California is poised to invest five years and $1.2 billion in an ambitious initiative aimed at revamping its strained employment safety net system, a project triggered by unprecedented job losses, rampant fraud, and consequent political turmoil during the pandemic.

The initiative, termed “EDDNext,” was set into motion recently with a focus on upgrading the operations of the state’s Employment Development Department (EDD). This effort is being led by a team of approximately 100 individuals who are actively securing contracts for Salesforce and Amazon technologies, based on interviews and documentation provided by CalMatters.

Concurrently, the EDD is planning to part ways with Bank of America, its longstanding partner in unemployment payments. Before 2025, the department anticipates introducing new debit cards for benefits and a direct deposit feature, facilitated by a new contractor yet to be announced.

Ron Hughes, who is steering EDDNext out of retirement, expressed a commitment to addressing the most critical issues faced by the public — enhancing online services, improving call center efficiency, and streamlining identity verification and benefit application processes.

Jennifer Pahlka, an advisor to Governor Gavin Newsom on EDD-related crises, highlights in her book “Recoding America” the systemic challenges plaguing government agencies like EDD. She underscores the need for fundamental changes to policy, procedure, and technology to prevent the issues from undermining the expensive overhaul.

EDD Director Nancy Farias, knowledgeable of the critiques leveled at the agency, aims to sidestep the “light switch” failure — a common pitfall where huge IT undertakings fail upon launch. To mitigate this risk, EDDNext will be fragmented into smaller, manageable projects stretching to 2028.

Despite these measures, some attorneys and workers remain concerned. They point out that even minor system failures can impact thousands, referencing a recent incident where 345,000 disability accounts were erroneously frozen due to suspected fraud.

Elaine Howle, former California State Auditor, advocates applying the tough lessons from the pandemic to bolster safeguards across all programs. The exponential rise of online fraud, exacerbated by easily available personal data, paints a grim picture of the future of such benefit systems, as suggested by Mason Wilder of the Association of Certified Fraud Examiners.

EDD still has unresolved issues, evidenced by over 130,000 Californians embroiled in lengthy unemployment appeals, and a high rate of claim rejections. According to federal data, many of these rejections are later overturned upon appeal, indicating that valid claimants are often erroneously denied.

Hughes, initially in retirement, has rejoined the workforce at the behest of Farias to address these challenges. He draws from his experience and interactions with fellow state tech executives, aiming to ensure that the new systems will be more responsive and integrated, consolidating multiple processes into a single, more efficient workflow.

California’s initiative is a significant step toward modernizing and streamlining its employment benefits system, but only time will tell if these reforms will stand up to the complexities of real-world application.