Unemployment Insurance Appeals Board: Just the name evokes controversy:

A “questionable board,” according to one 2011 Associated Press report.

“Highly paid sinecures,” an “ex-legislator private membership club” and  “first thing on the chopping block” are other less diplomatic assessments.  

Elimination of it was called for by Gov. Jerry Brown in the revised budget he unveiled in May, even though five of the board’s seven members are gubernatorial appointees.
This target of taxpayer ire and the potential budget ax is the Unemployment Insurance Appeals Board.

Created in 1938, the board resolves a wide range of disputes between employers, employees and the state Employment Development Department over unemployment benefits. Nearly 464,000 new appeals were filed in 2010 and almost 475,000 resolved.

The recession and the exponential rise in Californians claiming unemployment benefits spiked appeals, creating a backlog of 96,000 cases two years ago that the board has winnowed down to under 50,000.

“California has 26 percent of the national unemployment insurance appeals workload,” said Alberto Roldan, the board’s executive director and chief administrative law judge. “We’re larger than the next five states combined.”

What has earned the board much of its current notoriety – aside from the Democratic governor proposing its current members seek other employ – is that six of the seven members who each earn $128,109 are former lawmakers.

Excepting the current membership, over the past 25 years more than 12 former lawmakers of both parties have been appointed to the board by governors, Assembly Speakers and the Senate.

Among them: Art Agnos, Fred Aguiar, Richard Alatorre, Ruben Ayala, Sal Canella, Liz Figueroa, Elihu Harris, Trice Harvey, Cindy Montanez, David Roberti, Sharon Runner – now a state senator – and Virginia Strom-Martin.

Other appointees include gubernatorial aides, friends and fundraisers.

“It’s one of the choicest plums at the fruit stand,” said Steve Maviglio, former Gov. Gray Davis’ press secretary, now a Democratic consultant and, thanks to Davis, a member of the board for one year. “It’s a job that requires really no experience in the field, pays well and you can do it from the comfort of the home office.”

The six ex-lawmakers on the board now are a bipartisan mix: Former Sen. Denise Ducheny of San Diego and former Assemblyman Alberto Torrico of Fremont are Democrats. Former Assemblywoman Bonnie Garcia of Cathedral City and ex-Assemblyman George Plescia of La Jolla – whose four-year term has expired – are Republicans. As are ex-Senators Dennis Hollingsworth of Murrieta and Roy Ashburn of Bakersfield.

The Senate Rules Committee has scheduled Ashburn and Robert Dresser, a 69-year-old government lawyer appointed by Brown to the board in February, for a confirmation hearing on August 17. Hollingsworth was also supposed to be heard the same day but is no longer on the committee’s agenda.

“Four of these people are friends of mine from the Legislature,” said Lew Uhler, president of the National Tax Limitation Committee, referring to the board’s current GOP members.

“They’re perfectly fine people but this kind of board and many of the other boards where ex-legislators wind up are, generally speaking, highly paid, cushy operations. And especially during this time of very desperate budget situations these bodies should be reviewed and changed to the benefit of the taxpayer.”

Others argue that the board – as it’s structured now – is saving the taxpayers money.

Born out of the Great Depression, the board was created along with California’s unemployment insurance system through 1935 legislation passed two months before Congress enacted the landmark Social Security Act that established a voluntary national unemployment insurance system.

California’s current mandatory employer-paid unemployment insurance program began in 1938, as did the board. Payments, with a maximum of $450 per week, are awarded to workers who lose their job through no fault of their own.

Just as it has been for more than 70 years, the federal government requires each state to have some mechanism to adjudicate appeals of unemployment insurance awards. About 40 have a board structure like California’s, says Ducheny.

That’s just one of the requirements imposed by the federal government regarding unemployment insurance which has always been operated jointly by states and the U.S. Department of Labor.

Only $484,000 of the board’s $102 million budget is paid for out of the state’s cash-starved general fund.

Federal dollars account for $94 million, more than 92 percent of the 1,000-employee agency’s operating expenses.

Eliminating only the seven appointed board members, as Brown proposed in his revised budget, saves less than $900,000.

“This proposal was part of the administration’s efforts to reduce state costs and find more efficient ways for the state to operate,” said H. D. Palmer, the spokesman for Brown’s Department of Finance.

“While many of these sorts of proposed eliminations and reorganizations individually would save roughly $1 million, the combined effect is significant.”

The Legislature rejected Brown’s proposal to off the appointed board and says it will revisit the issue during next year’s budget negotiations.

But Brown may accomplish most of what he seeks without legislative action.

He can shrink the board simply by not replacing the vacancies left by Plescia, who has another 60 days on the board, and Garcia, whose term expires later this year.  

And, if the Senate does not confirm Hollingsworth he departs after one year, leaving the board at four members.

Completely eliminating the appointed board could cost more than the savings, however.  

The appeals process begins with the Employment Development Department making its determination on any number of unemployment benefit issues.

One of the more commonly appealed decisions are when an application for unemployment benefits isn’t turned in on time and the former employee is denied any weekly checks.

Or an employee leaves a job because of a family illness rather than being laid off but still seeks benefits that are denied by the department.

Sometimes the department decides a former employee is entitled to less benefits than the employee feels are warranted or, conversely, more than the employer believes are deserved.

Or the department demands repayment from a former employee who it decides has been paid too much in benefits.

Appeals are first heard at the board’s 11 field offices by one of more than 250 administrative law judges.

Roughly 9 percent of those decisions – more than 42,000 out of the 474,874 cases closed in 2010 – are appealed to a second tier of judges whose rulings must be approved by the seven appointed board members.

Without the board members to sign off, appeals of the second round of administrative law judges would go directly to superior court.

Filing fees and subpoena costs would be incurred by anyone who appealed and, given the $350 million cut trial courts took in the current budget, adjudicating such matters would be a low priority.

“We get these cases done,” Ducheny told Capitol Weekly.

“If we didn’t have a second level of appeal involving the board, particularly with the volume of appeals in this state, these cases would never be heard if
they went to court —  especially with the cuts the courts sustained this year. That would certainly be more costly for everyone.”

As Roldan says: “One thing about the unemployment insurance program is there is no cost to the public except putting a stamp on an envelope.”

Board members examine between 40 and 50 proposed decisions each day. Ashburn says in his seven months on the board he has reviewed 5,945.

Maviglio recalls board members agreeing with the judge’s proposed ruling “95 percent” of the time.

Ducheny says she often reads the transcripts in cases where the appellant is Spanish-speaking to gauge how well the interpreter expressed the issues of the case.

Having an appointed body give final approval to rulings provides accountability and consistency so that different judges aren’t setting varied precedent.