Report 2014-101 Recommendation 8 Responses

Report 2014-101: Employment Development Department: It Should Improve Its Efforts to Minimize Avoidable Appeals of Its Eligibility Determinations for Unemployment Insurance Benefits (Release Date: August 2014)

Recommendation #8 To: Employment Development Department

To identify and correct any policies, procedures, or practices that may be contributing to avoidable appeals filed by claimants and employers and thereby provide eligible claimants with unemployment benefits in a timelier manner, EDD should do the following: Using the appeals board's data from fiscal year 2013-14, EDD should identify the legal isssues where its determinations are most frequently overturned, and use these data to establish initial performance benchmarks. In addition, similar to the review that EDD's audit and evaluation division performed in 2012, EDD should then review samples of its overturned determinations and the appeals board's decisions on these legal issues to identify trends in the reasons the appeals board cites for overturning EDD's determinations. With this information, EDD should review its policies, practices, and training related to these areas and identify and correct any weaknesses that may be contributing to the overturning of determinations. By April 1, 2015, EDD should report to the Legislature on the results of this review and any changes it plans to make to its determination process.

Annual Follow-Up Agency Response From October 2017

Using the Appeals Board's data from State Fiscal Year (SFY) 2013-14, EDD identified three Unemployment Insurance Code sections as the legal issues where determinations are most frequently overturned along with the corresponding overturn rates. The EDD will continue to monitor the overturn rates for these three sections and will periodically review other appealed issues to determine additional ways to decrease the rates. The goal is to decrease the average overturn rate for all issue types over the next few years. Information regarding the determinations and overturn rates, as well as the established benchmarks are provided in the attachment.

The EDD has conducted its review of samples of overturned determinations and Appeals Board decisions to identify trends in the reasons the Appeals Board cites for overturning EDD's determinations. Through the implementation of other CSA recommendations, EDD has also reviewed related policies, practices, and training to identify and eliminate areas that may have been contributing to the overturn of determinations. Based on these reviews, had some of the changes to EDD's practices been in place before EDD issued the determinations, some of the determinations most likely would not have been overturned. Further information is provided in the supplemental document.

With regard to reporting to the Legislature, EDD testified the results of this review to the Senate Labor and Industrial Relations Committee Unemployment Insurance Oversight Hearing on May 5, 2017. The EDD will continue to report applicable findings and opportunities for improvement to the Legislature using the budgetary process or other informational updates as the reporting vehicle.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

We received EDD's report regarding its effort to use the appeals board's data to identify the legal issues where its determinations are most frequently overturned and to identify trends in the reasons the appeals board overturned the determinations. EDD reported that compared to fiscal year 2013/14, it has reduced the overturn rate for each of the three frequently overturned legal issues. Total appeals have also decreased.

Annual Follow-Up Agency Response From September 2016

Now that Recommendations 1 through 6 are fully implemented, the appeals project team will focus on implementing this recommendation. The EDD has reviewed Fiscal Year 2013-14 appeals board data to identify the legal issues that most frequently caused the EDD's determinations to be overturned by CUIAB. The EDD has also begun working with its Audit and Evaluation Division to establish techniques of recognizing trends in cases where EDD determinations were overturned. Additionaly, EDD plans to establish initial performance benchmarks and enhance the corresponding policies, procedures, and training to minimize overturned determinations. The EDD will report the results of this review and any changes it plans to make to the determination process to the Legislature using the budgetary process or other informational updates to the Legislature as the reporting vehicle.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

1-Year Agency Response

Our focus continues to be on implementing Recommendations 5 and 6 in order to use the information and experience gained from them to assist in a thorough analysis for this recommendation. We are approaching full implementation of Recommendation 5 and have begun our implementation efforts for Recommendation 6 (as indicated in Recommendations 5 and 6). Once Recommendations 5 and 6 are complete, we will proceed with our plan to redirect that team to work on the analysis required to implement this recommendation. As indicated in our six-month response, the analysis will involve reviewing EDD's original determinations, as well as full hearing records that must be requested from the California UI Appeals Board. We are on schedule with reporting on the initial outcomes of the analysis beginning late 2015.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

As indicated in our 60-day response, the analysis associated with this recommendation will be a time-consuming and resource-intensive effort, which will require reviewing not only the EDD's original determination documents, but also reviewing the full hearing records that will have to be requested from the California UI Appeals Board. Our focus right now is on implementing Recommendations 5 and 6 with the understanding that the information and experience gathered in the implementation of those recommendations will help us perform a more meaningful in-depth analysis. Once Recommendations 5 and 6 are implemented, those teams will be redirected to working on the analysis required to complete this recommendation. We will start reporting on the initial outcomes of this analysis in late 2015.

California State Auditor's Assessment of 6-Month Status: Pending

We are not convinced that this has to be a time-consuming or resource-intensive effort. The California Unemployment Insurance Appeals Board (appeals board) posted fiscal year 2013-14 data on its public Web site in a usable format six months ago. The appeals board's data indicates whether appeals were favorable or unfavorable for every unemployment insurance legal issue. We believe EDD could aggregate this data to easily identify the appeal issue areas with the highest number of overturned determinations. Using this information, EDD could review samples of its determinations and the appeals board's decisions in these issue areas to identify trends in the reasons the appeals board cites for overturning EDD's determinations. With this information, EDD could review its policies, practices, and training related to these areas to identify and correct any weakness that may be contributing to the overturning of its determinations. This is essentially the process that we used to select and review the 90 appeals for our analysis. This process is also similar to the methodology that EDD's audit and evaluation division used in 2012 to identify several opportunities for EDD to improve its determination process.

60-Day Agency Response

We maintain that we must receive aggregated data in a usable format in order for us to use the data to identify the reasons the California UI Appeals Board cites for overturning our determinations. While the California UI Appeals Board posted information on their website about some outcomes associated with each of the legal issues pursuant to Recommendation 7, the information does not provide the reasons for decisions, or a level of detail necessary for us to identify trends in the reasons for the overturns. We are now working on a plan to select a sample of overturned appeals, as well as the necessary elements that must be reviewed in order for us to perform a meaningful analysis. The analysis of the data will be conducted by the new team being formed in connection with the implementation of Recommendations 5 and 6 (refer to Recommendations 5 and 6). The EDD will report on the initial outcomes of the first analysis by the fall of 2015. The analysis will be a time-consuming and resource-intensive effort, which will require reviewing not only the EDD's original determination documents, but also reviewing the full hearing records that will have to be requested from the California UI Appeals Board.

California State Auditor's Assessment of 60-Day Status: Pending

We believe that the California Unemployment Insurance Appeals Board (appeals board) posted data in a usable format. The appeals board's data indicates whether appeals were favorable or unfavorable for every unemployment insurance legal issue. We believe EDD could aggregated this data to easily identify the appeal issue areas with the highest number of overturned determinations. Using this information, EDD could review samples of its determinations and the appeals board's decisions in these issue areas to identify trends in the reasons the appeals board cites for overturning EDD's determinations. With this information, EDD could review its policies, practices, and training related to these areas to identify and correct any weakness that may be contributing to the overturning of its determinations. This is essentially the process that we used to select and review the 90 appeals for our analysis. This process is also similar to the methodology that EDD's audit and evaluation division used in 2012 to identify several opportunities for EDD to improve its determination process. Finally, we are not convinced that this has to be a time-consuming or resource-intensive effort.

All Recommendations in 2014-101

Agency responses received are posted verbatim.