State auditor: EDD wasted chances to get back $500M in taxpayer money

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EVIDENTLY AND APPARENTLY, THAT DID NOT HAPPEN IN THIS CASE. THANKS. HALF A BILLION DOLLARS AND STILL COUNTING -- THAT'S HOW MUCH A DECISION AT E.D.D IS COSTING TAXPAYERS ACCORDING TO A STATE INVESTIGATION. ARE TOLD IT'S ABOUT PEOPLE WHO ARE BEING SENT TO MANY UNEMPLOYMENT PAYMENTS. THE AGENCY THAT HAS FAILED TO SEND UNEMPLOYMENT BENEFITS ON TIME TO SOME CALIFORNIANS ALSO SENDS SOME PEOPLE TOO MUCH MONEY, ISSUING TOO MANY PAYMENTS ON THESE DEBIT CARDS. ACCORDING TO THIS STATE INVESTIGATION, THE AGENCY IS FAILING TO COLLECT THAT MONEY, AN ESTIMATED 516 MILLION DOLLARS IN OVERPAYMENTS. THE PRESIDENT OF THE HOWARD JARVIS TAXPAYERS ASSOCIATION BOOK ABOUT IT. FIRST OF ALL, HEADS SHOULD ROLL. THIS IS CLEARLY ROSE NEGLIGENCE. THE AGENCY MISSED ONGOING CHANCES OVER THE LAST SEVERAL YEARS TO MODIFY COMPUTERS SO IT COULD COLLECT THOSE OVERPAYMENTS. HERE'S HOW THAT WOULD HAVE WORKED JUST COMPUTERS WOULD HAVE SENT INFORMATION ABOUT OVERPAYMENTS TO THE FEDERAL GOVERNMENT. THE FEDERAL GOVERNMENT WOULD HAVE WITHHELD THAT MONEY FROM PEOPLE'S TAX REFUNDS AND SEND IT BACK TO E.D.D. THE AUDITOR SAYS OTHER STATES DID THAT AND GOT TAXPAYERS THEIR MONEY BACK, BUT EDD DID NOT. CALIFORNIA HAS BEEN BORROWING MONEY FROM THE FEDERAL GOVERNMENT WITH INTEREST JUST TO PAY UNEMPLOYMENT BENEFITS. IF YOU ARE BORROWING MONEY TO MAKE IT WAS BENEFIT PAYMENTS, YET THERE'S ANOTHER VEHICLE FOR YOU TO COLLECT EVEN IF IT'S JUST A LITTLE MORE, YOU WOULD THINK THAT THAT WOULD BE -- THAT WOULD REDUCE THE AMOUNT YOU WOULD HAVE TO BORROW. THIS IS ESSENTIALLY THE STATE OF CALIFORNIA WALKING AWAY FROM $500 MILLION AT A TIME WHEN CALIFORNIA HAS THE HIGHEST TAX RATES IN AMERICA. WE CANNOT AFFORD TO HE LEAVING THIS KIND OF MONEY ON THE TABLE. EDD'S REPRESENTATIVES DECLINED AN ON CAMERA INTERVIEW BUT RELEASED A STATEMENT THAT READS IN PART, 'THE EDD CURRENTLY USES A VARIETY OF METHODS TO COLLECT PAYMENTS, AND THE EDD WILL BEGIN USING THE TREASURY OFFSET PROGRAM TOP AS ANOTHER COLLECTION METHOD WHEN THE PROGRAM IS FULLY IMPLEMENTED LATER THIS YEAR. A LOT OF FOLKS MIGHT BE WONDERING WHY EDD DID NOT TAKE CARE OF THIS THREE YEARS AGO WHEN I HAD A CHANCE IN OTHER STATES DID IT. ACCORDING TO THE AUDITOR'S REPORT, AN OFFICIAL AT THE AGENCY KNEW THAT EDD COULD GET BACK $100 MILLION IN JUST THE FIRST YEAR OF COLLECTING MONEY BUT STILL THOUGHT OTHER COMPUTER PROJECTS WERE MORE IMPORTANT. AND IT DOES NOT STOP AT 500 $16 MILLION. ACCORDING TO THIS REPORT, AS OF OCTOBER, THAT TOTAL AMOUNT OF OVERPAYMENTS

State officials have blown chances to recoup more than half a billion dollars they overpaid to jobless Californians who collect unemployment benefits, according to a state auditor's report.

Watch report: Investigation finds EDD decision cost California $500M

The report, released Thursday morning, is the result of an investigation that started at the Employment Development Department in May 2013, after a whistle-blower reported the agency's failure to collect money owed to taxpayers.

'First of all, heads should roll,' said Jon Coupal, president of the Howard Jarvis Taxpayers Association. 'This is clearly gross negligence, and it suggests that the management needs to hire people who are a little bit more sensitive to the desires of taxpayers who don't want their money wasted.'

EDD chose not to make specific computer modifications that would allow the over-payments to be withheld from people's federal tax refunds, the report said. The modifications would link information about over-payments to a federal computer that would then withhold the money and send it back to EDD.

Even as the agency made that choice, it has been paying hundreds of millions of dollars in interest on $10 billion it borrowed from the federal government to pay unemployment benefits. The state's own unemployment fund is depleted.

'If you're borrowing money to make those benefit payments, yet there's another vehicle for you to collect -- even if it's just a little more -- you would think that would reduce the amount you have to borrow,' said Margarita Fernandez, a spokesperson for the state auditor.

The auditor found that the agency's own officials estimated that the computer work would have cost $322,800, but would have recouped $100 million in taxpayer money in the first year alone.

Yet, a top EDD official decided that other IT projects were more important and chose not to move forward with the work, the report said.

EDD says it has several other ways of collecting over-payments and that it will finally join the federal collection program, called the Treasury Offset Program (TOP) in September.

'EDD has new leadership that has advocated for participation in TOP and is committed to its implementation that is expected this fall,' the agency said in a written statement.

But, the auditor said EDD only decided to join the federal program once investigators began looking into the issue.

Other states chose to take part in the federal program when it began three years ago and have recouped many millions in unemployment over-payments, according to the auditor's report.