With an approximate population of over 38 million, the Golden State is home to about one out of every eight people in the United States. Its economy ranks as the 7th largest in the world. However, with one of the lowest taxable wage bases in the country ($7,000), the state unemployment trust fund could not keep pace with the massive job losses of the Great Recession. California, like many other states, borrowed Federal funds in order to pay the staggering number of unemployment claims that were filed in the months and years that followed. While most of the states with Federal loans have since paid off those debts, California had more than $6 billion still to pay as of November, 2015. The state is making progress toward that goal as the unemployment level continued to drop throughout 2015, lessening the demand on the unemployment trust fund. However, the California Economic Development Department (EDD) projects that the fund will still have a deficit of approximately $2 billion at the end of 2017. That estimate does not take into account any potential economic downturn that may occur. The unemployment rate at the end of November, 2015 was 5.7% continuing the downward trend of recent years, yet still above pre-recession levels.
One cost saving process implemented by the State of California’s EDD in 2015 was the rollout of their UI SIDES program. The California UI SIDES interface allows the state to transmit and receive unemployment claims with TPAs electronically. This innovation strives to reduce the amount of follow up required to process claims, expedite the process of issuing determinations and minimize overpayment issues that contribute to the trust fund deficit.
Sources: State of California public website http://www.ca.gov/About/Fact.html
State of California Economic Development Department http://edd.ca.gov/About_EDD/Quick_Statistics_Overview.htm
US. Bureau of Labor Statistics, Unemployment Rate in California [CAUR], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/CAUR/, January 3, 2016