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EDD presents fourth year of EDD Next modernization; LAO urges stronger legislative oversight
Summary
The Employment Development Department sought $124.2 million split equally between the General Fund and the Unemployment Compensation Disability Fund for the fourth year of its EDD Next modernization program; LAO praised progress but recommended tighter oversight and mandatory checkpoints before major procurements.
The Employment Development Department (EDD) presented its fourth-year budget change proposal for the EDD Next modernization initiative and outlined recent customer-service improvements and planned workstreams. Director Nancy Farias described multi-pronged improvements including a shared customer portal (myEDD), new Amazon Web Services phone systems, multilingual services, and more self-service options to reduce call volume and speed eligibility decisions.
Caleb Horrell, EDD chief financial officer, said the 2025-26 governor's budget requests $124.2 million, funded equally from the General Fund and the Unemployment Compensation Disability Fund, to continue work on the transformation office, shared customer portal maintenance and operations, document management replacement, the integrated contact center (Amazon Web Services Connect), and fraud-prevention analytics and identity-proofing.
Horrell and Director Farias detailed prior accomplishments: redesigned UI forms, online eligibility questionnaires that have shortened processing time for some eligibility issues to an average of six days, disability-insurance contact-center migration to Amazon Web Services with 7,000 daily self-service use cases, and the roll-out of claim-status text messages. The department emphasized that the project combines technology upgrades with process and culture changes.
Chaz Alamo of the Legislative Analyst's Office said EDD has made tangible progress but warned the subcommittee that a major backbone project (ICMS/IDM) is entering procurement and the legislature should "level up" oversight for the critical phase. The LAO recommended four changes in budget bill language: removing extended encumbrance authority, inserting a mandatory checkpoint after vendor contract approval (to share vendor identity and contract details with the Legislature), bimonthly holistic portfolio reports to the Legislature and CDT, and quarterly briefings for legislative staff to maintain up-to-date oversight.
Members pressed EDD on fraud prevention, call-center staffing, contractor selection timelines, and why modernization takes multiple years. EDD officials said much of the existing technology dates from the 1960s or early 2000s, and incremental modernization was necessary to avoid repeated, costlier overhauls. The department said it welcomes additional legislative oversight and is finalizing a procurement for the integrated claims-management backbone, with awards expected later this year.
Senators voiced both support for the customer-focused improvements and concern about timeline, vendor selection, costs, and the need for stronger, real-time legislative oversight as EDD enters the most complex phase of the program.
