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Last Updated: 5/10/2010
Budget Issue: In order to meet an April 2011 statutory deadline, the Employment Development Department proposes an interim parallel database solution for implementing an alternate base period.
Program: Unemployment Insurance Program
Finding or Recommendation: Delay the statutory deadline by six months to allow the Employment Development Department (EDD) to continue with its original plan to implement an alternate base period without a risky parallel database. This would still give EDD a full year to complete ABP implementation before the federally imposed deadline of September 2012.
Further Detail

Employment Development Department's Statutory Deadline

Chapter 23, Statutes of 2009 (ABX3 29, Coto) directed the Employment Development Department (EDD) to implement an alternative base period (ABP) for individuals filing unemployment insurance (UI) claims. Chapter 23 established a statutory deadline of April 2011 to implement ABP. Once implemented, about 65,000 individuals who do not currently qualify for UI benefits under the standard base period would now qualify using an ABP. The ABP implementation is estimated to bring an additional $840 million in federal funds to the state pursuant to the American Recovery and Reinvestment Act.

Project Dependencies

The EDD indicated during 2009 spring hearings that before ABP could be implemented, the current UI and disability insurance (DI) database needed to be converted to a more modern and flexible technology. The department began work on the database conversion in 2009. However, due to numerous federal UI benefit extensions which stretched resources, work on the conversion has been delayed by five months. The ABP implementation is therefore also delayed by as many months.

Interim Solution Will De-link Projects

In an effort to meet the April 2011 statutory deadline for implementing an alternate base period, EDD is proposing an interim solution that will allow staff to work concurrently on the database conversion and ABP implementation. Essentially, the interim solution would de-link the two efforts. The department would create a parallel UI/DI database that utilizes modern technology and is flexible enough to handle ABP implementation. While working to convert the original UI/DI database, EDD would have the ability to begin implementing ABP through this parallel database.  

Interim Solution Poses Significant Risks

While the proposed interim solution would assist EDD in meeting the April 2011 deadline, it poses significant risks as well. For example, it may be difficult to synchronize and update both databases continually for several months, the proposed amount of time for which the solution would be required. This could jeopardize the integrity of all of the data stored in the both databases. 

Analyst's Recommendation

Delay the statutory deadline by six months and allow EDD to continue with its original plans for ABP implementation following database conversion. The EDD has indicated that even with the current five month delay, it can still meet the federal deadline of September 2012 for ABP implementation. The state would therefore still be eligible to receive the full $840 million in federal funding.

Adopting this recommendation means that about 65,000 unemployed Californians would have to wait an additional six months for UI payments pursuant to ABP. Although this delay is regrettable, it avoids the risk of compromising the UI/DI database which could threaten the ability for EDD to pay billions of dollars in benefits to approximately two million unemployed Californians.