Report I2012-0651 All Recommendation Responses

Report I2012-0651: Employment Development Department: It Failed to Participate in a Federal Program That Would Have Allowed the State to Collect Hundreds of Millions of Dollars (Release Date: March 2014)

Case Number I2012-0651

Recommendation #1 To: Employment Development Department

To ensure that EDD collects unemployment benefit overpayments as efficiently as possible, we recommend EDD adhere to its commitment to begin participating in the Offset Program to collect unemployment benefit overpayments by no later than September 2014.

Agency Response From October 2014

EDD reported that on September 30, 2014, it sent to the U.S. Treasury a file to offset the federal tax returns of individuals who owe delinquent Unemployment Insurance (UI) compensation debts. This initial offset file contained more than $1.2 billion of UI compensation liabilities. EDD stated that it expected to soon begin receiving successful offset returns from the U.S. Treasury. However, it likely will not collect substantial amounts until February through May 2015 when the U.S. Treasury processes the majority of tax refunds. EDD stated that it continues to send the notices to claimants who meet the overpayment criteria.

California State Auditor's Assessment of Status: Fully Implemented


Agency Response From August 2014

EDD reported that in May 2014 it began sending notices to claimants with outstanding overpayments for unemployment benefits received. The notices informed the claimants of EDD's intent to offset their federal payments. It reported in August 2014 that it is still on track to begin collecting unemployment benefit overpayments by offsetting federal tax returns in September 2014.

California State Auditor's Assessment of Status: Partially Implemented


Agency Response From April 2014

EDD reported that it is working actively to perform the information technology work necessary to participate in the Offset Program to collect unemployment benefit overpayments beginning in September 2014.

California State Auditor's Assessment of Status: Partially Implemented


Case Number I2012-0651

Recommendation #2 To: Employment Development Department

To ensure that EDD efficiently acts to take advantage of future collection opportunities, we recommend EDD institute a routine process for staff to identify and thoroughly evaluate ideas for improving EDD's ability to collect overpayments. This process should require staff to bring promising ideas to the attention of EDD's senior management so it can give prompt, informed consideration to these ideas and document in detail the substance of that consideration.

Agency Response From October 2015

EDD reported that since our initial report, it has improved its structured process, which is called the business results planning process. As part of the process, it now includes staff suggestions as a standing agenda item in the monthly staff meetings. In addition, EDD reported that it has identified, evaluated, and implemented several improvements, including a staff recommendation to increase cross-training and job shadowing. It further reported that its collection division staff has brought forward seven new ideas that are being evaluated or are pending implementation.

EDD also reported that in its Winter 2014 employee newsletter, it promoted to its employees the State Merit Award program, which provides financial incentive for employees to submit ideas for improving state operations. In February 2015, EDD's director reminded employees of the Improve EDD program, which provides a dedicated email address for employees to submit ideas, suggestions, and solutions. EDD highlighted this program in a special edition of the employee newsletter, including the requirement that EDD branches report to the director every 30 days until each suggestion has been addressed.

California State Auditor's Assessment of Status: Fully Implemented


Agency Response From August 2014

EDD's subsequent responses have not included any updated information regarding this recommendation.

California State Auditor's Assessment of Status: No Action Taken


Agency Response From April 2014

EDD stated that since 2000, its collections division has had a structured process in place to solicit ideas from staff about how to improve efficiency and increase revenue opportunities. This process includes a monthly meeting between staff and managers where the participants share information and discuss operational changes. In the meetings, managers encourage staff to provide input and make suggestions. The managers then share these ideas with senior-level management for consideration and implementation.

However, this process was in place between 2010 and 2012, when some EDD employees openly favored participating in the expanded Offset Program to collect unemployment benefit overpayments, and senior-level management paid little or no attention to this opportunity. We therefore are left to conclude that this process is not effective in helping EDD to take advantage of new collection opportunities. EDD therefore must make improvements to its process to implement our recommendation fully.

California State Auditor's Assessment of Status: No Action Taken


All Recommendations in I2012-0651


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