDD asking for more money to roll out a long overdue direct deposit option
SACRAMENTO (CBS13) - It's no secret that California's unemployment agency has been plagued by fraud to the tune of more than $32 billion dollars in recent years. Now, CBS13 has obtained internal Employment Development Department (EDD) communications that reveal the agency is asking for more money in the Governor's recently-released state budget to roll out a direct deposit option for unemployment, disability, and paid family leave benefit recipients.
California is one of only three states in the nation that doesn't offer direct deposit for unemployment, disability, and paid family-leave benefits. Instead, the EDD mails Bank of America Debit cards to benefit recipients. An alternative direct deposit option has been in the works for years, but now, EDD is asking for more money to transition away from the Bank of America debit cards that have been riddled with fraud.
While Californians can enroll in direct deposit, once their EDD Bank of America debit cards arrive, many never arrive. EDD documents are a target for mail thieves, and they have been for years. Yet receiving initial payments by mail, which are too often stolen from the mail by identity thieves or mailed to the wrong address by EDD, is still the only option EDD offers.
As we've reported, strangers have received other people's EDD debit cards in the mail, and there are countless stories of cards being hacked or stolen, robbing benefit recipients of the funds they desperately need to survive.
Lawmakers began pushing for more secure benefits via direct deposit back in 2020. A law requiring it was passed the following year.
But after two years and more than $11 million in budgeted funding to "begin planning and implementation of a direct deposit solution," a leaked draft of "Budget Change Proposal" documents, obtained by CBS13, reveals that EDD is asking for money for "vendor's implementation and transaction costs."
Internal agency emails appear to signal a planned transition away from Bank of America, which would require "a LOT of development work" for the EDD communications team alone, which will be "far more extensive than (some) might realize," writes one EDD executive.
That's in addition to the required "complex programming changes in multiple EDD systems including the mainframe, UI Online, SDI Online, PFL application, and the Interactive Voice Response," according to the leaked draft Budget Change Proposal document.
Notably, EDD computers still use the antiquated Cobol programming language. The agency is now in year two of an ongoing modernization project that technically began two decades ago.
Why haven't they been modernized yet?"
"I've been asking this question since 2003 when Governor Davis approved the modernization project," explains Michael Bernick, a former EDD Director who now serves as special counsel at Duane Morris.
Bernick led the agency until 2004 when they were still mailing out checks. While a lot has changed, one thing is the same: the agency's computers.
"It's one more example of a major dysfunction in our state government over the past couple of decades," Bernick said.
However, he adds that it's not necessarily EDD's fault. He blames the State Department of Technology for modernization delays.
So, what are the odds that EDD is able to reprogram the system to implement direct deposit soon?"
"I think if there's the right sense of urgency in state government, it can be done," Bernick said.
The draft Budget Change Proposal document doesn't indicate the final total that EDD will request in the Governor's budget. Internal emails indicate the agency is currently polling its various departments to come up with details and a narrative to support the eventual ask.
We asked EDD for a current estimated cost and timeline, and when Californians might actually be able to enroll in direct deposit. A representative would only say that EDD is required by law to have Direct Deposit available by next January.
Although EDD does have a long history of failing to meet legally required mandates, without consequence.