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UnemploymentInsurance ProgramB U S I N E S S P L A N

2 0 0 7 - 2 0 1 2B U S I N E S S P L A N

2 0 0 7 - 2 0 1 2

CU/GA 874 CDE 4525 Rev. 3 (11-07)

EDD is an equal opportunity employer/program. Auxiliary aids and services are available upon request to individuals with disabilities. Requests for

services, aids, and/or alternate formats need to be made by calling 1-800-300-5616 (voice), or TTY 1-800-815-9387.

STATE OF CALIFORNIA

LABOR AND WORKFORCE DEVELOPMENT AGENCY

EMPLOYMENT DEVELOPMENT DEPARTMENT

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DE4525Rev.3(11-07)(INTERNET) Cover+60pages CU/GA874C

TABLE OF CONTENTS

Page � of 60DE 4525 Rev. 3 (��-07) (INTERNET)

FiguresList................................................2

1.0 ExecutiveSummary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2.0 ProgramDescription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

VisionandMission .......................................7

Background ............................................8

California’sEconomyandDemographics ....................13

Services ..............................................18

Governance ...........................................25

ProgramFunding .......................................32

EvaluationandPerformanceMeasures......................39

TechnologicalAdvances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

3.0 BusinessIssues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

4.0 ProgramInitiatives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

5.0 FutureProgramPolicy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

6.0 AppendixA:StatutoryBasisfortheUIProgram. . . . . . . . . . . . . . . . . . 57

of 60DE 4525 Rev. 3 (��-07) (INTERNET)

Figure 1 UIBasicStatistics,CalendarYear2006;California Comparedto10LargestStates,Page10

Figure 2 UIBenefitandTaxComponents,CaliforniaComparedtothe10 LargestStates,Page12

Figure 3 CaliforniaUIClaimsFiled,CalendarYear2002-2006,Page19

Figure 4 UIProgramGovernance,Page25

Figure 5 EDDOrganizationChart,Page26

Figure 6 UIBranchOrganizationChart,Page28

Figure 7 UIFinancialData,CalendarYear2006,Page35

Figure 8 EmploymentSecurityFinancing,Page35

Figure 9 California’sHistoricalFundingforUIAdministration,Federal FiscalYear2001-2007,Page36

Figure 10 FederalPerformanceMeasures,Page41

Figure 11 UIProgramMeasures,Page42

Figure 12 ChangingLaborMarket,1935vs.2007-2012,Page53

FIGURES LIST

1.0 EXECUTIVE SUMMARY

Page 3 of 60DE 4525 Rev. 3 (��-07) (INTERNET)

TO: California’s Unemployment Insurance (UI) Program Partners, Stakeholders, and Customers

WhenthefirstUIProgramBusinessPlanwasdevelopedearlyin2001,California’seconomywasdoingwell,withalowunemploymentrateof4.7percent.Bythetimetheplanwascompletedin2002,thestateandthenationhadenduredatragicterroristattackonSeptember11,2001,thatwasfollowedbyanationwideeconomicdownturnthatlastedthrough2003.

Overthepastfiveyears,theUIprogramhashadmanychallengesandopportunitiestoimproveourservicesandprogramoperations,including:

n ImplementedlegislationthatsignificantlyincreasedCalifornia’smaximumweekly benefitamountandappliedtheincreaseretroactivelybacktoSeptember11,2001.

n DeployedeApply4UI,anInternetclaimfilingapplication,in2002.Currently,morethan 40percentofUIclaimsarefiledviaeApply4UI.

n SecuredappropriationofReedActfundsforamajorautomationprojecttoupgrade thecallhandlingandpaymentsystems,andprovideInternetandphonecertification optionsforUIclaimants.

n Implementedanewidentityverificationprocessandmultiplecrossmatchsystemsto enhancefraudpreventionanddetectionactivities.

n BorrowedfederalfundstopayUIbenefitsforthefirsttimeeverwhentheUITrust Fundbecameinsolventbrieflyin2004.

n ProvidedenhancedreemploymentservicestocustomersthroughtheReemployment andEligibilityAssessmentproject,pilotedin2005andongoingsincethen.

n RedirectedanentirecallcentertofileclaimsandprovidethefullrangeofUIservices toLouisianaresidentsafterthedestructiveeffectsofHurricaneKatrinain2005.

n Replacedoutdatedpaymentscannerstoprovideforamoreefficientpaymentsystem andtheelectronicscanningandcaptureofUIforms.

n Conductednumeroushiringeffortsandgrappledwithcontinuedhighattritionrates, withmanyemployeespoisedtoretireincomingyears.

TheUI Program Business Plan, 2007 - 2012,servesasa“roadmap”toguidetheadministrationofCalifornia’sUIprogramoverthenextfiveyears.TheplanaffirmstheUIprogram’svisionandmission,andestablishesgoals,objectives,andstrategiestoensuretheUIprogrammeetscustomerneedsandoperatesasaneffectivewagereplacementsystem.

Arnold Schwarzenegger

Governor


Inaddition,theplanprovidesinsightontheimpactofchangesineconomicanddemographictrendsonUIfundingandservicedeliveryandidentifiesthechallengesinvolvedinmeetingtheneedsofachangingcustomerbase.TheUIprogramwasestablishedinresponsetothehardshipcreatedbywidespreadunemploymentduringtheGreatDepression.Forover70years,

theprogramhasprovidedaneconomicsafetynetforCaliforniaworkersandservedasaneconomicstabilizerforCaliforniacommunities.ThefundingandstructureoftheUIprogramweredesignedtomeettheneedsofprimeage,full-timeworkersinalaborsurpluseconomy.

Technologyandglobalizationhavechangedhowwework,ourmarkets,andthecompositionofourworkforce.Intoday’sworld,laborshortagesarenotuncommon;workersareolderandworkingforlongerperiodsoftime;andthenumberofcontingentworkers,part-timeworkers,andindividualswhoareselfemployedissteadilyincreasing.Despitethesechanges,theUIprogramcomponentsandfundingmechanismshaveremainedlargelyunchanged.

BusinessIssuesTherearesixissueareasthatrepresentthekeybusinesschallengesfacingtheUIprogram:

n AccessandIntegrationofUIServices

n ModernizationofUIProgramTechnologyandInfrastructure

n ProgramQuality

n StaffResources

n ProgramFunding

n FuturePolicyStrategies

Theseissueareaswilldrivecurrentandfuturegoals,objectives,andinitiativesintheUIprogram.

ProgramInitiativesInordertoaddressthekeybusinessissuesdiscussedinthisplan,wehaveestablished6goalswith16correspondingobjectives.Thegoalsareasfollows:

n ImproveeaseofaccesstoUIservices.

n ImprovequalityofUIservices.

n EnsureconsistentandequitableUIservicestocustomers.

n ImproveUIsystemcapacitytoenhancecustomerserviceandprogramperformance.

n EnsureUIBranchemployeeshavetheknowledge,skills,abilities,andwork opportunitiesforpeakperformance.

n EnsuretheUIprogramcontinuestosupporteconomicprosperityinourcommunities

andstatewideasCaliforniacontinuestogrowandchange.


Avarietyofinitiativesareplannedoralreadyunderwaytoaddressthesegoals.Ourabilitytocompletetheseinitiativesdependsontheavailabilityofresources,andinsomeinstances,theapprovalofstateandfederaloversightentities.

Thesectionsthatfollowprovideinformationonthepast,present,andfutureofCalifornia’sUIprogramanddescribestrategiesformeetingcurrentandfuturechallengesinkeyareasrelatedtoaccessandintegrationofservices,technologicalimprovements,programquality,staffingresources,funding,andfuturepolicydirections.

DEBORAHBRONOWDeputyDirectorUnemploymentInsuranceBranchCaliforniaEmploymentDevelopmentDepartment

TheUnemploymentInsuranceBranchwillprovidehigh-qualityunemploymentinsuranceservices.

Wewillaccomplishthisthrougheffectiveleadership,knowledgeableandskilledstaff,andaccesstoinformation,tools,andtechnology.

TheUnemploymentInsuranceBranchprovidescomprehensiveunemploymentinsuranceservicestoworkersandemployers.

Ourservicessustaineconomicprosperityinourcommunities,provideincomereplacement,andassistinthereemploymentofworkers.

Page 7 of 60

2.0 PROGRAM DESCRIPTION

VISION

MISSION

DE 4525 Rev. 3 (��-07) (INTERNET)

BACKGROUND


Formorethan70yearstheUIprogramhasbeenashort-termwagereplacementprogramforindividualswhobecomeunemployedthroughnofaultoftheirown.TheUIprogramisaneconomicstabilizerandstimulatorduringeconomicdownturnsandhelpsmaintainanavailableskilledworkforce.Inresponsetothestockmarketcrashof1929andtheDepressionofthe1930s,CongressenactedtheWagner-PeyserActof1933.Thislegislationcalledfortheestablishmentandstateadministrationofpublicemploymentofficesthroughoutthecountry.Subsequently,theunemploymentcompensationprogramwasestablishedwiththeenactmentoftheOmnibusSocialSecurityActinAugustof1935.

ThebasicUIprogramcomponentsincludepaymentandfundingofbenefits.Thesecomponentsarecarriedoutinauniquefederal-statepartnership.TheUIprogramisjointlyadministeredbythefederalgovernmentaspartofanationalUIprogram,andbythestategovernmentwhichestablishesCalifornia’sadministrativeandeligibilityrequirements.Theprogramisentirelyfinancedbyunemploymenttaxcontributionsfromemployers.

PaymentandFundingofBenefitsEligibilityforUIbenefitsrequiresclaimantstobeoutofworkduetonofaultoftheirown,abletowork,availableforwork,activelyseekingwork,andwillingtoacceptsuitableemployment.Currently,approximately15.5millionCaliforniaemployeesarecoveredforUIbenefits.

TheUIprogramisfullyfundedbystates’employercontributions.TheFederalUnemploymentTaxAct(FUTA)providestheauthorityforcollectionoffederalandstateemployerUIpayrolltaxesbasedontheamountofwagestheypaytheiremployees.BothfederalandstateUItaxesareheldinUnemploymentTrustFundsattheUnitedStatesDepartmentofTreasury.ThesecontributionsfundbothUIbenefitsandUIadministrationatthefederalandstatelevels.

“No Country, however rich, can afford the waste of its human

resources. Demoralization caused by vast unemployment is our greatest

extravagance. Morally, it is the greatest menace to our social order.”

Franklin D. Roosevelt, Second Fireside Chat, Washington, D.C. September 30, 1934


Federal-StatePartnershipforProgramAdministrationInthesharedfederal-statestructure,thefederalroleconsistsprimarilyofsettingbroadprogramguidelinesandoverseeingtheprogramadministration.Withinthefederalguidelines,stateshavediscretioninsettingtaxrates,determiningbenefitlevels,anddeterminingeligibilityrequirements.Statesalsohavediscretionindeterminingthemethodofservicedelivery.Asaresult,thereisgreatdiversityamongthestatesintermsoftaxratesandeligibilityrequirements,aswellastheiroperations.

StatutoryBasisfortheUIProgramCalifornia’sUIprogramissubjecttolawsandregulationsatboththefederalandstatelevel.TheSocialSecurityAct(SSA)andtheFUTAprovidethefederalstatutorybasisforstates’UIprograms.TheSSAestablishesthebasicframeworkofthefederal-stateUIsystemandprovidesrequirementsforprogramfunding.TheFUTAfocusesprimarilyonthetaxaspectsoftheprogramaswellasestablishingbenefitstandardsandcoverageprovisions.Atthestatelevel,theCaliforniaUICodeisthestatutoryauthorityforCalifornia’sUIprogramandmandatesthestate’seligibilityrequirements.Title20oftheCodeofFederalRegulationsprescribesrulestoimplementfederalUIlaws,whileTitle22oftheCaliforniaCodeofRegulationsguidesCaliforniapracticeontheimplementationofstateUIlaws.

ComparingCaliforniaCaliforniaundeniablyadministersthelargestUIprogramnationallyintermsofparticipatingemployers,revenuecollected,andbenefitspaid.ThefollowingchartdemonstratesthesizeofCalifornia’sUIprogrambycomparingbasicstatisticalprograminformationagainstthenext10largeststatesintermsofUItaxrevenues.

Page �0 of 60DE 4525 Rev. 3 (��-07) (INTERNET)

Figure1,UI Basic Statistics,comparesstateswiththelargestvolumeofsubjectemployers,UItaxrevenues,firstpayments,andtotalUIbenefitspaid.

Figure1:UIBasicStatistics,CalendarYear2006:CaliforniaComparedtothe10LargestStates1

StateSubjectEmployers2UITaxRevenues FirstPayments UIBenefitsPaid

California 1,130,000 $5,001,700,000 947,507 $4,492,100,000

Illinois 293,000 $2,511,097,000 334,744 $1,563,754,000

NewYork 488,000 $2,397,316,000 454,201 $2,086,684,000

Pennsylvania 284,000 $2,300,634,000 447,066 $1,898,484,000

Massachusetts 184,000 $1,594,916,000 210,418 $1,181,333,000

Texas 421,000 $1,563,336,000 297,478 $1,011,729,000

NewJersey 261,000 $1,518,039,000 305,259 $1,674,375,000

Michigan 218,000 $1,516,376,000 475,596 $1,877,441,000

Washington 194,000 $1,341,731,000 171,137 $665,373,000

Florida 487,000 $1,127,083,000 239,827 $677,476,000

Ohio 229,000 $1,067,963,000 275,431 $1,049,618,000

TOTAL 4,189,000 $21,940,191,000 4,158,664 $18,178,367,000

Below is a list of commonly used terms and definitions to describe basic principles and components of the UI system ranging from financing methods to benefit coverage. These terms are used in Figure 2, UI Benefit and Tax Components, to compare the difference in principles and components among the states which are reviewed when considering benefit increases and financing reforms.

BenefitInformationnWageReplacementRates:ThewagereplacementratemeasuresthepercentageoflostearningsthatarereplacedbyUIbenefits.MostrecentrecommendationsbytheAdvisoryCouncilonUnemploymentCompensationrecommendedatleasta50percentwagereplacementoverasix-monthperiod.California’saveragewagereplacementrateissetat50percent.

1 Datasources:U.S.DepartmentofLabor,Unemployment Insurance Data Summary, 4th Quarter 2006andUnemployment Insurance Financial Data Handbook, 2006.UItaxrevenuesandUIbenefitspaidforCaliforniaarebasedontheEDD UI Fund Forecast, May 2007.ThelargeststatesaredefinedasthosestateswiththehighestUItaxrevenuesinCalendarYear2006.

2 TheCaliforniaUnemploymentInsuranceCode,Article3,Sections675-687.2defineemployerssubjecttotaxation uponthepaymentofwages.

Page �� of 60DE 4525 Rev. 3 (��-07) (INTERNET)

nRecipiencyRates:Therecipiencyrateistheratiooftheinsuredunemployed(thoseclaimingbenefits,excludingclaimsunderextensionssuchastheFederalExtendedBenefits)tothetotalunemployed.Forcalendaryear2006,therecipiencyratesamongallstatesrangedfrom17-57percent.California’srecipiencyratewas40percentin2006.

nMaximumWeeklyBenefitAmount(MWBA)Indexing:SomestatesuseamechanismknownasindexingthatlinkstheMWBAtoaspecifiedpercentoftheaverageweeklywage.ThismechanismincreasestheMWBAannuallyastheaverageweeklywagerises.AdjustingtheMWBAonanannualbasishelpstheUIprogramtokeeppacewiththecostoflivingandinflation.

nAlternateBasePeriod(ABP):ABPsareofferedasavehicletoallowindividualswitharecentlabormarketattachment,whodonotqualifyforUIbenefitsunderthestate’sregularbaseperiod,topotentiallyqualifyunderanalternatebaseperiod.Currently,19statesofferABPs.

nDependencyAllowances:Additionalmoneyisaddedtoaclaimant’sweeklybenefitamountiftheclaimantsupportsadependent.Twelvestatespaydependencyallowances.Californiadoesnotpaydependencyallowances.

TaxandFundInformationnAverageHighCostMultiple(AHCM)/TrustFundSolvency:TheU.S.DepartmentofLabor(DOL)usesanindicatorcalledtheAHCMtomeasuretrustfundsolvencylevels.TheAHCMdetermineshowmanyyearsofbenefitsthestates’trustfundscouldpaywithoutadditionalrevenuesduringaneconomicdownturnorarecession.TherecommendedminimumAHCMlevelis1.0oroneyear.

nTaxableWageBase(TWB):Thetaxablewagebaseisthemaximumtotalwages,subjecttoUItaxation,earnedbyanemployeeinayear.Federallawestablishes$7,000asthelowestallowabletaxablewagebase.California’staxablewagebaseissetatthislevel.

nTaxableWageBaseIndexing:Somestatesuseamechanismknownasindexingthatlinkstheamountofthetaxablewagebasetoastate’saverageannualwage.Thepurposeofindexingistoensurethatastate’staxablewagebaseisinlinewiththerisinglevelsofwagesinordertomaintainasufficienttrustfundbalancetopayUIbenefits.Theindexingmechanismisassessedonanannualbasisand,asaresult,employers’taxablewagebaseamountsmayincrease.

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CALIFORNIA’S ECONOMY and DEMOGRAPHICS


AsCalifornia’seconomyandpopulationchangeovertime,theUIprogrammustevolvetomeettheneedsofachangingcustomerbase.Thetransitiontoaservice-orientedeconomyandthedeclineofmanufacturingjobsmakethestatemorevulnerabletoeconomicdownturnsandpresentchallengesforlower-skilledworkers.TherearesixmaineconomicanddemographictrendsthatwillimpactfuturepolicydecisionsabouthowtomaintaintheUIprogram’sroleasaneffectivewagereplacementsystem.Thesetrendsincludethefollowing:

nThetransitiontoaservice-orientedeconomynCalifornia’sgrowingpopulationandlaborforcenShiftsintheracialandethniccompositionofthestate’spopulationnAnagingpopulationandworkforcenIncreaseddemandforeducatedworkers

nMoreworkersseekingalternativestofull-timeemployment

ThesedemographictrendsareusedtohelphighlighttheUIprogram’scurrentcustomerbaseandexpectedchangesinthefuture.PotentialshiftsintheUIcustomerbasepresentconsiderationsforservicedelivery,coverage,andfunding.Thesetrendsareconsideredtheprimaryfactorsthatwillbereviewedwhenconsideringpotentialprogrammaticreformsandoperationalenhancementsinthefuture.1

California’sEconomyCalifornia’strillion-dollareconomyiscurrentlytheeighthlargestintheworld.2AsofJuly2007,over17millionCalifornianswereemployed,3withemploymentprojectedtoreach19millionby2014,anincreaseof12percent.4

MorethanfouroutofeveryfivejobsinCaliforniaisinserviceindustries.Conversely,lessthanoneoutofeveryfivejobsisingoods-producingindustries.Employmentprojectionsindicatethatmorethan70percentofthejobgrowthwillfallwithinfivemajorindustrysectorsthatinclude:professionalandbusinessservices,educationandhealthservices,government,retailtrade,andleisureandhospitality.5

Thefastestgrowingoccupationsareinthetechnology,healthcare,andeducationindustries.6Ofthe30fastestgrowingoccupations,25willrequireapost-secondarydegreeorothercredential.7However,therearealsojobopportunitiesforindividualswithlowereducationlevels,althoughthesejobstendtopaylowerwages.Sevenofthetoptenoccupationswiththemostprojectedjobopeningsrequirejust30daysofon-the-jobtraining,includingretailsalespersons,officeclerks,andjanitors.8


Theprevalenceoftechnologyandautomationintheworkplaceoftencausesoccupationaldeclines.Inthecomingyears,demandforadministrativesupportpersonnel,suchaswordprocessorsandtypists,aswellasclerksinavarietyofindustries,computeroperators,andtelemarketerswilldecline.Farmworkersandlaborersarealsoexpectedtoexperienceadeclineinemployment.9

Sincepeakingat6.9percentduringmuchof2003,theCaliforniaunemploymentratefellsteadilyto5.3percentinJuly2007.Unemploymentratesthroughoutthestatevarywidely,withalowrateof3.8percentinMarinCountyandahighrateof20.2percentinImperialCounty.10ThebroadrangeofindustrieswhichdobusinessinCaliforniaandthevastgeographicalareascontributetoCalifornia’sspreadinunemploymentrates.DuetoslowereconomicgrowthassociatedwiththecoolinginCaliforniahousingmarkets,labormarketanalystspredicttheunemploymentratewillrisegraduallyoverthenextcoupleofyears.11

Despitethisprojection,Californiaisexpectedtogenerate6.5millionjobopeningsfrom2004to2014.Fourmillionofthesejobopeningswillresultfromvacanciescausedbythoseworkersthathaveleftthelaborforceorhavechangedoccupations.12

AsCalifornia’seconomybecomeslessdiversewiththelossofmanufacturingjobs,thestateispotentiallymoresusceptibletoeconomicdownturnsandworkersareatgreaterriskofbothshort-andlong-termboutsofunemployment.MoreepisodicemploymentresultsinincreasedusageoftheUIprogramandpotentiallylesstaxrevenuetofundbenefitpayments.Thispresentschallengestoensureadequatefundsareavailabletopaybenefitsandcoverageprovisionsarerobustenoughtocoverunemployedworkers.Inaddition,ifthereistheneedforpeopletousetheUIsystemmorefrequently,theremaybeagreaterexpectationofeasyaccesstoservicesandmoreself-serviceoptions.

California’sPopulationandLaborForceThereareanumberofdemographictrendsimpactingCalifornia’spopulationandlaborforce.ItisanticipatedthatthesetrendswillpresentsomepublicpolicyissuesforensuringCaliforniahasastrongandviablelaborforceinthefuture.Thisisespeciallycriticalforthestate’saginglaborforceandthedemandforworkersinspecificoccupations.

Californiaisthemostpopulousstateinthenationwithmorethan37millionresidents.13California’spopulationisprojectedtobeover44millionby2020,a19percentincrease.14Asthepopulationgrowsandmoreworkersenterthelaborforce,thenumberofpeoplecoveredforUIpurposeswillalsoincrease.


RACE/ETHNICITY

ShiftsinthedemographiccompositionofthepopulationmayhaveanimpactonservicedeliveryintheUIprogram.ThefuturecompositionofCalifornia’slaborforce,aswiththestate’spopulationasawhole,isshiftingtowardsaHispanicmajority.By2020,itisprojectedthatapproximately30percentormorethan13.4millionindividualsofworkingagewillbeHispanic.15

Anothermajortrendistheincreaseinforeign-bornresidents.Twenty-fivepercentofCaliforniaresidentswereforeign-bornin2000.Thisdemographicgroupisprojectedtoincreaseto30percentby2025.16Thistrendmayfacilitatetheneedforservicedeliveryinadditionallanguagestomeetcustomerneeds.Asthepublicandprivatesectorincreasinglymovetowardself-servicedeliveryoptions,existingandfutureUIapplicationswillrequiretranslationtoallownon-EnglishspeakingcustomerstoeffectivelyaccessUIservices.

AGE

Alongwithchangesinitsethnicdistribution,thestatewillalsoexperienceshiftsintheagedistributionofitsresidents.AnunprecedentednumberofCalifornianswillreachretirementageoverthenextfewyears.ThisincreaseinCalifornia’solderpopulationwillbedrivenprimarilybythebabyboomerswhowillbegintoreachretirementagein2011.By2020,itisprojectedthat14percent,or6.4million,Californianswillbe65orolder.17

Laborforceparticipationratesaregenerallyhighestforindividualsage25to54.Thelaborforceparticipationraterepresentsthoseindividualsthatareworkingorlookingforworkwithintheworkingagepopulationof16andolder.Laborforceparticipationratesforpeopleover65aretypicallylower.

However,recentresearchindicatesthatCaliforniansareworkinglaterinlifethantheyoncedidforanumberofreasons,includingimprovedhealth,longerlifeexpectancy,financialneed,andothernon-financialreasons.Approximately62percentofCaliforniansage55to64wereemployedin2006,upfrom59percentin2000and54percentin1995.Inaddition,25percentofpeopleage65to69wereemployedin2006,upfrom20percentin1995.18

Fewerthan40percentofworkersage66to70reportfinancialreasonsforworking.19OlderCalifornianswhocontinuetowork,especiallythosewhohavethefinancialflexibilitytoworkforotherreasons,suchasthedesiretostayactiveortodomeaningfulwork,maychoosetoworkintermittentlyratherthanholdasteadyjob.ThisweakenedattachmenttothelaborforcecouldresultinincreasedusageoftheUIprogramifindividualscollectbenefitsbetweenjobs.Olderworkershavemoredifficultygettingbacktoworkthantheiryoungercounterparts,whichmeanstheymaycollectUIbenefitsforalongerperiodoftimethantheywouldhaveinthepast.20


Inaddition,olderindividualstypicallyhavehigherwagesthatwouldqualifythemforahigherbenefitamount,potentiallyresultinginanadverseeffectontheTrustFund,althoughthiswouldbeoffsettoacertaindegreebythetaxescontributedtocovertheseworkers.

Asnewentrantstotheworkforce,youngerworkersgenerallyhaveaweakerattachmenttothelabormarket,makingthemmorelikelytobeamongthefirstemployeestobelaidoffduringaneconomicdownturnandcollectUIbenefits.Asolderworkersretirefromtheirpermanent,full-timejobs,somewilltransitiontopart-timeemployment.Theseworkersmayalsobemorevulnerabletounemploymentduringadverseeconomicconditions.

EDUCATION

AsignificantpercentageoftheCaliforniaworkforcehassomepostsecondaryeducation.Over40percentofCaliforniansemployedin2004hadacollegedegree,with75percentofthispopulationholdingabachelor’sdegreeorhigher.However,therearealsosignificantnumbersofCaliforniaadultswithlittleeducation.In2004,nearly16percentofworkersage25to54hadnotreceivedahighschooldiplomaorageneralequivalencydiploma.21

RecentprojectionsbytheCaliforniaDepartmentofFinanceindicateexpectedgrowthinenrollmentatCaliforniapublicpostsecondaryinstitutions.Between2005and2015,enrollmentisexpectedtoincreasebyover22percentormorethan500,000students,foratotalenrollmentof2.7million.22

Educationwillplayacriticalroleforthestate’sfuturelaborforce.Theshiftfromamanufacturingtoaservices-basedeconomyrequiresamoreeducatedlaborforce.HighereducationisanimportantfactorinmanyofCalifornia’sfastestgrowingoccupations.Eightofthetoptenfastestgrowingoccupationsfrom2004-2014requirepost-secondaryeducation.Sixoftheseoccupationsrequireabachelor’sdegree.23

Whileaservices-basedeconomyprovidesjobopportunitiesforindividualsatallskilllevels,thejobsavailabletolower-skilledworkerstendtobelow-paying,suchasretailsales.Astheservicesindustrygrowsandtheneedforeducatedworkersincreases,thosewithlesstrainingoreducationmaybeunemployedmorefrequentlyorneedtoutilizetheUIprogramforlongerperiodsoftime.

Inaddition,asmanufacturingjobsdecline,thoseworkersmayrequireretrainingtolearnnewskillsforemploymentinadifferentindustry.ThistypeofintensivetrainingmayresultinlongerbenefitdurationasindividualscollectUIwhilecompletingthenecessarytrainingtoreentertheworkforce.TheUIprogrammayalsoneedtoexamineitsbenefitandtrainingprovisionstodetermineiftheywillcontinuetomeetcustomerneeds.


AlternativestoFull-TimeEmploymentAlthoughnotdiscussedinpriordemographicsections,alternativestofull-timeemploymentisatrendthathasimplicationsfortheUIclaimantpopulation.Thetraditionalemploymentmodelofafull-time,40-hourworkweekhastransformedtoaworkenvironmentwheremanyCaliforniansworkonacontingentorpart-timebasis,orareself-employed.

SixpercentorjustoveronemillionindividualswereconsideredcontingentworkersinCaliforniaasofFebruary2005.Acontingentworkerisdefinedasanyworkerwhodoesnotexpecthisorherjobtolastmorethan12months.ContingentworkersaretypicallycoveredforUIpurposes.Theseworkersareconcentratedintheservicesindustryandaretwiceaslikelytoworkpart-time.Alargepercentageofcontingentworkersarefromlow-incomehouseholds.24

Duetothetemporarynatureoftheirwork,contingentworkersarelikelytoutilizetheUIsystemmorefrequentlythanotherworkers.Ascontingentworkcontinuestobemorecommon,thereisapotentialimpacttotheTrustFundasmoreindividualscollectUIbenefits.Inaddition,coverageprovisionsmayneedtobereevaluatedtoensurethatCalifornia’scontingentworkersareadequatelycoveredforUIpurposes.

Part-timeemploymentisquitecommonintoday’seconomy.Approximately17percentofworkingCalifornianswereemployedonapart-timebasis,definedasoneto34hoursperweek,asofJuly2007.25SenateBill40(Chapter409,Statutesof2001)addedtheabilityforpart-timeworkerstocollectUIbenefitsinCalifornia.

SignificantnumbersofCaliforniansareself-employed.AsofSeptember2006,1outofevery10workingCalifornianswasselfemployed.26ThishasimplicationsfortheUIprogram,asself-employedindividualsarenotgenerallycoveredforUIpurposesandthereforedonotpaytaxesinsupportoftheprogram.Ontheotherhand,thismeanstheyalsodonotcollectUIbenefits,whichwouldseeminglynegateanyconcernofdecreasedfunding.However,anincreaseinthenumberofself-employedCaliforniansinthefuturecouldpotentiallyresultinasmallerpooloffundingtopayUIbenefitsasworkersleavecoveredemploymentforself-employment.Atthatpoint,thewagesofthoseindividualsarenolongerasourceofrevenuefortheUITrustFund.Moreself-employmentcouldalsoresultinagreaternumberofCalifornianswhoarenotcoveredduringperiodsofunemployment.

TheUIprogramwillcontinuetomonitordemographictrendstodeterminethepotentialimpactonservicedelivery,coverage,funding,andotheraspectsoftheprogram.ThesetrendsareimportantfactorsforcurrentandfuturepolicydecisionstoensurethattheUIprogramcontinuestobeaneffectivewagereplacementsystem.

SERVICES


ThissectionoutlinesthebasicUIservicesprovided,howservicesareaccessed,andtargetedservicesforclaimantsandemployers.Inaddition,thissectiondescribestheroleofautomationinservicedelivery.

BasicUIServicesUIBENEFITS

ThebasicUIprogramprovidesupto26weeksofpartialwagereplacementanduptoamaximumof$450perweektoeligibleclaimants.Theminimumavailablebenefitis$40perweekfor14weeks.

UIELIGIBILITY

Eligibilityforbenefitsisdeterminedbythefollowingfactors:

nPastearningsactivity(laborforceattachment)

nConditionsofjobseparation

nContinuingjobsearchactivity

nAbilitytoworkandavailabilityforwork

AccesstoServicesTheUIprogramservesbothclaimantsandemployers.CustomerscanaccessUIservicesandinformationontheEmploymentDevelopmentDepartment(EDD)WebsiteorbycallingoneoftheUItoll-freenumbers.IndividualsmayfileaUIclaimonline,bytelephone,orbymailorfax.Reemploymentservicesarealsoavailableelectronically.Forexample,claimantscansubmitarésuméandlookforworkusingEDD’sonlineCalJOBSSMsystem.Inaddition,relevantlabormarketinformationisavailableontheEDDWebsite.

LANGUAGE/DISABLED

TheUIprogramprovidesinformationandservicesinavarietyoflanguagesrepresentativeofCalifornia’sdiversepopulation.TheDepartmenthastoll-free800numbersforEnglish,Spanish,Cantonese,Mandarin,andVietnamesespeakingcustomers.ManyUIformsandpublicationsarealsoavailableinthesamelanguages.Ateletypewriter(TTY)toll-freenumberisalsoavailableforhearingandspeechimpairedcustomers.TheUIprogrammeetstherequirementsoftheDymally-AlatorreBilingualServicesActof1973whichmandatesthatstateagenciesprovideanequallevelofservicetonon-Englishspeakingcustomers.


ONLINESERvICES

Sincethelate1990s,theDOLhassupportedremoteclaimfilingwhichhasresultedinmoststatessupportingclaimfilingandrelatedactivitiesthroughthetelephoneandtheInternet.27TheflexibilityandeaseofusingtheInternethaschangedUIclaimfilingaswellashowpeoplefindworkandaccessreemploymentinformation.

SurveysreportthattheInternetplaysanincreasingroleinhowpeopleseekwork,withover50percentofunemployedworkershavingaccesstocomputers.28SomesurveyssuggestthisrateishigherinCalifornia.WiththeavailabilityofcomputersinmostOne-StopCareerCenters,UIclaimantshaveaccesstoalargerangeofonlineUIandreemploymentservices.

a Internet UI Claim Filing

TheUIprogram’sInternetclaimfilingapplication, eApply4UI,wasintroducedonApril8,2002.Customersmaycompleteandsubmittheonlineapplicationattheirconvenience24hoursadayfromanycomputerwithInternetaccess.TheapplicationisalsoavailableinSpanish.TheUIprogramconductsregularmarketingandoutreacheffortstoincreaseawarenessanduseofeApply4UI.

Inadditiontoprovidingaself-serviceclaimfilingoption,theuseofeApply4UIallowstheUIprogramtomaximizelimitedstaffingandresourcesaseApply4UIclaimstakeone-thirdtheprocessingtimeastelephoneclaims.

Sinceitsinception,overthreemillioneApply4UIapplicationshavebeensubmitted,andcurrently,thisonlineapplicationaccountsformorethan40percentoftotalUIclaimsfiled.

TheeApply4UIapplicationiscontinuallyenhancedforeasieruseandtoserveawidercustomerbase.

ThefollowingchartshowstheincreaseduseofeApply4UIsince2002.

Figure3:CaliforniaUIClaimsFiled,CalendarYear2002-2006

Year TotalClaimsFiled TotalInternet InternetClaimsas Claims aPercentageof Submitted29 TotalClaimsFiled

2002 3,298,710 280,382 8%

2003 3,202,193 538,425 17%

2004 2,271,904 492,987 22%

2005 1,971,365 684,300 35%

2006 2,097,839 860,435 41%


a Internet Access to Information Services

TheEDDprovidesclaimantsandthegeneralpublicawidevarietyofonlineUIinformation.ThisrangesfromUIclaimfilingoptionstotheappealprocess,aswellasfrequentlyaskedquestionsandfactsheetsdescribingvariousUIservices.

ThereisalsoanonlinetoolforthepublictocommunicatewithEDDelectronically.TheAsk EDDsystemallowscustomerstocommunicateclaiminformationorsubmitaquestion,comment,orsuggestioninasecureenvironment.

SincetheestablishmentoftheAsk EDDsystem,thenumberofmessagesreceivedbytheUIprogramhasincreasedbymorethan82percent.

TargetedServicesInadditiontothebasicUIprogramservices,therearemanytargetedservicesavailabletoclaimantsandemployers.Theseservicesincludereemploymentassistancetohelpclaimantsreentertheworkforceandspecialbenefitprovisionsintheeventofadisasterorduringperiodsofhighunemployment.TheUIprogramalsoassistsemployersinretainingtheirworkforceandpromotesanactivepartnershipwiththeemployercommunityaskeyprogramstakeholders.TheUIprogramalsointeractswithotherEDDentitiesandstateandfederalagenciesfortheoperationofvariousprogramfunctions.

REEMPLOYMENTSERvICES

a One-Stop Partner System

Currently,thereareover200One-StopCareerCentersinCaliforniathatreceivefederalfundingtoprovideemploymentandtrainingservicestothepublic.TheEDD’sEmploymentServicesandUIprogramsarebothrequiredpartnersoftheOne-StopCareerCentersystem.TheEmploymentServicesprogramisrequiredtoprovidedirectservicesin-personandtheUIprogramisrequiredtoensurethataccesstoUIservicesisreadilyavailableintheCenters.

a Reemployment Services for UI Claimants

TheU.S.DepartmentofLaborrequiresthestatestoprovidereemploymentservicestoUIclaimants.ThesemandatoryservicesincludeWorkerProfilingandReemploymentServicesthatvalidatetheindividual’sattachmenttothelabormarket.TheseservicesareprovidedtoUIrecipientstoassisttheminreturningtoworkquicklyandtoensuretheycontinuetomeetUIeligibilityrequirements.

TheEDDprovidesanumberofdifferentreemploymentservicesthattargetdifferentclaimantgroupsandservetomeetthefederalrequirements.TheprimaryservicescurrentlyincludeInitialAssistanceWorkshopsandPersonalizedJobSearchAssistanceprovidedbytheDepartment’sEmploymentServicesstaffandReemploymentandEligibilityAssessmentsprovidedbyUIstaffinOne-StopCareerCenters.

� of 60DE 4525 Rev. 3 (��-07) (INTERNET)

a Trade Adjustment Assistance (TAA)

TheTAAprogramisafederalprogramthatprovidesaidtoworkerswholosetheirjobsorwhosehoursofworkandwagesarereducedbecauseofincreasedimportsorforeigncompetition.Workersmaybeeligiblefortraining,jobsearchandrelocationallowances,incomesupport,andotherreemploymentservices.

a California Training Benefits (CTB) Program

TheCTBprogramprovidesUIpaymentsuptoamaximumof52weekstoeligible,unemployedworkersenrolledinstate-approvedtrainingprograms.Thesetrainingbenefitshelpsustainworkersastheyupgradetheirskillsandexperienceinordertoreentertheworkforce.

a Employment Training Panel (ETP)

TheETPfundstrainingprogramsforemployeesofcompaniesfacingforeignanddomesticcompetition,currentUIrecipientsorthosewhohaverecentlyexhaustedtheirUIbenefits,andotherworkerswithspecificneeds,suchasthoseinhighunemploymentareasorwithbarrierstofulltimeemployment.

EMPLOYERSERvICES

a Partial Claims/Pacific Maritime Association

PartialClaimsprogramallowsemployerstoretaintheirworkforceforalimitedtimeduringperiodsoftemporarylossofwork.PacificMaritimeAssociationisaspecialprogramforlongshorementhatallowsthemtocollectUIbenefitsiftheyworklessthantheirnormalhoursofworkasaresultoftheemployersharingtheworkamongemployees.

a Work Sharing

Thisprogramassistsemployersinmaintainingtheirlaborforceduringaworkloadreductionbyallowingemployeestoshareworkforareductionofhoursandwagesinlieuofbeinglaidoff.

a State Special Schools Benefits

EmployeesofeducationalinstitutionsaregenerallydeniedUIbenefitsundercertaincircumstances.However,thereisaspecialprovisionfortheStateSpecialSchools,whichenrolldeaf,blind,andneurologically-handicappedstudents,thatallowscertainemployeestocollectUIbenefitswhowouldotherwisebedeniedunderotherprovisionsoflaw.


a School Employer Advisory Committee (SEAC) and the Unemployment Insurance Technical Subcommittee (UITS)

TheSEACpartnerswiththeEDDtoidentify,consider,andrecommendimprovementsconcerningtheadministrationoftheSchoolEmployeesFund,whichisthefinancingmethodbywhichschoolemployerspaytheirUIcosts.ServingunderthedirectionoftheSEACistheUITS,which

consistsofrepresentativesfromtheschoolemployercommunityandEDD,andwhosepurposeisthediscussionofkeyissuespertainingtoUIclaimsmanagement.

a California Employer Advisory Council (CEAC)/Employer Advisory Council (EAC)

TheCEACisanonprofit,statewideumbrellaorganizationformorethan50EACchaptersthroughoutCaliforniathatconsistoflocalemployers.PartneringwithEDDstaff,theEACshelpeducateemployersaboutemploymentissues,increaseknowledgeofEDDprogramsandservices,andidentifywaystoimproveEDDservices.

a Small Business Employer Advisory Committee (SBEAC)

TheSBEACservesthesmallbusinesscommunitybyworkingwithEDDtoprovideasmallbusinessperspectiveonemploymenttaxissuesandtohelpsmallbusinessesunderstandtheUIfinancingsystemandhowtomanagetheirUIcosts.

UIEMERGENCYSERvICES/HIGHUNEMPLOYMENTSERvICES

a Disaster Unemployment Assistance (DUA)

DUAisafederalprogramthatprovidesfinancialassistanceandemploymentservicestojoblessworkersandtheself-employedwhentheyareunemployedasadirectresultofamajornaturaldisaster.

a California Extended Duration Benefits (Cal-ED)

Californiaprovidesforstate-fundedextendedUIbenefits,knownasCal-ED,duringprolongedperiodsofhighunemployment,providinguptoamaximumofanadditional13weeksofUIbenefitstoeligible,unemployedworkers.

a Federal Extended Duration Benefits (Fed-ED)

Federallawprovidesforjointlyfundedfederal-stateextendedUIbenefits,knownasFed-ED,duringprolongedperiodsofhighunemploymentinCalifornia,providinguptoamaximumofanadditional13weeksofUIbenefits.WhentheFed-EDprogramcriteriaismet,itsupersedesthestate-fundedCal-EDprogramifthatprogramhasbeenactivated.


GOvERNMENTALRELATIONSTheUIprogramcoordinateswithavarietyoffederalandstategovernmentagenciesandotherEDDentitiesfortheeffectiveoperationoftheprogram.InteragencyrelationsarenecessarytoprovideawidearrayofrelatedservicestoCalifornia’sworkforce,aswellassupportiveservicessuchastaxcollection.Inaddition,coordinationwithothergovernmentagencies

isessentialforprogramintegritytoverifyclaimantinformationfortheproperpaymentofbenefits,investigateandprosecutefraud,andcollectfraudulentbenefitoverpayments.

TheUIprogramworksinpartnershipwithotherentities,someofwhicharelistedbelow,toprovideUIservices:

nEDDDisabilityInsuranceBranch nEDDTaxBranch

nEDDWorkforceServicesBranch nCaliforniaDepartmentofJustice

nCaliforniaDepartmentofMotorVehicles nCaliforniaFranchiseTaxBoard

nCaliforniaOfficeofEmergencyServices nCaliforniaUnemploymentInsurance

nFederalEmergencyManagementAgency AppealsBoard

nSocialSecurityAdministration nU.S.DepartmentofLabor

AutomationtoImproveServices

TheUIprogramhasanumberofautomationeffortsunderwaytomodernizeservicedelivery,improvecustomerservice,andstreamlineworkprocesses.Increasingly,thepublicexpectsautomatedserviceoptions,suchasonlineclaimfilinganddirectdepositofUIbenefits.Thecurrentautomatedsystemsandplannedfutureenhancementshelptheprogrammaximizetheuseoflimitedfundingresourceswhilealsoimprovingprogramintegrity.Whilethereareseverallong-termeffortsunderway,theUIprogramhastakeninterimstepstoimprovecurrentprocesses.

CURRENTEFFORTS

a Imaging

TheUIprogramisintheinitialstagesofreengineeringworkfunctionstomovefromapaper-drivenprocesstoanelectronicprocess.Thiswillpromotemoreflexibility,allowingforthedistributionofworkamongstUIofficesthroughoutthestate.Italsopositionstheprogramtomoveintotheimagingarenaforthestorage,retrieval,andmanagementofworkflowinallprogramfunctions.


a Small Automation Applications

Asmallautomationapplication,oraMacro,isasavedsequenceofkeyboardstrokesthatcanbestoredandthenrecalledwithasinglecommandorkeyboardstroke.MacrosareusedintheUIprogramtoestablishstandardproceduresintheprocessingofUIclaims,withouttheneedforstafftolearncomplicatedautomatedapplications.

TheTelephoneClaimFilingMacrowasrecentlydevelopedtoassiststaffinfilingclaims.Itreducesanumberofroutineclericalclaimfilingactivitiesandincreasesconsistency.Italsolinkswithseveralcrossmatchprocesses,withbothinternalandexternalentities,todecreasefraud.

a Interactive Voice Response (IVR) Services

TheIVRsystemprovidesUIprograminformationtoclaimantsoverthephone,includinghowtofileaclaim,statusofUIbenefitschecks,andlocationsofEDDpublicoffices.Toobtainpersonalinformation,theclaimantmustestablishaPersonalIdentificationNumber.

FUTUREEFFORTS

a Enhanced Claim Filing Tools for UI Staff

Currentlyunderdevelopment,theWebBasedClaimFilingProjectwillresultinamoreuser-friendly,PC-basedclaimfilingsystem,whichwillmakeiteasierforstafftoprocessUIclaimsandreducetrainingtimefornewlyhiredstaff.Thenewsystemwillalsohaveanti-fraudcomponentstoincreaseprogramintegrity.

a Online UI Claim Certification

Currently,claimantscertifytheircontinuedeligibilityforUIbenefitsviamailedpaperforms.Inthefuture,claimantswillbeabletocertifyforUIbenefitsbytelephoneoronline.ThisprojectwillalsoupgradetheoutdatedUIpaymentsystemandprovidenewtoolsforfraudprevention.

a Debit Cards/Direct Deposit

ThereisaDepartment-wideefforttoresearchDirectDepositanddebitcardoptionstopayUIbenefits.Electronicpaymentofbenefitswouldresultincostsavings,aswellasgiveclaimantsmoreimmediateaccesstobenefitsandeliminatetheneedtoreplacelostchecks.

a Enhanced Telecommunications

Overthenexttwoyears,theEDDandotherpublicagencieswithlargecallcenterswilltransitiontoupgradedtelecommunicationservicestoprovidebettercustomerservice.Changesincludevoiceanddataservicesovernetworks,enhancedandexpandedcallcentertechnology,voiceoverInternetprotocol(VOIP),andbroadbandandwirelessservices.ThesechangeswillenabletheUIProgramtoeasilyextendinboundcallcenterservicestoallUIprimarycenters.


GOVERNANCE

ThefollowingchartillustratestherelationshipbetweenthevariousgovernancebodiesinvolvedintheoperationoftheUIprograminCalifornia.

Figure4:UnemploymentInsuranceProgramGovernance

FEDERALDEPARTMENTOFLABOR

ProvidesUIprogramoversightandfunding.

CALIFORNIAGOvERNORANDLEGISLATURE

Overseesallstateagencies,enactslawsandregulations,anddistributesfunding.

LABORANDWORkFORCEDEvELOPMENTAGENCY

Improvesaccesstoemploymentandtrainingprogramsforworkersandemployers,improvesaccountabilityandefficiencyinthestate’s$10.8billion

workforcetrainingprograms,increasescoordinationofenforcementprogramsindisabilityandtaxprograms,andemploysastrategic

approachtoemploymentresearchprograms.

CALIFORNIAEMPLOYMENTDEvELOPMENTDEPARTMENT

AdministerstheDisabilityInsurance,UnemploymentInsurance,andWorkforceServicesprograms.TheEDDalsoisCalifornia’slargesttaxcollectionagency,handlingtheauditandcollectionofemploymenttaxesandmaintainingrecords

formorethan17millionCaliforniaworkers.

UNEMPLOYMENTINSURANCEBRANCH

OverseestheadministrationoftheUIprogramanddevelopsprogrampoliciesandproceduresthatcomplywithfederalandstatelawsgoverningtheprogram.

TheBranchalsomaintainstheintegrityoftheUIprogramandUITrustFund.


Figure5:EmploymentDevelopmentDepartmentOrganizationChart

TheEDDiscomprisedofthefollowingbranchesandoffices:

SUPPORTOFFICES

SUPPORTBRANCHES

PROGRAMBRANCHES

DIRECTORATE

EqUALEMPLOYMENTOPPORTUNITY

ADMINISTRATION DISABILITYINSURANCE

INFORMATIONSECURITY

INFORMATIONTECHNOLOGY

TAX

LEGAL PROGRAMREvIEW

UNEMPLOYMENTINSURANCE

LEGISLATIvE&INTERGOvERNMENTAL

AFFAIRS

PUBLICAFFAIRS

WORkFORCESERvICES


UnemploymentInsuranceBranchResponsibilities

TheUIprogramprovidestemporarywagereplacementtoclaimantswhoareunemployedthroughnofaultoftheirownandareactivelyseekingemployment.TheUIBranchworkscloselywithotherEDDentitiesincludingtheDisabilityInsurance(DI)Branch,theTaxBranch,andtheWorkforce

ServicesBranchtoprovidecomprehensiveandcoordinatedservicestocommoncustomergroups.TheEDDstrivestoprovideacombinationofservicesinaseamlessmannerregardlessofprogrammaticboundaries.WhiletheDepartmentismakingprogresstowardthisgoal,manycoordinationandservicedeliverychallengesremain.

Inadditiontoprovidingdirectservicestoemployersandunemployedworkers,theUIBranchisresponsibleforprotectingtheintegrityoftheUITrustFundandensuringthatUIbenefitsarepaidappropriately.Employerpayrolltaxesfundprogramadministrationaswellasbenefitpaymentstounemployedworkers,anditisimperativethatemployers’accountsareproperlychargedforbenefitspaidtotheirformeremployees.

TheEDD’sUIBranchisresponsibleforthefollowingactivitiesastheypertaintotheUIprogram.ItisthroughthecombinedeffortsofallBranchentitiesthattheseactivitiesareundertakentocreateaunifiedprogram:

nEnsuringthattheprogramcontinuestoactasaneffectiveeconomicstabilizer

andadynamicsystemresponsivetotheneedsofachangingcustomerbase.

nDevelopingprogrampolicyandprocedurespursuanttofederalandstatelaws.

nAnalyzingandapplyingfederalandstatelaws.

nMaintainingtheintegrityoftheUIprogramandtheUITrustFund.

nFilingUIclaims,determiningeligibility,andpayingbenefitstimelyandaccurately.

nAssistingemployerstomaintainatrainedworkforce.

nEnsuringemployers’accountsarechargedcorrectlyforbenefitspaid.

nConductingadministrativeandoversightfunctions.

nPerformingbenefitaccountingfunctionsoftheUIBranchincluding

thoseassociatedwithDI.

nPlanninganddevelopingautomationprojects.


OrganizationalStructureTheUIBranchDeputyDirectoradministerstheUIprogram,andhasfiveDivisionChiefswhooverseetheirrespectivedivisions.EachdivisionhasofficeorsectionmanagerswhocollectivelycomprisetheUIBranchSeniorManagementTeam.TheUIBranchiscomprisedofthefollowingfive

DivisionsandoneOffice:

Figure6:UnemploymentInsuranceBranchOrganizationChart

UIBRANCHOFFICE

DEPUTYDIRECTOR

UIPOLICYANDCOORDINATION

DIvISION

UIRESOURCEMANAGEMENT

DIvISION

UICLAIMSERvICESDIvISION

UIADJUDICATIONSERvICESDIvISION

UIINTEGRITYANDACCOUNTING

DIvISION

UIBRANCHOFFICE

TheUIBranchOfficeperformsavarietyofactivitiesandsupportfunctionsrequiredtoassisttheDeputyDirectorinworkingwiththeUIDivisionChiefstoprovideleadershipanddirectioninallaspectsofUIprogramadministration.TheUIBranchOffice:

nPlansforthefutureoftheUIprogram,establishesprograminitiatives/priorities,and tracksprogramaccomplishmentsthroughthedevelopmentandmaintenanceof afive-yearbusinessplan.nWorkswiththeSeniorManagementTeamtosupportandoverseeUIoperationsto ensureconsistentanduniformservicedeliverytocustomersinaccordancewith federalandstatelawandpolicy.


nInteractswithemployerassociations,advocacygroups,andcommunity organizationsonavarietyofissuesrelatedtotheadministrationof California’sUIprogram.

nRepresentstheinterestsoftheUIprogramattheEnterpriselevelasa memberoftheDepartment’sExecutiveManagementTeam.

nInfluencesUIprogrampolicyandlegislationatthenationalandstatelevel throughactiveinvolvementwithgovernmentalofficials,Congressionaland Legislativerepresentatives,advocacygroups,andstakeholders.

nOverseesanddirectspersonnelselectionandmanagementpracticesto ensurecompliancewiththeprovisionsofthelaboragreementandtoestablishuniform hiringproceduresthatresultinselectionofthemostqualifiedapplicants.

nFacilitatescollaboration,communication,andinformationsharingamongmembersof theSeniorManagementTeam.

nServesasaliaisonbetweentheBusinessOperationsPlanningandSupportDivision andthefieldmanagersonallpremises-relatedactivities.

UIPOLICYANDCOORDINATIONDIvISION(UIPCD)

TheUIPCDcoordinatestheprogramactivitiesacrosstheBranch,workingwithotherDepartmententities,stateagencies,andfederalpartners.TheUIPCD:

nInitiates,develops,plans,andimplementsUIprogrampolicyandproceduralchanges asaresultofstateandfederallevelpoliciesandrequirements,legislativechanges, andadministrativeandcourtdecisions.

nInitiates,leads,plans,andoverseesstatewidesystem,automation,andapplication enhancementsfortheUIProgram.

nOverseesUIprogramperformanceagainstpolicy,program,andperformance objectivesandrequirements.

nEnsurescoordinationwithinUIBranchandbetweenEDDorganizationstoprovide consistent,efficient,andeffectiveUIservicestoourcustomers,whileensuringthe integrityandsecurityoftheUIprogram.

nProvidesadministrativeoversightoftheUIprogram.

UIRESOURCEMANAGEMENTDIvISION(UIRMD)

TheUIRMDplans,oversees,manages,andaccountsforpersonnelandoperatingresourcesacrosstheBranch.TheUIRMD:

nDevelopsmethodologiesandsystemsfortheallocationofUIbudgetresources.

nRepresentstheUIprogramandworkswithFiscalProgramsDivisioninthe developmentoffederalandstatebudgetingdocumentation.


n Forecastsworkloaddemands,assessesproductioncapacity,projects

workload-basedbudgetceilingoptionsforprogramoperations,estimates

expenditures,anddevelopsspendingplanoptionsfortheUIBranch.

n Preparesresourcerequests,reviewsactualworkloadandresource

utilization,andaccountsforresourcesusedforallUIclaimhandling

processes.

n PreparesrecommendationsforUIBranchmanagement,includingbudgeting

alternativestoimproveprogrameffectivenessandefficiency.

n Coordinatesworkflow,andprioritizesandallocatesresourcestoachievetargeted

results,inconsultationwiththeBranch’sDeputyDirectorandDivisionChiefs.

n SupportstheUIcallcenteroperationsbymaintainingtheintelligentcallrouting

application(thatdistributesincomingcallstostaff),andbypartneringwith

InformationTechnologyBranchandtelecommunicationvendorstoensurethecall

processingnetworkmeetsbusinessneeds.

UICLAIMSERvICESDIvISION(UICSD)

TheUICSDservescustomersthroughCustomerContactCentersandtheConsolidatedUIServicesCenters.TheUICSD:

n Files/ReopensUIclaimsviatelephone,mail,orelectronicaccess.Determinesthe

correcttypeofclaimtobefiled(Californiaintrastate,interstate,federal,military,

DisasterUnemploymentAssistance,andextensions).

n Identifieseligibilityissuesandtakesappropriateactioninordertopayordeny

benefitspromptly.

n Providesinformationtothepublicandemployers.

n Initiatesverificationofclaimantidentityincludingclaimantsocialsecuritynumbers.

nAuthorizesthepaymentofUIbenefits.

n Processesrulingstodetermineemployers’liabilityforbenefitcharges.

n Processesclaimantandemployercorrespondenceincludinglettersofprotestand

returnedbenefitchecks.


UIADJUDICATIONSERvICESDIvISION(UIASD)

TheUIASDservescustomersthroughAdjudicationCenters,anOverpaymentCenter,andaSpecialClaimsOffice.TheUIASD:

nConductsaccurateandtimelydeterminationofeligibilityissuesin

accordancewithfederalandstatelaws.

n Resolvesbenefitadjustmentsandexceptions.

n Determinesemployers’liabilityforbenefitcharges.

n Investigatesandestablishesfraudandnon-fraudUIoverpayments.

n RecoversinappropriatechargesagainsttheUITrustFund.

n Conductspre-appealreviewstoensurethatallpertinentfactsaredivulgedatUI

AdministrativeHearings.

n AdministerstheWorkSharing,StateSpecialSchoolsBenefits,andTradeAdjustment

Assistanceprograms.

UIINTEGRITYANDACCOUNTINGDIvISION(UIIAD)

TheUIIADservescustomersthroughacentralizedlocation.TheUIIAD:

n AccountsforUI/DIbenefitpayments.

n AccountsforandmaintainsUI/DIbenefitoverpaymentaccounts.

n AccountsforandtransmitsVoluntaryFederalIncomeTaxwithholdingsandChild SupportInterceptdeductions.

n ReconcilesUI,DI,andotherDepartmentbankaccounts.

n Administersinteragencyoffsetprograms(withFranchiseTaxBoardandtheLottery) andthecreditcardprogramforrepaymentofUI/DIbenefitoverpayments.

n ConductstheUIWorkers’CompensationLienprocess.

n AdministerstheUIbenefitauditcross-matchprogram.

n Administerstheannual1099GprocessforUI/DIbenefitpayments.

n Assistsemployerswithreconcilingtheirwagerecordsandthewagedatareportedto theDepartment.

n PerformsallUI/DIclaimmonetaryrecomputations,includingcombiningwagesfrom

otherstatesandU.S.territories,oraddingfederalormilitarywages.

n Conductsclaimantidentityverification.


TheUIprogramisentirelyfundedbyemployerpayrolltaxes.EmployerspayafederaltaxtotheInternalRevenueServicefortheadministrationoftheprogramandaseparatestateUIpayrolltaxtofinanceUIbenefitspaidtounemployedworkers.

Mostemployersusethetax-ratedmethod.Thetax-ratedmethodcalculatesaspecifictaxpercent,whichisappliedtothefirst$7,000inearningsperemployeeonanannualbasis.Administrativecostsarecoveredbyafederaltaxof0.8percent,whichisalsopaidonthefirst$7,000inwagesperemployee.Forthestatetax,whichcoversbenefitcosts,theactualtaxratevariesforeachemployer,dependingontheemployer’soveralluseoftheUIsystemaswellastheconditionoftheUIFund.Anemployermayearnalowertaxratewhenfewerclaimsarechargedtotheemployer’saccountbyformeremployees.Employers’taxratesarebasedononeofseventaxschedulesestablishedunderCalifornialaw.

Indiantribes,governmental,andcertainnonprofitemployersmayelectanothermeansofpayingtheirUIcosts,calledthereimbursablemethod.Inthisfinancingmethod,employersreimbursetheUITrustFundonadollar-for-dollarbasisforallbenefitspaidtotheirformeremployees.

TherehavebeennumerouseffortsthroughoutthehistoryoftheUIprogramtoreformtheUIfinancingstructureandtheexistingsystemshouldbeupdatedtoreflectCalifornia’scurrenteconomicenvironment.

UIFundingPrinciplesTheUIsystemisbasedontraditionalinsuranceprinciplesusedbypublicandprivateinsurers.Theseprinciplesincludefundsolvency,experiencerating,andpooledrisk.TheseprinciplesarethefoundationoftheUIprogramnationwide.

FUNDSOLvENCY

Californiausesamulti-scheduledUIcontributionsystemthatwasoriginallydesignedtoensurethesolvencyoftheUnemploymentFundunderchangingeconomicconditions.Thesystemwasdesignedtoincreaseemployercontributionsasthefundbalancedeclines,anddecreasecontributionsasthefundbalancegrows.TheEDDworkswithactuarieswhoreviewthefundbalanceandoperationofthetaxingandbenefitstructurestoensuresolvency.TheactuariesreviewcurrentandfutureFundadequacy,thefinancingandbenefitsystems,andtheimpactoffutureeconomicandenvironmentalcircumstancesontheFund.

PROGRAM FUNDING


However,thefundingsysteminCaliforniaisover20-years-oldandinneedofredesigninordertobeeffectiveinthecurrentenvironment.Thesystemdoesnotreflectrecenteconomicchanges,suchasincreasesinCalifornia’sminimumwageandaverageweeklywage,aswellaschangesinthebenefitstructure.

TheDOLandtheAdvisoryCouncilonUnemploymentCompensation,anadvisoryboardestablishedbytheDirectoroftheDOL,haverecommendedsolvencystandardsforstates’UItrustfundbalances.ThemeasuremostfrequentlyusedbyDOListheaveragehighcostmultiple(AHCM).TheAHCMdetermineshowmanyyearsofbenefitsthestateUITrustFundcouldpay,atthestate’shighestbenefitlevel,withoutadditionalrevenue.ThecalculationisbasedontheaverageofthethreehighestannuallevelsofUIbenefitsthatastatehaspaidinanyoftheprevious20calendaryears.

EXPERIENCERATING

ExperienceratingdeterminestheUItaxrateaccordingtotheemployer’soveralluseoftheUIsystem.ItisdesignedtoallocatemoreoftheUItaxcoststoemployerswhoseworkersreceivemoreUIbenefits.TheUItaxratesaresettoencourageemployerstomaintainastableworkforce,therebyreducingtheirtaxliability.

POOLEDRISk

ThepooledriskconceptrequiresallparticipatingemployerstopayintotheUIsystem,helpingtodefraythehighUIcostsofemployerswithpoorexperienceratings.Pooledriskworksonthepremisethatsomeemployersexperienceadverseeconomicconditions,orhaveoperationsthataredependentonseasonalorpart-timeworkers,andwillpayfortheirUIcostsuptoaspecificthreshold.Thecostsabovethethresholdaresubsidized,orsocialized,acrosstheboardtoallemployers.Inaddition,somecostsaresubsidizedacrossthepoolofemployersduetospecificstatelawstoreducetheadverseeffectonemployers’individualtaxrates.Whenanindividualresignstopreservefamilyunity,forexample,costsaresocializedacrosstheemployerpool.

REIMBURSABLEEMPLOYERS

Publicemployers,mostnonprofitorganizations,andfederallyrecognizedIndiantribeshavetheoptiontobereimbursableemployers.Asopposedtothetax-ratedmethodoffinancing,theseemployersmayelecttoreimbursetheUIFundonadollar-for-dollarbasisforallbenefitspaidtotheirformeremployees.Likewise,publicschooldistrictsandcommunitycollegesmayelecttoparticipateintheSchoolEmployeesFund(SEF),whichisaspecialreimbursablefinancingmethodavailableforschooldistricts.AllschoolemployersparticipatingintheSEFhavethesameUIcontributionrate,plusanadditionalchargebasedontheemployer’sindividualexperience.


UIProgramCostsTheUIprogramisfullyfundedbyemployercontributions,bothforthepaymentofbenefitstoclaimantsandforthepaymentofstates’administrativecosts.

BENEFITCOSTS

EmployerspaystateUItaxes,collectedbyEDD,whichmaybeusedsolelyforthepaymentofUIbenefits.Statesmusthaveaminimumtaxablewagebaseof$7,000andamaximumstatecontributionrateofatleast5.4percent.Generally,thenewemployer’sUItaxrateis3.4percentforthefirstthreeyearsandthencanchangedependingontheemployer’sexperienceratingandthetaxscheduleinusethatyear.

ADMINISTRATIONCOSTS

InadditiontostateUItaxes,tax-ratedemployerspayfederalpayrolltaxesof0.8percentonthefirst$7,000paidperyeartoeachemployee.Themaximumamountanemployerpaysinfederaltaxesannuallyis$56peremployee.ThesetaxesarecollecteddirectlybythefederalgovernmentandplacedintothreenationalUITrustFundaccounts.Thenationalaccountsareusedtoredirectcollectedtaxesbacktothestates.Thethreeaccountsare:

a Employment Security Administration Account

ProvidesfundsfortheoperationsoftheUI,EmploymentServices,andveterans’ employmentprograms.

a Extended Unemployment Compensation Account

Providesfundsforthefederalshare(50percent)oftheextendedbenefitspaidto unemployedworkers.

a Federal Unemployment Account

ProvidesloanstostateswhoseUIbenefittrustfundsbecomeinsolvent.

AdministrativecostsincludethecostofUIpremises.TheDOLpermitsstatestouseselectedadministrativegrantsforconstructionandacquisitionofrealproperty.ThereisaneffortunderwayintheEDDtoreducerentcostsbymaximizingexistingfacilities.Withlimitedfederalfundingavailable,theUIBranchmuststrikeabalancebetweenmaintainingadequatefacilitiesforstaffandensuringsufficientfundingtoprovidedirectservicestounemployedworkers.


ThefollowingtwochartsshowCalifornia’sportionofcontributionscomparedtotheU.S.Total(Figure7)andanoverallpictureofEmploymentSecurityFinancing(Figure8).

Figure7:UIFinancialData,CalendarYear20061

FinancialInformation California U.S.Total Percentageof U.S.Total

StateTaxContributions $5.0billion $34.1billion 15%

FUTAContributions(2005) $861.8million $7.1billion 12%

TrustFundBalance $2.3billion $35.9billion 6%

UIGrant2 $353.2million $2.6billion 14%

1 DataSources:U.S.DepartmentofLabor,Unemployment Insurance Data Summary, 4th Quarter 2006andUnemployment Insurance Financial Data Handbook, 2006.StatetaxcontributionsandTrustFundbalanceforCaliforniaarebasedontheEDD UI Fund Forecast, May 2007. UIbasegrantinformationprovidedbyEDDFiscalProgramsDivision.2 ForFederalFiscalYear2006-07:October1,2006–September30,2007.IncludesUIbasegrant,postageallocation,above-base contingencyearnings,temporaryextendedunemploymentcompensation,andsupplementalbudgetrequests.

Figure8:EmploymentSecurityFinancing

STATEUNEMPLOYMENT

TAXES

EMPLOYERSTaxpayments

0.1%-5.4%offirst$7,000inwages

UNEMPLOYMENTBENEFITS

STATEUNEMPLOYMENT

TRUSTFUNDS(UTF)

FUAFEDERAL

UNEMPLOYMENT

ACCOUNT

ReedActLoansl Usedtofinance loanstoinsolvent stateUTFs.

l ReedAct distributions supplement admin.&benefitcosts.

l Ceilingis0.5%of coveredwages.

FUTAFEDERALUNEMPLOYMENT

TAXACT

ESAAEMPLOYMENT

SECURITYADMINISTRATION

ACCOUNT

80%ofFUTA

l Usedforstategrantsand federaladministration

l Ceilingis40%ofcurrent year’sappropriation.

20%ofFUTA

EUCAEXTENDED

UNEMPLOYMENTCOMPENSATION

ACCOUNT

TaxPayments0.8%offirst$7,000inwages

IRSTAXCOLLECTION

CHARGE

l Usedto finance fedshare (50%)of extended benefits.

l Ceiling is0.5% ofcovered wages.

l $100M peryear

ExcessFundTransfers


CurrentUIAdministrativeFundingRESOURCEJUSTIFICATIONMODEL

TheDOLintroducedtheResourceJustificationModel(RJM)tobetterjustifytoCongresstheneedtoadequatelyfundthestates’UIprograms.Sincefundingamountsaretiedtoworkloadlevels,states’requestedfundinglevelscouldbe

betterjustifiedbymorecomprehensivereportingofdataandperformanceelements.

ThefollowingchartshowsCalifornia’shistoricalshareofthefederaladministrativegranttooperatetheUIprogram.InadditiontofundingdirectservicestounemployedCalifornians,thisfundingisdistributedthroughoutEDDandtheCaliforniaUnemploymentInsuranceAppealsBoard(CUIAB)foranumberofUI-relatedservices,includingtaxcollection,informationtechnologyinfrastructure,andotheradministrativefunctions.

Figure9:California’sHistoricalFundingforUIAdministration,FederalFiscalYear2001-20071

FederalFiscalYear FederalFunding2 StateFunding3

(Inmillions) (Inmillions)

FY2001-02 $431.5 $25.1

FY2002-03 $381.8 $26.9

FY2003-04 $382.0 $67.8

FY2004-05 $360.1 $37.0

FY2005-06 $358.9 $40.5

FY2006-07 $353.2 $30.7

AlthoughtheRJMwasdevelopedtoensureadequatefundingfortheadministrationofthestates’UIprograms,Californiaandotherstatesareconsistentlyunderfundedatthefederallevel.Whilesomeofthedecreaseinfundingisduetolowerworkload,thisdoesnotfullyaccountforthedecliningfundingstream.FederalfundinghasnotkeptpacewithCalifornia’srisingstaffandautomationcosts,requiringsupplementalstatefundingtoproperlyadministertheUIprogram.

1 DataSource:EDDFiscalProgramsDivision2 FederalfundingincludesUIbasegrant,postageallocation,above-basecontingencyearnings,temporaryextended unemploymentcompensation,andsupplementalbudgetrequests.3 Statefundingincludespenaltyandinterestmonies(EDDBenefitAuditFundandEDDContingentFund),ReedActmonies,ora combinationthereof.


STATEFUNDING

Asfederalfundingforprogramadministrationcontinuestofallshortofactualneed,manystateshavecometorelyonsupplementalstatefundingtoaugmentfederalfunding.ThefollowingarestatefundingsourcesthatCaliforniausestoimproveandenhancetheUIprogram.

TheEDDhastwosourcesoffundingfrompenaltyandinterestmonies,theContingentFundandtheBenefitAuditFund.

a Contingent Fund

TheContingentFundconsistsofmoniescollectedfrompenaltiesandinterestassessedagainstdelinquentemployerUItaxes.ThesemoniesaremainlyusedforEDDtaxcollectionprogramsandtomaintainWorkforceServicesprograms.However,inrecentyearsContingentFundmonieshavebeenappropriatedbytheStateLegislatureforUIfraudpreventioninitiatives.

a Benefit Audit Fund

TheBenefitAuditFundiscomprisedofmoniescollectedfrompenaltiesandinterestassessedonfraudulentbenefitoverpayments.Thesefundsareusedtofinanceadministrativecostsassociatedwithdetecting,establishing,andcollectingUIbenefitoverpayments.BenefitAuditfundsareappropriatedinthestatebudgetandsupplementfederalUIbenefitcontrolresources.

a Reed Act

TheEmploymentSecurityFinancingAct(PublicLaw83-567)waspassedin1954amendingspecificprovisionsthatgovernthenationalUITrustFundaccounts.TheseamendmentsarereferredtoastheReedActandrequireCongresstoreturnexcessemployerpayrolltaxestothestates.

ThePresidentauthorizedan$8billionReedActdistributiontothestatesin2002,ofwhichCaliforniareceived$936.9million.Ofthisamount,$66millionhasbeendedicatedtoUImodernizationprojectstoupgradetheclaimcertificationandpaymentsystemsandtoreplaceanoutdatedcallhandlingsystem.ThebalanceoftheReedActfundswasusedtopayUIbenefitsandcoverotheradministrativecosts.

a General Fund

AsmallpercentageoftheEDD’stotalfundingcomesfromstateGeneralFundmonies.TheDepartmentreceivesanappropriationfromthecollectionofpersonalincometaxestoadministerthecollectionandauditoftaxes.TheEDDcollectsapproximately44percentofallGeneralFundrevenuesand72percentofallpersonalincometaxespaid.


UIAdministrativeFinanceReformInrecentyears,anumberofstateshaveadvocatedforchangeinthefinancingoftheUIandrelatedprograms.Manystatesarguethattheseprogramsarecontinuouslyunderfundedandthat,asaresult,statesareunabletoadequatelyadministertheseprogramsandservetheirdislocatedworkers,jobseekers,veteranpopulations,andthebusinesscommunity.

Inthelast30years,thefederalgovernmenthasproposedanumberofadministrativechangestoUIfunding.Mostrecently,thisresultedintheimplementationoftheRJM,whichtiesUIfundingtoworkloadlevels.Inaddition,therehavebeennumerousproposalstoshiftUIfundingresponsibilitiesfromthefederalgovernmenttothestates,whichwillbeanongoingissuefortheUIprogram.Inrecentyears,thefollowinginitiativeswereproposedatthefederallevel.

DEvOLUTIONOFUIFUNDING

ThePresident’sBudgetforfiscalyear2003proposedthatUIandEmploymentServicefundingresponsibilitiesbefullytransferredtothestatesby2007.Accordingtotheproposal,thefederalgovernmentwouldcontinuetocollectonlyone-quarter(0.2percent)ofFUTAtaxes.Thefederallycollectedfundswouldbeusedtocontinuefinancingthe:

n Federaladministrationcostsforprogramoversight.

n Federalshareoftheextendedbenefitspaidtounemployedworkers.

n LoanstostateswhoseUITrustFundsbecomeinsolvent.

n Smallstateadjustmentprogramthatensuresadequateadministrativefundingis availabletoallstates.

TheproposalwouldrequireCalifornia,aswellasallotherstates,toenactimplementinglegislation.ThefederalgovernmentwouldstillretainitsauthoritytorequirethestatestoadministernewprogramsandmeetcertainperformancelevelsassociatedwiththeUI,EmploymentServices,andrelatedprograms.However,theadministrativefundingauthorityfortheseprogramswouldbethestates’responsibility.

STATECHOICE

In2004,theDOLintroducedaconcepttogivestatestheoptiontotakeprimaryresponsibilityforadministrativefinancingoftheirUIprograms.Underthisconcept,employersinstatesthatopttofundUIadministrationwouldeventuallyreceiveareductioninfederaltaxesfrom0.8percentto0.2percentofthefirst$7,000inwagespaidtoeachemployeeannually.

Ifthecostofadministrationofastate’sUIprogramshouldeverexceedthetaxsavingstothatstate’semployers,thefederalgovernmentwouldprovidefundingtomakeupanydifference.TheStateChoiceapproachwasnotadoptedasAdministrationpolicy.


TheDOLhasestablishedperformancemeasuresthatallstatesarerequiredtofollowforcontinuousimprovementoftheUIprogram.Performancemeasuresmayplayanimportantpartinobtainingadministrativefunding.ThefederalmeasuresprovideinformationabouttheaccuracyandtimelinessofUIprocessesfromthefederalperspective.

Federal/StateStatutoryRequirementsUnderauthorityofTitleIIIoftheSocialSecurityActandtheGovernmentPerformanceResultsAct(GPRA),theSecretaryofLaborhasestablishedprimaryperformancegoalsfortheUIprogram.ThepurposeoftheseperformancemeasuresistoensurethattheUIprogramisproperlyadministeredbythestatesinaccordancewithfederallaw.ThisensuresthatUIbenefitsarepaidaccuratelyandtimelytounemployedindividualsandmaintainstheintegrityandsolvencyoftheUITrustFund.ThisalsoensuresemployersmaketimelyUItaxcontributionsusedforthepaymentofUIbenefitstoeligibleunemployedindividuals.

GOvERNMENTPERFORMANCERESULTSACT

TheGPRAof1993requiresfederalagenciestoreporttoCongressannuallyontheirstrategicplansandprogramperformancegoals,objectives,andoutcomesaspartofthefederalbudgetprocess.ThepurposeoftheGPRAistoholdgovernmentagenciesaccountablefortheservicestheyprovidetothepublic,whichlinksperformancetofundinglevels.

SincetheUIprogramisfederally-funded,theDOLisrequiredtosubmitannualstrategicandperformanceplans,whichincludeUIprogramstrategicguidelinesandperformancemeasuresthatareestablishedbyDOLasnationalstandardsforallstates.TheDOLannualplanssetforththestrategicframeworkwithinwhichthestatesarerequiredtodeveloptheirindividualstrategicplansandoperatetheirUIprogramsaccordingly.Thepurposeoftheperformancemeasuresistorequirestatestomeetminimumqualitystandardsatthese“baseline”levelsandtostriveforcontinuousimprovementabovetheseestablishedmeasures.

AsrequiredbyGPRA,DOLannuallyreportstoCongressonachievementoffourgoals:

n PaymentTimeliness;

n PaymentAccuracy;

n Reemployment;and

n EstablishmentofnewUItaxaccountstimely.

EVALUATION and PERFORMANCE MEASURES


FederalAdministrativeRequirementsUSDOLPROvISIONS

InordertomeetGPRArequirementsandtherequirementsoftheSocialSecurityAct,theDOLhasestablishedUIPERFORMSastheUIprogram’sperformancemanagementsystem.UIPERFORMSincorporatesUIbenefits,tax,andappealsactivities.ListedbelowarethekeycomponentsoftheUIPERFORMSsystem:

n BenefitAccuracyMeasure:MeasuresaccuracyofUIbenefitpaymentsanddenials.

n BenefitTimelinessandQuality:MeasuresqualityofUIbenefitdecisionsandlower

authorityappeals.Measuresthetimelinessinrenderingdeterminationsandappeals,

andpaymentofUIbenefits.

n DataValidation:Measuresaccuracyofdata.

n TaxPerformanceSystem:Measuresaccuracy,timeliness,andqualityofUItax

revenuecollectionandprocessing.

InordertoreceivefederaladministrativegrantsfromDOL,statessubmitStateQualityServicePlans(SQSP)describingeachstate’sannualbusinessandperformanceplansforadministeringtheUIprogram.Eachstate’sUIperformanceiscomparedtotheGPRAgoals.Whenstatesdonotmeettheperformancegoals,theyarerequiredtoincludeanannualcorrectiveactionplanwiththeSQSP.

TheSQSPincludesthefollowinginformation:

n Acomparisonofthestate’sperformanceagainstDOLstandards.

n Adescriptionofthestate’scorrectiveactionplansforUIprogramsthatdidnotmeet

federalstandards.

n Adescriptionofthestate’sgoalsforprogramimprovement.

TheSQSPisadynamicdocumentthattheDepartmentcanuseasamanagementtool,muchlikeabusinessplan,notonlytobuildstrongprogramperformance,butalsotoguidekeymanagementdecisions,suchaswheretofocusresourcesandimproveservices.TheSQSPisdesignedtobeflexibletoaccommodate,amongotherthings,multi-yearplanningandsignificantchangesthattakeplaceduringtheplanningcycle.

InadditiontoDOLgoalsandrequirements,theDepartmentalsoestablishesinternaloperationalgoalsthatareadoptedtoensurethetimelyandaccuratepaymentofUIbenefits.

ThefollowingchartshowsthefederalperformancestandardsforwhichtheUIBranchisaccountable.Thesemeasuresaremandatory.


Figure10:FederalPerformanceMeasures

PerformanceMeasure Target

FirstPaymentTimeLapse

Percentof1stPaymentswithin14/21days:Full&partialweeks 87%

Percentof1stPaymentswithin35days:Full&partialweeks 95%

Percentof1stPaymentswithin35days:IntrastateUI,fullweeks 93%

Percentof1stPaymentswithin35days:InterstateUI,fullweeks 78%

Non-monetaryDeterminationsTimeliness

PercentofSeparationIssuesdeterminedwithin21daysofDetectionDate 80%

PercentofNon-SeparationIssuesdeterminedwithin21daysofDetectionDate 80%

Non-monetaryDeterminationsquality

PercentofSeparationandNon-SeparationDeterminationswith 75%QualityScoresgreaterthan80points


STATEPROGRAMTARGETS

TheprimaryfunctionsoftheUIprogramareclaimfiling,adjudicationofclaims,andtimelypaymentofUIbenefits.ThefollowingaretheUIBranch’sperformancetargetsforthosekeyfunctionsandotherrelatedfunctions.Thereareanumberofmeasuresthatarestillbeingdefined,andaredesignatedinthefollowingchartas“ToBeDetermined(TBD).”Thesemeasuresrepresentmajorprograminitiativesoverthenextfiveyears.

Figure11:UIProgramMeasures

PerformanceMeasure Timeliness quality

CallCenterAccess

TelephoneServiceLevels TBD TBD

InformationCalls TBD TBD–PercentWithout SubstantiveErrors

ClaimFiling

ClaimFiling TBD TBD–PercentWithout SubstantiveErrors

TelephoneClaimFiling(CallBacksand Within3Business TBD-PercentWithoutDownModeProcessing) DaysofReceipt SubstantiveErrors

InternetClaimFilingApplications/Paper Within3Business TBD-PercentWithoutClaimFilingApplicationsCompleted DaysofReceipt SubstantiveErrors

UIBenefitPayments

TimelinessforContinuedClaim Within2Business TBD-PercentWithoutCertification Days SubstantiveErrors

BenefitPayment TBD 98%Without SubstantiveErrors

Adjudications

SchedulingInterviewAppointment Within5to11Business NotApplicableDates Daysfromreceiptof eligibilityinformation

NotificationofDecisiontoInterested Within3Business TBD–PercentWithoutPartiesforIdentityDeterminations Days,followingthe SubstantiveErrors suspenseendingdate

NotificationofDecisiontoInterested Within10Business TBD–PercentWithoutPartiesforallothereligibilityissues Days,following SubstantiveErrors Interview

TransmissionsofAppealsTimeliness WithinOneBusiness TBD–PercentWithout DayofReceipt SubstantiveErrors


Figure11:UIProgramMeasures(Continued)

PerformanceMeasure Timeliness quality

EstablishmentofOverpayments TBD TBD

OverpaymentAdjustmentsCompleted Within2Business TBD–PercentWithout DaysofReceipt SubstantiveErrors

RulingsReviewed Within10Business TBD–PercentWithout DaysofMailReceipt SubstantiveErrors

RulingsCompleted Within30Calendar TBD-PercentWithout Daysofthe SubstantiveErrors Ready-for-RulingDate

AllRulingsCompleted ByAugust10EachYear NotApplicable

DepartmentMailings

ProcessEmployerResponseto Within2BusinessDays TBD-PercentWithoutNoticeofClaimFiled(DE1101) ofMailReceipt SubstantiveErrors

ReportofTaxableUnemployment Completedby NotApplicableCompensationForm(DE1099G) January31EachYear

TransferofFundsBetweenAgencies

TransmitChildSupportInterceptFunds WithintheSameWeek NotApplicable

RespondtoChildSupportIntercept WithinOneBusiness NotApplicableInquiries DayofInitialInquiry

Recomputation(WageCorrections)

CompletionofRecomputations Within5Business 96%-Without DaysofReceipt SubstantiveErrors

CompletionofObstructedClaims Within10Business 96%-Without DaysofReceipt SubstantiveErrors

NOTE: Substantive Error: Has the potential to create an overpayment, underpayment, unnecessarily delay payment, or inappropriately affect the employer’s tax account; or the customer is not sufficiently identified to ensure confidentiality, system integrity, or claim security.


CustomerSatisfactionSurveysTheEDDiscommittedtocontinuallyimprovingthevariousservicesweprovidetoourcustomers.Ineachofthelastfiveyears,theAuditandEvaluationDivision’sCustomerServiceSurveyunithasconductedsurveystomeasurecustomersatisfactionwiththeDepartment’sclaimfilingservices.

In2002,theDepartmentshifteditsfocusfromsatisfactionwithonlytelephoneclaimfilingtoincludethegeneralUIapplicantpopulation.ThesurveysexpandedtoincludeeApply4UIapplicantsaswellasthosewhoaccessedthepaperapplicationontheEDDWebsite.

TheyearlysurveysareusedtomeasureUIservicequalityandcanincludewrittensurveysconductedbyAuditandEvaluationDivisionaswellasastatewideQualityControlsurvey.TheUIprogramiscontinuouslyreviewingaspectsoftheprogramtodeterminecustomersatisfaction.

2002-2006CALLCENTERSURvEYRESULTS

Ineachofthesurveysfieldedduringthelastfiveyears,thegeneraltrendshavenotvariedsignificantlyfromyeartoyear.TheonemajordissatisfactionwiththetelephoneclaimfilingprocessistheinabilitytoquicklyandreliablyreachaDepartmentRepresentativeonthefirstattemptedphonecall.

AveryhighproportionoftheindividualssurveyedexpresssatisfactionwithEDD’sprocessingoftheirUIclaimapplications.Whilemostindicateapreferencetofilebyphone,thoseusingeApply4UIindicateahighprobabilitythattheywillcontinuetousetheInternetinthefuture.

ResultsofapplicantsusingtheInternettofileforbenefits:

nApproximately90percentofrespondentsindicatethatitwasveryeasyoreasyto

completetheapplication.

nApproximately80percentofrespondentsindicatethattheycompletedtheapplication

processin20minutesorless.

nOfrespondentswhousedtheeApply4UImethodtofileaUIclaim,85percent

indicatethattheywouldprefertousethesamemethodshouldtheyneedtofileforUI

benefitsinthefuture.


In1956,EDDwastheveryfirstdepartmentintheStateofCaliforniatoinstallcomputersystemstosupportitsprograms.Sincethattime,EDDhascontinuedtoupdateautomatedsystemsto

improveservicedeliveryandprogramsupportservicesasresourcesareavailablefortheseimprovements.Astechnologyadvancestoprovidemoresophisticatedtoolsforservicedelivery,publicexpectationsincreaserelativetothetimelinessandavailabilityofservices.

Althoughtheadventoftechnologyinstategovernmenthasbeenslowcomparedtotheprivatesector,theEDDiscommittedtoincreasingandprovidingeasyaccesstoitsservices.Formorethan10years,customershavebeenabletofileUIclaimsviathetelephoneandcertifyforweeklybenefitsbymail.ItisnolongernecessaryforcustomerstoreportinpersontoreceiveUIservices.Technologyhashelpedstaffimproveservicetocustomersandreduceprocessingcosts.In2002,theUIprogramdeployedpersonalcomputersandrelatedhardwareandsoftware.Thisprovidedtheabilityforstafftoutilizethecurrentmainframesystemswhilealsobuildingthecapacitytoruntheclient/serverapplicationsthatwillbecriticallyneededtoprovideservicesinthenearfuture.ImplementingtheuseofpersonalcomputersforUIstaffprovidesthefoundationtoincreaseaccesstoservicesandleveragetechnologyforfutureprogramenhancements.

AswithallStateagencies,EDDiscontinuingtomovetowardprovidingmoreinformationandaccesstoservicesthrougheGovernmentinitiativesdeployedovertheInternet.WithinEDD,successfuleGovernmentwillconsistofmultipleapplicationsbasedontheDepartment’sservices.

TheDepartmentiscontinuouslyseekingsystemenhancementstotheUIprogramtoimproveservicedelivery,providemultiplewaystoaccessUIservices,increaseself-serviceoptions,andmaximizetheuseoflimitedfunding.Forexample,theeApply4UIapplicationallowsindividualstosubmitUIclaimsthroughtheInternet.Firstimplementedin2002,thissystemisnowthesourceofover40percentofUIInitialClaims.TheeApply4UIsystemisalsomorecosteffectivethanotherclaimfilingmethods.

ProjectsareunderwaytoimplementanewclaimfilingsystemforusebyUIstaffthatwillimprovequalityandconsistencyintheclaimfilingprocessandreducetrainingtimeforindividualswhofilenewclaims.Inaddition,theUIBranchispursuingareplacementandupgradeofclaimpaymentsystemstoallowclaimcertificationviatelephoneandtheInternet,theimplementationofnewcontentmanagementsystems,andreplacementandexpansionofcallmanagementsystemstoallUIcenters.Theseprojectswillprovidetheinfrastructureforfuturesystemenhancementstoimproveprocessesandprogramperformance,expandEDD’seGovernmentcapabilities,andenhancecommunicationandservicesforcustomers.

TECHNOLOGICAL ADVANCES


SixkeyIssueAreas

TherearesixissueareasthatrepresentthekeybusinesschallengesfacingtheUIprogram:

a Access and Integration of UI Services: Providingcustomerstheservicestheyneed.

a Modernization of the UI Program Technology and Infrastructure: Supportingmodern methodsofservicedelivery.

a Program Quality: Improvingtimelinessandaccuracyofservicesinordertomeet customerneedsandfederalmandates.

a Staff Resources: Findinginnovativewaystomeetcurrentandfuturestaffingneeds.

a Program Funding: Theabilitytomaintainsufficientfundinglevelstopaybenefitsand administertheprogram.

a Future Policy Strategies: Meetingtheneedsofourchangingcustomerbaseand ensuringthattheUIprogramcontinuestoactasaneffectiveeconomicstabilizer.

ACCESS/INTEGRATIONOFSERvICES

California’sUIcustomersdemandservicechoicesandtimelyservicedelivery.TheEDDisadepartmentwithfourmajorprogramareasthatserveCalifornia’sworkers,jobseekers,andemployercommunities.TheyaretheDI,Tax,UI,andWorkforceServicesprograms.TheEDDischallengedtointegratecustomerservicesandimproveaccesstoallreemployment,wagereplacement,tax,andtrainingservicestheDepartmentprovides.Thisrequirestheseprogramstocollaborateandplanastrategyforintegratedservicedelivery.Theprogramsoftensharethesamecustomers,yetprovideservicesindependentlyandoftenfromdifferentserviceaccesspoints.

ForUIclaimants,expandedaccessoptionsmeansInternetclaimfilinganddirectdepositoftheirbenefitpayments.DirectdepositandtheuseofdebitcardsareservicedeliveryoptionsthatEDDisexploringwithregardstotheDepartment’sbenefitprograms.AnotherimportantissueistheaccessofUIservicesbyindividualswithspecialneeds.TheUIprogramwillexpandeffortstoaddressthespecialneedsofthosewithlimitedEnglishproficiencyandenhanceservicestodisabledcustomers.

EmployerswillalsobelookingtotheUIprogramforexpandedelectronicaccesstoservices.OneenhancementistheabilityforemployerstoidentifyacentralizedaddressfortheirUIclaimsmanagementwhichshouldimprovetimelyandaccurateinformationforproperpaymentofUIbenefits.Thisstreamlinesemployerprocessingandimprovesprogramintegrity.TheUIprogramcontinuestoexploreonlineservicedeliveryoptionsfortheemployercommunity.

3.0 BUSINESS ISSUES


MODERNIzATIONOFTHEUIPROGRAMTECHNOLOGYANDINFRASTRUCTURE

TheUIprogrambeganusingautomationintheirservicedeliverysystemsabout35yearsago.California’sUIprogramcontinuestooperateina35-year-oldmainframeenvironment.Asubstantialinvestmenthasbeenmadeovertheyearsinthislegacysystem,bothintermsoftheinitialsystem

developmentandthemaintenanceandoperationsactivitiesneededtokeepthesystemrunning.Modernizationeffortsareunderway,however,competingprioritiesandfundinglimitationsextendthetimelineforprogramautomationdevelopmentandimplementation.

Asadditionalfundingbecomesavailabletoimproveinfrastructure,incrementalstepswillbetakentoupgradethesystemandbuildneededfunctionality.Forexample,theconversiontopersonalcomputersandtheinfrastructureupgradeslinkingalllocationsthroughclient-servertechnologyhaveprovidedemployeesthebasictoolstocommunicateeffectivelybetweengeographicallydispersedlocations.TheUIBranchiscurrentlyreplacingpersonalcomputersstatewidetokeeppacewithchangingtechnologies.Thefront-endupgradeshavealsoprovidedtheabilitytoaddWeb-basedfunctionalityandincreasecustomeraccessibilitytoUIservicesthroughtheInternet.

TheUIBranchisalsoimplementingamajormodernizationprojectthatwillenhanceservicedelivery,increasefrauddetectionandprogramintegrity,andbuildamoreflexibleandresponsiveinfrastructuretooperatetheUIprogram.TheEDD’scurrentUIcallhandlingsystemsupportssixintegratedcallcentersthroughoutthestatewherestafffileclaimsandanswerinformationcallsfromcustomers.ThemodernizationprojectwillresultinthefollowingenhancementstotheUIprogram:

n ProvidealternatewaysforcustomerstocertifyforUIbenefitsviathe telephoneorInternet.n UpdatethecurrentUIpaymentsystem.n Replacetheexistingoutdatedcallhandlingplatformwithamodern andflexiblesystem.n Upgradecallhandlingforourspecializedintegrityandaccountingcallcenter.n Improvecallhandling.n ExpandcallcentertechnologytoeightadditionalUIcenters.n Facilitatebusinessresumptionplans.n PromoteflexibilityinmanagingUIworkload.n Assistwithfrauddetectionandpreventioneffortsbyprovidingincoming calldatatoprogramstaff.

TheseupgradeswillimproveservicesandcallhandlingfortheentireUIprogram.

Currentandfutureautomationefforts,includinginfrastructureupgrades,technologyandtelecommunicationadvancements,andnetworkconnectivitymovetheUIprogramclosertoservicedeliveryinavirtualenvironment,therebyimprovingUIservicesstatewide.MorebusinesswillbeconductedthroughtheInternet.Paperdocumentswillbereplacedwithdatabase-storedelectronicimagesaccessiblebyallUIstaff.


TheupgradedinboundcallcentertechnologywillbeextendedtoallUIprimarysites.Asaresult,theUIBranchwilltransitionfromsilo-basedoperationstomulti-functionaloperations.Wheretheworkisperformedwillbeimmaterialtotheserviceprovided.TheBranchcanleverageallstaffresourcesthroughoutthestatetoimproveserviceaccess,servicequality,andworkproductivity.Inaddition,avirtualenvironmentwillenhancebusinesscontinuityintheeventofalocalizeddisasterorprolongedoutageatanysite.

PROGRAMqUALITY

Formanyyears,Californiahasbeenexperiencingdifficultymeetingfederalperformancemeasures.Meetingworkloadperformancegoalsisimportanttocomplywithfederalmandates.Systemenhancementswillassistinmakingqualityimprovementsthatarecurrentlyhandledmanually,relyingonstaff’sknowledgeandcorrectapplicationofprocessesandprocedures.Thiswillbeusefulinresolvingperformanceproblemsthathavepersistedforseveralyears.

Anotherimportantcomponentofprogramqualityisprogramintegrity.ReducingUIfraudandabuseisapriorityandwillimprovebytheintroductionoftechnology.TheprogramwillundertakeprojectstodetectandpreventUIfraud,suchasthecalleridentificationdatathatwillbeprovidedwiththenewcallhandlingplatform,businessintelligenceforidentifyingfraud,andnewcrossmatchprogramstocurtailclaimantfraud.

STAFFRESOURCES

TheEDDisoneofthelargeststatedepartmentsinCaliforniawithapproximately8,000employeeslocatedthroughouttheState.

TheUIBranchemploysapproximately2,200staffwithmorethanthree-quartersofthosestafflocatedinCallCentersandAdjudicationCenters.Allnon-managerialemployeesintheUIBrancharerepresentedbyorganizedlabor,subjecttocollectivebargainingagreementsthataffectthetermsandconditionsoftheiremployment.TheEDDemployshundredsofmultilingualindividualswhoprovideservicestoournon-EnglishspeakingandlimitedEnglishproficiencyclients.Therewillbeagrowingdemandformultilingualservicesinboththepublicandprivatesectors,resultingincompetitionacrossthestateforemployeeswiththeseskillsets.TheUIBranchisembarkingonamajorsuccessionplanninginitiativetopreparefortheexpectedincreaseinretirementsoverthenextseveralyearsandtopositiontheUIprogramforstrongleadershipinthefuture.Thiseffortwillfocusonmanagerdevelopmentforfuturepromotionalopportunitiesincludingindividualleadershipdevelopmentplansandtrainingonessentialleadershipskills.TheaverageannualattritionrateintheUIBranchisnearly14percent,withtheprimaryfactorsbeingstaffretirementandleavingforotherworkopportunitiesoutsidetheUIBranch.Asmoreemployeesreachretirementageinthenextseveralyears,itislikelythattheattritionrateintheUIBranchwillincrease.Thisiscompoundedbythefactthat


retiringstafftakewiththemawealthofexperienceandinstitutionalknowledge,makingsuccessionplanningeffortscrucialtothefutureoftheprogram.

TheUIprogramisadministeredbyhighlytrainedprogramstaffthatprovidedirectservicestocustomers.ThetrainingofprogramstaffrequiresasignificantinvestmentoftheUIBranch’stimeandresources.Thisinvestment

ensuresstaffhavedevelopedtheskillsandobtainedthelegalandoperationalknowledgetoprovideavarietyofkeyservicestounemployedworkersandemployers.

Maintainingahighly-trainedandskilledUIworkforcewillcontinuetobeoneoftheUIBranch’stopchallengesandprioritiesinthecomingyears.Thehighpercentageofemployeeswhoareatretirementage,compoundedbyemployeeschangingjobsfrequentlythroughouttheircareers,willrequiretheUIBranchtoengageinanongoinghiringandtrainingeffort.Furthermore,theprogram’sinvestmentinnewautomationtoolsrequiresprogramstafftobeabletoeffectivelyusenewtechnologiesandapplications.AsknowledgeableUIandInformationTechnologystaffretireormoveontootheropportunities,theDepartmentwillbechallengedtomaintaincurrentautomatedsystemsandbuildfutureapplications.ThesechallengesincreasetheimportanceoftheUIBranch’strainingefforts.

AllUIBranchstaffreceivebothclassroomandon-the-jobtraining(OJT).NewemployeeshiredinUIcentersthroughoutthestatereceiveintensiveclassroomtrainingrelatedtotheirassignment.TheclassroomtrainingisfollowedbyextensiveOJTprovidedbythecenter’sstaff.AllnewemployeesalsoreceiveaNewEmployeeOrientationasanintroductiontotheUIprogramandtheDepartment.Journey-levelemployeesreceivefurthertraininginspecializedfunctions,aswellastrainingwhennewautomationprojectsorstatutesareimplementedthatrequiresignificantchangestotheUIprogram’sprocedures.Trainingfornewandjourney-levelemployeesisconductedbytheindividualcenters.TheUIprogram’scommitmenttoaqualitytrainingdeliverysystemcannotbeunderstated.Awell-trainedworkforceprovidesthefoundationthatguaranteesconsistent,accurate,timely,courteous,andmeasurableapplicationofCalifornia’sUIprogram.

TheUIBranchrecognizestheneedforatrainingstructurethatwillmeetfutureprogrammaticneeds.AkeyinitiativeinthisbusinessplanistodevelopatrainingofficethatsupportsanenvironmentofcontinuouslearningusinginnovativeapproachestodevelopinganddeliveringhighqualitystandardizedtrainingthroughouttheUIBranch.ByinvestingintheBranch’smostimportantresource,itsemployees,theprogramwillensurethattherearetrainedstaffwiththeskills,knowledge,andabilitiestoeffectivelyoperatetheUIprogramtoserveCalifornia’semployersandunemployedworkers.

RecruitingandretainingstafftomeetworkloaddemandshasbeenaconstantchallengefortheUIprogram.Governmentisjustlearningwhattheprivatesectorhasknownformanyyearsaboutstaffingpractices:successfullyoperatingintheInformationAgerequiresbusinessestoacknowledgenewworkforcerealitiesandrethinktheapproachtorecruitment,hiring,andmaintainingtheworkforce.AchallengefortheUIprogramistomodernize


staffingpractices.OneinitiativeunderwayisconstructinganonlineexamprocessforUIfieldstaffforjust-in-timerecruiting.Afullclassificationstudyisalsounderconsideration.

PROGRAMFUNDING

AdministrativeFundingThestatessharewidespreadconcernthatmoniesallocatedtothemfromthefederalEmploymentSecurityAdministrationAccountareinsufficienttoproperlyfundtheprogram.TheamountoffederalUIfundinghasdeclinedovertheyears.Asaresult,therehasbeenamovementbyUIstakeholders,suchastheStateEmploymentSecurityAgencies,DOL,NationalAssociationofStateWorkforceAgencies,andemployerandclaimantassociations,tolegislativelyreformthefederaladministrativefinancingprocess.Overthelast30yearsnumerousproposalshavebeendraftedthataddressthisissue.TheproposalsareintendedtoensurethatthestatesreceiveadequatefundingtooperatetheirUIprograms.TheResourceJustificationModelwasintroducedtoimprovestates’dataandreportingelementsandtiesfederalfundingtostates’workloadlevels.WhiletheRJMwasintendedtomoreadequatelyfundUIadministrativecosts,CaliforniaandotherstatesareconsistentlyunderfundedandmustseekadditionalstatefundingtoadministertheirUIprograms.

OtherrecentproposalswouldtransferresponsibilityforraisingrevenuetofinanceUIoperationstothestates,leavingthefederalgovernmentprimarilyresponsibleonlyforextendedbenefitsandloanstoinsolventstatefunds.Itisexpectedthatthetopicofstate-fundedUIadministrationwillcontinuetobeanissueinthefuture.

TrustFundSolvencyAsolventtrustfundmeansthereservelevelsinstates’UIfundsareadequatetopaybenefits.Therearedifferingopinionsastowhatlevelofreserveconstitutes“solvency.”Thestatefacedasolvencycrisisduringtheearlypartofthisdecade.TheUIfinancingsystemneedstobeupdatedtoreflectcurrenteconomicconditionstobetterensurefundsolvency.California’ssystemhasnotbeenreformedsince1984.Anadequatelevelofreserveinvolvesmanyconsiderations.Thesystemwasdesignedbasedonadifferenteconomy,marketplace,andlaborforce.TherearethreemajorelementsthatmustbeconsideredforreformingtheUIprogramtaxmechanism:

n Experienceratingsystem nTaxablewagebase

nMinimumandmaximumpayrolltaxrates

FUTUREPOLICYSTRATEGIES

AkeyresponsibilityoftheUIBranchistoactasastewardforCalifornia’sUIprogram.Thisinvolvescollaboratingwithfederalandstatepolicymakerstocraftaprogramthatmeetschangingcustomerneeds.Thereareavarietyofeconomic,demographic,andsocialtrendsthatwillprovidethefoundationforfuturepolicystrategiesintheUIprogramregardingfunding,coverage,servicedelivery,andotherrelatedpolicyissues.


TheoperationalbusinesschallengesandissuesdiscussedinSection3.0areaddressedbythefollowing6goalsand16objectives.

TheBranchhascreatedaseriesofinitiativestomeetthegoalsandobjectivesofourplan.

Theprogram’sabilitytomeetourgoalsandobjectivesandcompletetheinitiativesdependsontheavailabilityofresourcesand,insomecases,theapprovalofstateandfederaloversightentities.

Goal1:Improve ease of access to UI services

OBJECTIvES:

1.1Improveeaseofaccesstoclaimfilingservices1.2Improveeaseofaccesstoinformationservices1.3Improveeaseofaccesstobenefitpayments1.4ImproveawarenessofavailableUIservices

Goal2:Improve Quality of UI Services

OBJECTIvES:

2.1ImproveaccuracyandintegrityofUIbenefitpayments2.2Providecourteousservicestoallcustomers,partners,stakeholders,andcoworkers2.3ImproveUIBranchinformationsecurity

Goal3:Ensure consistent and equitable UI services to customers

OBJECTIvES:

3.1Ensurestandardizedservices3.2Provideequitableservicestospecialneedscustomers

Goal4:Improve UI system capacity to enhance customer service and program performance

OBJECTIvES:

4.1Improveworkproductivitytoolstoincreaseefficiency4.2Improvebusinessprocessestoincreaseefficiency4.3Improveworkportability,workflows,andworkloadmanagementtoincreaseproductivity4.4ImproveintegrityofUIprogramdatatoincreasevalidityofperformanceassessments

4.0 PROGRAM INITIATIVES


Goal5:Ensure UI Branch employees have the knowledge, skills, abilities, and work opportunities for peak performance

OBJECTIvES:

5.1Ensuretheclassification,testing,recruitment,andselectionprocessmeettheUIBranch needs5.2Providedevelopment,workassignments,feedback,andsupportneededforemployees toachievepeakperformanceandprepareforfuturejobopportunities

Goal6:Ensure the UI program continues to support economic prosperity in our communities and statewide as California continues to grow and change

OBJECTIvES:

6.1EnsureCalifornia’sUIprogrammeetsfuturecustomerneeds


TheUIprogramwasestablishedtofunctionasaneconomicstabilizerbyprovidingtemporarywagereplacementtoworkersexperiencingshort-termperiodsofunemploymentorseasonalboutsofunemployment.

Boththenationalandstateeconomieshavechangedfromanindustrialmanufacturingbasewithworkerschangingjobsnumeroustimesduringthecourseoftheircareers.

Asevidencedinthefollowingchart,California’sworkforce,economy,andpopulationhavechangeddramaticallysincetheUIprogram’sinceptionin1935.

Figure12:ChangingLaborMarket,1935vs.2007-2012

1935 2007-2012

Workforce

1.Full-time,stableemploymentanda 1. Full-timeemployment,multiplepart-time lifetimerelationshipwithasingle jobs,orcontractualorconsultantpositions. employer. Couldhavemultipleemployers simultaneously.

2.Singleoccupationduringone’swork 2. Multipleoccupationssequentiallyor career. concurrentlyduringone’sworkcareer.

3.Loyaltytoasingleemployer. 3. Loyaltytoone’scareerratherthantoa particularemployer.

4.Corporateculturewashierarchicalwith 4. Corporateculturehasaflatterstructurewith silosbasedonfunction. amorecollaborativeenvironment,where teamworkflowsbothverticallyand horizontally.

5.Educationalattainmentwasprimarilya 5. Educationalattainmentisalifelongprocess, highschooldiploma,aswellasjob withspecializedtrainingandcertificationof trainingandapprenticeships. skillsandknowledge.

6.Workforceconsistedofyoung,male 6. Workforceismultigenerational,global,and breadwinners. raciallyandethnicallydiverse.Todaywomen compriseover50percentoftheworkingage population.Multipleincomesourcesina singlehouseholdarealsoprevalent.

7.Uppermanagementcomprisedof 7. Uppermanagementisstillmaledominated, whitemales. butisshiftingtowardsgreaterracialand genderdiversity.

5.0 FUTURE PROGRAM POLICY


Figure12:ChangingLaborMarket,1935vs.2007-2012(Continued)

1935 2007-2012

IndustryInformation

1. Dominantindustriesweremining, 1.Dominantindustriesareservice-related, construction,manufacturing,and includingtheretail,financial,information agriculture. technology,professionalandbusiness, andhealthfields.

2. Fastestgrowingindustrieswere 2.Fastestgrowingindustriesareinformation manufacturingandconstruction. technology,health,andeducation.

3. Theoccupationswiththemost 3.Theoccupationswiththemostopenings openingswereassemblylineor areprimarilylow-wageentry-levelservice manuallaborjobs. jobswithhighturnover,suchasretail salespersons,cashiers,andwaiters.

4. Manyjobswerecharacterizedby 4.Technologyhasautomatedjobsand manuallaborinadefinedworkplace displacedworkers,whilealsocreatingmore withdefinedhours. knowledgeworkers.Virtualworkplaceswith flexibleworkhoursarecommon.

EmployerWorksites

1. Employerworksiteswereprimarily 1.Employerworksitesaremultinationaland communitybased. global.Globaloutsourcingandoffshoring ofjobsisgrowing.

PopulationChanges

1. Continuedurbangrowthwithnearly 1.Primarilyurbanpopulation. 75percentofthepopulationresiding inurbanareas.

2. Majorityofthepopulationwaswhite, 2.Populationismovingfromawhitetoa butwithincreasingracialdiversityand Hispanicmajorityofmorethan40percent decliningnumbersofwhiteimmigrants. by2020.

3. Nearlyhalfofthetotalpopulationwas 3.Agingpopulationwithmorethan25percent intheprimeworkingageyearsof ofCaliforniaresidentsprojectedtobe55or 25-54. overby2020.


IftheCaliforniaUIprogramistocontinuetoactasawagereplacementsystemforCalifornia’sworkers,thereisaneedtobeawareofandresponsivetoemergingtrendsinthestate’seconomyandlaborforce.

Thereareanumberofeconomicanddemographictrends,asreflectedinFigure12,whichmayimpactfuturechangesintheUIprogramincluding

funding,coverage,servicedelivery,andotherrelatedpolicyissues.Theshifttoaservice-orientedeconomyandthecontinueddeclineofmanufacturingjobspotentiallymakethestatemoresusceptibletoeconomicdownturns,therebyputtingworkersatgreaterriskofunemployment.UIbenefitdurationcontinuestoincreaseovertheyearsanditistakinglongerforunemployedworkerstofindnewemployment.Apossiblereasonforthistrendisoffshoring.InCalifornia,offshoringhashadasignificanteffectonlowerskilledorassembly-relatedmanufacturingjobs.30

ThereareindicationsthatsomeCaliforniaindustriesarerelocatinglowpaidjobsrequiringlesstechnicalknowledgetootherstates,whilejobsrequiringmoreeducationareremaininginthestate.31Thistrendmayresultincertainworkersexperiencinglongerormorefrequentperiodsofunemploymentandanincreasedneedfortrainingtore-entertheworkforce.Therearesomeprojectionsthatoffshoringisextendingtotheserviceindustriesincludinginformationtechnologyandadministrativesupport.32

TheagingofCalifornia’spopulationmayalsohavesomebearingonfuturepolicydecisionsfortheUIprogram.Peopleareworkinglaterinlife,andassomeolderworkerstransitionfrompermanent,full-timeemploymenttopart-timework,theymayusetheUIsystemmorefrequentlybetweenjobs.Inaddition,olderworkersgenerallyhavehigherwagesduetoseniority,whichwouldentitlethemtohigherbenefits.However,theyarelikelytobeunemployedforalongerperiodoftimeandlesslikelytoobtainnewemployment.Ifthesetrendscontinue,therecouldbeanimpacttotheUITrustFundintermsofhigherbenefitpaymentsforaprolongedduration.

Thedynamicsoftheworkplaceandhowpeopleapproachtheircareersisalsochanging,andthesetrendshavepotentialimportancefortheUIprogram.Increasingly,workersareseekingalternativestothetraditionalemploymentmodelofthe40-hourworkweek,suchaspart-timeorcontingentworkorself-employment.Thesetrendscouldbesignificantintermsofprogramfundingaswellascoverageprovisions.AtthistimeitappearsthatUIclaimantswillexperiencemorefrequentperiodsofun-employmentintheircareersandthesewillbeforalongerperiodoftimethaninthepast.Withregardtoemploymentopportunities,newjobs,asopposedtojobvacancies,willincreasinglybemoresignificantandthesejobsmayrequirehigherlevelsoftechnicalskill.33Asworkersremainlongerintheworkforce,theywillusetheUIsystemmorefrequentlythaninthepast.Aslongerdurationofunemploymentandmorefrequentperiodsof


unemploymentexistamongworkers,therewillbeanincreaseddemandontheUITrustFund.PressuretomodifyorincreasethefundingbasisfortheUITrustFundwillbecarriedoutinthefederalandstatepoliticalprocess.

ThereareavarietyofnationalstudiesunderwaytoexaminetheworkforceandtheotherdynamicsoftheUIprogramforfuturepolicyconsideration.

Theworkforce,businessandindustrycomposition,labormarketattachmentofworkers,andthechangingoccupationalstructureofworkersrequiringlifelonglearningtoremainanactiveparticipantinthelaborforcearechanging.Thesechangeswillallraiseissuesaboutthestructure,financing,andpurposeoftheunemploymentsystemnationally.

Thedynamicsoftheeconomyarechangingfasterinthelast10yearsthantheydidintheprior70years.TheUIBranchischargedwithoperatingaseamlessprogram,deliveringconsistent,reliable,andsecureservicestothepublicincludingunemployedworkers,thebusinesscommunity,andpublicsectoragencies.Inthenextfiveyears,theEDDwill:

n Modernizetheinfrastructureoftheprogram’sservicedeliverysystem,

n Restructurethefinancingsystem,

n Analyzethechangingeconomyandrecommendationsfromthenationalstudies,and

n Workwithstakeholderstobuildaneffectivesystemtoassistinthestabilizationofthe local,state,andnationaleconomy.


TheUIprogramisadministeredasauniquefederal-statepartnership.Theprogramisbasedonfederalandstatelawandisadministeredbythestates.CaliforniaissubjecttoUIlawsandregulationsatboththestateandfederallevel.

Federal/StateStatutoryRequirementsSOCIALSECURITYACT(SSA)

TheSSAestablishesthebasicframeworkoftheFederal-StateUIsystem.KeyprovisionsoftheSSAincludethefollowing:

n ProvidesstateswithfundingfortheadministrationoftheirUIprograms.

n Setsrequirementsforprogramfunding,suchasmethodsofadministrationtoensure fullpaymentwhendue.

n EstablishesthestructureoftheUnemploymentTrustFund.

n Providesforloanstoinsolventstatestopaybenefits.

FEDERALUNEMPLOYMENTTAXACT(FUTA)

TheFUTAfocusesprimarilyonthetaxaspectsoftheUIprogram.KeyprovisionsoftheFUTAincludethefollowing:

n Establishesafederalpayrolltaxonemployers.

n Providesfortwocredits,normalandadditional,againstthefederalpayrolltaxunder anapprovedstatelaw.

n Mandatesbenefitstandardsforstates.

n Requiresstatestomeetexperienceratingprovisionstoreceivetheadditionalcredit.

n Establishescoverageprovisions,includingdefinitionsofwages,employers,and employment.

CALIFORNIAUICODE(CUIC)

TheCUICisthestatestatutoryauthorityforCalifornia’sUIprogram.KeyprovisionsoftheCUICincludethefollowing:

n Definesscopeorcoverageatthestatelevel.

n Setsbenefitlevels.

n Establishesmonetaryqualifyingrequirements.

n Institutesnonmonetaryeligibilityrequirements.

6.0 Appendix A: Statutory Basis for the UI Program


Federal/StateRegulationsCODEOFFEDERALREGULATIONS(CFR)

TheCFR,Title20,prescribesrulestoimplementfederalUIlaws.ManyoftheseregulationsoutlinerequirementsforstatesfortheoperationofvariousaspectsoftheUIprogram.KeyprovisionsoftheCFR,Title20,includethefollowing:

n Establishesfederaladministrativeprocedurefortheapprovalandcertificationofstate UIlawsforthepurposesofgrantingtaxcreditsandadministrativegrants.

n Definesfederalrequirementsandstateresponsibilitiesforqualitycontrolinthe Federal-StateUIsystem.

n InstitutesrequirementsoffederalUIlawregardingtheconfidentialityanddisclosure ofUIinformation.

n ImplementsthetaxcreditprovisionsofFUTAandtheloanprovisionsof TitleXIIoftheSSA.

n ProvidesrulesfortheadministrationandimplementationoftheUIbenefitprogramsfor federalcivilianemployeesandex-servicemembers.

n ImplementsthefederalExtendedBenefitsandtheDisasterUnemployment Assistanceprograms.

n OutlinesaninterstatearrangementtocoveranindividualforUIpurposeswhenthey haveemploymentorwagesinmorethanonestate.

n Impartsstandardsforbenefitpaymentandappealspromptness.

CALIFORNIACODEOFREGULATIONS(CCR)

TheCCR,Title22,prescribesregulationsandrulesdealingwiththevarioussectionsoftheCUIC.TheseregulationsguideCaliforniapracticeontheimplementationofstateUIlaws.KeyprovisionsoftheCCR,Title22,includethefollowing:

n EstablishesstateadministrativeprocedurefortheoperationoftheEDD,theCalifornia UnemploymentInsuranceAppealsBoard,andinterstateandfederalcooperation.

n Implementsstatecoverageprovisions,includingdefinitionsofemployment,employee, subjectemployers,andexcludedservices.

n Definesrequirementsforemployertaxcontributionsandreserveaccounts.

n ProvidesrulesforUIbenefits,includingeligibilityanddisqualifications,computation ofbenefits,andfiling,determination,andpaymentofbenefits.

n IdentifiesroleofpublicemploymentofficesintheUIprogram.

n Laysouttheappealprocessandrights.


ENDNOTES

1Thedatausedinthissectionisfromavarietyofsources.Totheextentpossible,dataforthesametimeperiodisusedforcomparativepurposes.

2LegislativeAnalyst’sOffice,Cal Facts: California’s Economy and Budget in Perspective, December 2006.Retrievedfromhttp://www.lao.ca.gov.

3CaliforniaEmploymentDevelopmentDepartment,LaborMarketInformationDivision,Quick Statistics: Labor Market Information,July2007.Retrievedfromhttp://www.labormarketinfo.edd.ca.gov.

4CaliforniaEmploymentDevelopmentDepartment,LaborMarketInformationDivision,California Occupational Projections 2004-2014.Retrievedfromhttp://www.labormarketinfo.edd.ca.gov.

5CaliforniaEmploymentDevelopmentDepartment,LaborMarketInformationDivision,A Labor Day Briefing for California,September2006.

6CaliforniaEmploymentDevelopmentDepartment,LaborMarketInformationDivision,Fastest Growing Occupations 2004-2014.Retrievedfromhttp://www.labormarketinfo.edd.ca.gov.


8CaliforniaEmploymentDevelopmentDepartment,LaborMarketInformationDivision,Occupations With the Most Job Openings 2004-2014.Retrievedfromhttp://www.labormarketinfo.edd.ca.gov.

9CaliforniaEmploymentDevelopmentDepartment,LaborMarketInformationDivision,California Occupations with Most Jobs Lost 2004-2014.

10CaliforniaEmploymentDevelopmentDepartment,LaborMarketInformationDivision,California Labor Market Review, August 2007.

11CaliforniaEmploymentDevelopmentDepartment,LaborMarketInformationDivision.12CaliforniaEmploymentDevelopmentDepartment,LaborMarketInformationDivision,

California Occupational Projections 2004-2014.Retrievedfromhttp://www.labormarketinfo.edd.ca.gov.

13CaliforniaDepartmentofFinance,E-4 Population Estimates for Cities, Counties, and the State, 2001-2007, with 2000 Benchmark,May2007.Retrievedfromhttp://www.dof.ca.gov.

14CaliforniaDepartmentofFinance,Population Projections for California and Its Counties 2000-2050,July2007.Retrievedfromhttp://www.dof.ca.gov.

15CaliforniaDepartmentofFinance,Population Projections for California and Its Counties 2000-2050, by Age, Gender and Race/Ethnicity,July2007.Retrievedfromhttp://www.dof.ca.gov.

16PublicPolicyInstituteofCalifornia,California 2025: Taking on the Future,June2005.Retrievedfromhttp://www.ppic.org.


17CaliforniaDepartmentofFinance,Population Projections for California and Its Counties 2000-2050, by Age, Gender and Race/Ethnicity, July2007.Retrievedfromhttp://www.dof.ca.gov.18CaliforniaBudgetProject,More Californians are Working Later in Life, April2007.Retrievedfromhttp://www.cpb.org.19CaliforniaBudgetProject,More Californians are Working Later in Life, April2007.Retrievedfromhttp://www.cpb.org.

20UpjohnInstitute,Reemployment and Earnings Recovery Among Older Unemployment Insurance Claimants,February2007.Retrievedfromhttp://www.upjohninst.org.

21CaliforniaWorkforceInvestmentBoard,California’s Strategic Two-Year Plan For Title I of the Workforce Investment Act of 1998 and the Wagner Peyser Act For the Period of July 1, 2005 – June 30, 2007,May2005.Retrievedfromhttp://www.calwia.org.

22CaliforniaDepartmentofFinance,California Public Postsecondary Enrollment Projections, 2006 Series,December2006.Retrievedfromhttp://www.dof.ca.gov.


24CaliforniaEmploymentDevelopmentDepartment,LaborMarketInformationDivision,Contingent Workers Bolster California Work Force,December2006.

25CaliforniaEmploymentDevelopmentDepartment,LaborMarketInformationDivision,California Labor Market Review,August2007.

26CaliforniaEmploymentDevelopmentDepartment,LaborMarketInformationDivision,A Labor Day Briefing for California,September2006.

27U.S.DepartmentofLabor,2004-01: Internet Initial Claims Evaluation,October2003.28W.E.UpjohnInstituteforEmploymentResearch,Labor Exchange Policy in the United States,

2004.29ThenumbersfortotalInternetclaimssubmittedincludesapplicationssubmittedvia

eApply4UI.30CaliforniaResearchBureau,Formal Training and the Manufacturing Sector in California,Alicia

BugarinandEliasS.Lopez,2004.31FederalReserve,Rising Unemployment Duration in the United States: Causes and

Consequences,RobertG.Valetta,May2005.32CaliforniaPolicyResearchCenter,The New Wave of Outsourcing,AshokDeoBardhan,

DwightJaffee,andCynthiaKroll,2003;HaasSchoolofBusiness,UCBerkeleyforHumanSystemsManagement,Managing Globalization of R&D: Organizing for Offshoring Innovation,AshokDeoBardhan,2006.

33FederalReserveBankofNewYork,Current Issues in Economics and Finance, Vol. 11, No. 8: U.S. Jobs Gained and Lost Through Trade: A Net Measure,EricaL.Groshen,BartHobijn,andMargaretM.McConnell,August2005;FederalReserveBankofNewYork,Current Issues in Economics and Finance, Vol. 9, No. 8: Has Structural Change Contributed to a Jobless Recovery?,EricaL.GroshenandSimonPotter,August2003.

UnemploymentInsurance ProgramB U S I N E S S P L A N

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2 0 0 7 - 2 0 1 2

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EDD is an equal opportunity employer/program. Auxiliary aids and services are available upon request to individuals with disabilities. Requests for

services, aids, and/or alternate formats need to be made by calling 1-800-300-5616 (voice), or TTY 1-800-815-9387.

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