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The Labor Department deployed a “strike team” to California to address federal findings of improper payments and alleged fraud within the state’s unemployment insurance (UI) program.
California has been found to have a depleted UI trust fund, along with $21 billion in borrowed federal funds to keep the system running — which federal officials say has led state employers to pay higher UI taxes to repay the debt.
In a statement, the department cited an 83-page California State Auditor report that determined the state’s UI system is high-risk, in part due to “inadequate fraud prevention and claimant service [in its employment development department (EDD)], as well as a high rate of overturned eligibility decisions in its Unemployment Insurance Program.”
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California Gov. Gavin Newsom is seen. (Tayfun Coskun/Getty Images)
“Financial issues and potential fraud in California’s unemployment insurance program will be fully examined. The previous administration turned a blind eye toward failing Labor programs: This ends now,” Labor Secretary Lori Chavez-DeRemer said.
“Immediately, we are engaging a specialized strike team to uncover any potential fraud or abuse and quickly moving to protect the American worker and taxpayers. I look forward to restoring the California UI program’s integrity and financial health.”
Chavez-DeRemer added that the “strike team” will include Labor Department specialists from both its national and regional offices.
The secretary also wrote a letter to the EDD, citing increasing improper payment rates, insufficient timeliness, data accuracy and quality concerns, and questions about participants’ eligibility and the use of taxpayer funds.
California received about $290 billion in COVID relief, part of, part of which helped what the California Post described as “rapidly implementing expanded…
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