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Job Cuts Expected At State Unemployment Agency

SACRAMENTO, Calif. (AP) -- The state Employment Development Department plans to begin cutting staff to address declining funding from the federal unemployment insurance program, state officials told employees.

A client walks out of the county's unemployment office after searching for jobs online.
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Above: A client walks out of the county's unemployment office after searching for jobs online.

A memo sent to employees said the department expects a $150 million shortfall through June 15, The Sacramento Bee reported Tuesday.

Ongoing underfunding in the federal unemployment insurance program and congressional budget cuts were listed as the main reasons for the move. That includes about $30 million in sequestration cuts so far, but the figure could grow, spokeswoman Loree Levy said.

"We strongly encourage staff to explore other employment opportunities within EDD that don't rely on (unemployment insurance) funding," or in other state agencies, Chief Deputy Director Sharon Hilliard said in the memo.

The department cannot maintain staffing to keep up with the demand and is urging clients to use the Internet for as many services as possible to help save money.

It already has reduced telephone service hours, moved staff to other programs and restricted overtime.

Federal funding also has fallen as California's unemployment rate, now at 8.7 percent, has steadily declined for the past two years after hovering in double digits for most of the recession. Demand has not fallen by an equivalent amount, Levy said.

"The recession was so severe that we still have a demand for unemployment insurance benefits that is twice what it was before the recession," she said.

The state also owes the federal government nearly $10 billion that it borrowed to continue paying the unemployed when California's own unemployment insurance fund ran out of money.

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