California’s EDD Faces Fraud, Debt, and Calls for Reform

The Employment Development Department struggles with fraud, a $20 billion debt, and outdated systems as lawmakers debate solutions.

Fraud complaints against the EDD’s new payment contractor, Money Network, highlight ongoing issues with stolen funds from unemployment and disability accounts.
California’s unemployment fund remains $20 billion in debt to the federal government, costing taxpayers $1 billion annually in interest payments.
A report from the Legislative Analyst’s Office warns the state’s outdated unemployment tax system is losing $2 billion annually, threatening long-term stability.
Proposed reforms include raising the unemployment tax base from $7,000 to $46,800 per worker and modernizing the EDD’s infrastructure through a $1.2 billion overhaul called EDDNext.
Lawmakers face pressure from business groups opposing tax hikes and labor advocates pushing for expanded unemployment benefits and eligibility.