The California unemployment insurance system has faced repeated failures, first during the Great Recession due to political decisions and again during the COVID-19 pandemic, lacking reserves.
The state borrowed about $10 billion from the federal government during the Great Recession, unable to cover unemployment claims due to depleted reserves and previous mismanagement.
California's Employment Development Department was criticized in 2011 for its shortcomings. However, during the pandemic, it revealed new issues with claim responses and fraud losses.
Despite being informed of its deficiencies, the state auditor's report in 2011 did not lead to improvements, and the system again broke down under pandemic pressure.
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