Report 2020-628.2 Recommendation 1 Responses

Report 2020-628.2: Employment Development Department: Significant Weaknesses in EDD's Approach to Fraud Prevention Have Led to Billions of Dollars in Improper Benefit Payments (Release Date: January 2021)

Recommendation #1 To: Employment Development Department

To ensure that its recession planning encompasses its fraud prevention efforts, EDD should identify the fraud prevention and detection efforts it can adjust during periods of high demand for UI benefits. It should ensure that it accounts for all probable consequences of the adjustments and design procedures that appropriately balance the need to provide prompt payment during a recession with the need to guard against fraud in the UI program.

The EDD continues to reassess and evaluate its fraud prevention and detection processes to ensure that they are current, effective, and adaptable while continuing to pay benefits in a timely fashion. The ongoing reassessment of the Department's fraud prevention and detection methods will also identify areas where modification or elimination of fraud filters may be beneficial. However, the EDD asserts that it will not retreat from any fundamental fraud prevention and detection approaches during recessionary times.

California State Auditor's Assessment of Status: Resolved

Although EDD's recession plan does not specify the fraud prevention and detection efforts it can adjust during periods of high demand, it asserts that it will not retreat from any fundamental fraud prevention and detection approaches during recessionary times. Therefore, this recommendation is resolved.

The Employment Development Department (EDD) has developed a Recession Plan, based upon responses to Senate Bill 390, containing strategies to better forecast fluctuating workload and improve fraud prevention efforts. In addition to conducting a lessons learned analysis, the plan identifies the following to improve workload forecasting and operations: indicators to project workload impacts, steps to take to address workload increases, alignment of staff and workload, improvement of self-services, equipment assessment, policies and procedures to activate, analysis of lines of communication, budgeting and funding constraints, and call center protocol enhancements. The strategies specific to fraud prevention that the plan identifies include: the UI Online Document Upload feature, the launch of ID.Me, and the implementation of Thomson Reuters. On 3/11/22, EDD submitted the Recession Plan to CSA.

California State Auditor's Assessment of Status: Pending

Although EDD's recession plan includes general fraud prevention and detection efforts, it does not include determining probable consequences of any adjustments it might make during a recession or design procedures that appropriately balance the need to provide prompt payment during a recession with the need to guard against fraud in the UI program. EDD should ensure that its recession plan includes this information to implement our recommendation.

The Employment Development Department has developed a draft Recession Plan, based upon responses to Senate Bill 390, containing strategies to better forecast fluctuating workload and improve fraud prevention efforts, which is currently under first level review. In addition to conducting a lessons learned analysis, the plan identifies the following to improve workload forecasting and operations: indicators to project workload impacts, steps to take to address workload increases, alignment of staff and workload, improvement of self-services, equipment assessment, policies and procedures to activate, analysis of lines of communication, budgeting and funding constraints, and call center protocol enhancements. The strategies specific to fraud prevention that the plan identifies include: the UI Online Document Upload feature, the launch of ID.Me, and the implementation of Thomson Reuters.

California State Auditor's Assessment of Status: Pending

The Employment Development Department (EDD) continues assessing lessons learned and best practices from the pandemic and previous economic downturns to build a recession plan in preparation for future fluctuations in the economy. The EDD is reviewing existing documentation and historical data to better forecast fluctuating workloads, improving on fraud prevention and detection efforts and keeping in step with our Strategic Goals of Responsible Service, Skilled Workforce, Sustainable Operations, Technological Innovations and Fiscal Stewardship.

California State Auditor's Assessment of Status: Pending

The Employment Development Department (EDD) continues assessing lessons learned and best practices from the pandemic and previous economic downturns to build a recession plan in preparation for future fluctuations in the economy. The EDD has started reviewing existing documentation and historical data to better forecast fluctuating workloads, improving on fraud prevention and detection efforts and keeping in step with our Strategic Goals of Responsible Service, Skilled Workforce, Sustainable Operations, Technological Innovations and Fiscal Stewardship.

California State Auditor's Assessment of Status: Pending

EDD is assessing lessons learned and best practices from the pandemic and previous economic downturns to build a recession plan in preparation for future fluctuations in the economy. As part of this retrospection and recession planning, EDD, along with its vendor partner, Accenture, will identify fraud prevention and detection efforts that can be adjusted during periods of high demand and ensure appropriate procedures are in place to promote prompt payment and preserve program integrity.

California State Auditor's Assessment of Status: Pending

All Recommendations in 2020-628.2

Agency responses received are posted verbatim.