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Learning Opportunities: The $20B EDD Fraud

Updated: Mar 2, 2023

In 2020, California’s Employment Development Department was bilked out of $20B in pandemic unemployment insurance funds. The Department’s head dropped the bombshell recently that she thinks the fraud was then-President Trump’s fault.

Blaming Donald Trump is like shooting fish in a barrel in California. Perhaps he does share some responsibility. But our pandemic insurance losses were 20x that of Texas, so it’s appropriate to ask how we can do better as a state.

We need to get better, and ask for more accountability, because the EDD fraud is just the latest in a series of high profile failures related to California state government capacity.

The State’s FI$Cal project - which created a single statewide financial management system - has been in progress for more than 15 years, at a cost of nearly $1B. Yet questions linger about the project’s timeline and long-term operation. In 2021, the Secretary of State decided to reassess the ongoing transition to a new platform for tracking campaign finance contributions – essentially starting over two years after the original 2019 deadline for project completion.

To their credit, the legislature understands the state has a problem. It has asked the State Auditor to review the California Department of Technology’s performance overseeing technology deployments in state government.

Government will never be on technology’s cutting edge, but it needs to keep pace. We’ll be watching for the State Auditor’s report, ready to encourage legislators to use recent technology failures as an opportunity to make California more efficient - and accountable - going forward.

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