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EDD Next technical reappropriation moves forward as LAO urges tighter oversight of ICMS phase
Summary
The May revision includes a reappropriation to fix an encumbrance timing error for EDD Next modernization funding so the ICMS integration contract can be awarded; LAO recommended shortening multi-year encumbrance windows to improve legislative oversight.
The Employment Development Department briefed Assembly Subcommittee 5 that a technical reappropriation in the May revision corrects an encumbrance-availability date for the Unemployment Compensation Disability Fund portion of EDD Next, the department—s multi-year modernization effort, and that the change is necessary to allow an anticipated ICMS contract award this fiscal year.
Caleb Horrell, chief financial officer for EDD, said the reappropriation aligns the UI/DI-fund encumbrance availability with the general fund appropriation so funds remain available through June 30, 2026. "These funds are critical for the ICMS contract that EDD does expect to award in this coming fiscal year," Horrell said.
The Legislative Analyst—s Office said the technical fix is acceptable but raised broader oversight questions as EDD Next moves into its most expensive phase. Chaz Alamo of the LAO noted the project has received roughly $660 million to date and that the governor's budget includes another $124 million in the May revision, pushing total project investments to roughly $700 million if approved. The LAO recommended tightening encumbrance authority going forward (for example, eliminating two-year encumbrance windows) to give the Legislature more immediate fiscal oversight of the project as it reaches the costly ICMS integration.
EDD officials described the program as a multi-year, modular modernization that has already delivered incremental improvements, including a shared customer portal launched in 2023. EDD said the ICMS phase is the most complex and that the project—s target completion for the ICMS integration is June 2029, though incremental benefits have been delivered along the way.
Ending: The subcommittee accepted the technical correction but the LAO and several members asked for additional legislative oversight measures for the upcoming ICMS contract and suggested budget bill language options to tighten multi-year encumbrance authority on large modernization programs.
