Federal immigration authorities are looking for a potential new detention center in Northern California, an effort that alarms advocates and some Democratic state lawmakers as President-elect Donald Trump gears up to unleash his mass deportation plan.

In August, U.S. Immigration and Customs Enforcement (ICE) issued a request for information to identify additional detention bed space in the state as other federal agencies intensified border enforcement. The effort began in the wake of the Biden administration’s sweeping asylum ban, implemented in June, for migrants caught crossing the U.S.-Mexico border outside designated entry points. Under the ban, border agents can deport such migrants within hours or days without considering their asylum claims.

Advocates say an expansion of detention space would give Trump a runway to carry out more mass deportations in California. Immigrants in counties with more detention space are more likely to be arrested and detained, according to research by advocacy groups.

Unlike in Texas, where state officials are offering up land to the Trump administration to facilitate mass deportations, California tried to ban new federal immigrant detention centers from opening during the first Trump administration. The court blocked that, ruling that the state was unconstitutionally overstepping on federal immigration enforcement.California Attorney General Rob Bonta told CalMatters that the state may be powerless to stop the possibility of a new facility.

ICE’s expansion plans

Federal documents show ICE issued the request for information on Aug. 14. Such requests can pave the way for federal contracts, in this case to obtain “available detention facilities for single adult populations (male and female)” in Arizona, New Mexico, Washington, Oregon, and California. Its request says the facilities should each have from 850 to 950 detention beds and “may be publicly or privately owned and publicly or privately operated.”One of the facilities should be within a two-hour drive of the San Francisco field office, the documents state. The request also seeks facilities near field offices in Phoenix, El Paso, and Seattle.

“ICE has identified a need for immigration detention services within the Western U.S. area of responsibility,” ICE spokesman Richard Beam wrote in an email to CalMatters. “The proposed services are part of ICE’s effort to continually review its detention requirements and explore options that will afford ICE the operational flexibility needed to house the full range of detainees in the agency’s custody.”

Currently, ICE detains roughly 38,000 people every day in about 120 immigration jails across the country. In California, that number is just under 3,000 detainees each day, held in six facilities, according to the most recently available immigration data maintained by the Transactional Records Access Clearinghouse at Syracuse University.That’s the third-largest population of detained immigrants in the country.

While ICE, the federal agency responsible for immigration enforcement, owns and operates a very small number of facilities nationwide, it mostly contracts with private prison operators such as CoreCivic, GEO Group, and Management and Training Corp. Their detention facilities house 80% of ICE’s detainees. Stock for CoreCivic and GEO Group soared upon Trump’s win last month.

In California, private, for-profit prison companies run all six ICE detention facilities – the Golden State Annex and Mesa Verde detention facilities in Kern County; the Adelanto Detention Facility and Desert View Annex, both in San Bernardino County; the Otay Mesa Detention Center in San Diego County; and the Imperial Regional Detention Facility in Imperial County.

Across all six, the federal government has the capacity to detain up to 7,188 people statewide.

State Sen. María Elena Durazo, a Democrat from Los Angeles, said she was concerned about the potential economic impacts of ICE having an increased capacity for detention and, therefore, deportations.

“The expansion of detention in California concerns everyone in our state. Expanding detention correlates with increased ICE raids and family separation, all of which has devastating social and economic impacts for California,” she said. “In addition, these facilities are run by private for-profit companies that consistently place their bottom-line profit above the health and safety of those who work in or are detained in these facilities.”

Advocates argue that detention expansions lead to human rights abuses and undermine community safety.

“An expansion of ICE detention operations within the Bay Area and Northern California is going to be part of a reign of terror on our communities the Trump administration is threatening,” said Bree Bernwanger, a senior staff attorney on the Immigrants’ Rights team at the American Civil Liberties Union of Northern California. “We already know from existing facilities within California that ICE does not and cannot maintain safe and or healthy standards of confinement for people inside.”

The ACLU is suing to learn more about the federal agency’s expanded detention plans.

Bernwanger was referring to issues like complaints of sexually abusive patdowns. Also, in 2023, ICE allegedly retaliated against hunger strikers by storming into their cells, violently dragging them, threatening them with forced feedings, and then providing food that was not appropriate for breaking a 21-day fast, prompting a medical condition in at least one inmate, according to a claim filed by the inmate, who was represented by two advocacy groups.

In August, the civil liberties organization released a 34-page report detailing 485 grievances filed by detainees across six immigration detention facilities in California between 2023 and June 2024. Those grievances included allegations of hazardous facilities, inhumane treatment, medical neglect, and retaliation.

ICE declined to comment on the report.

California failed to ban for-profit federal detention centers

In December 2019, California passed a law that would have banned private immigration detention centers. It was part of a wave of resistance by California Democrats to the first Trump administration. It also prohibited the state from using for-profit prisons for any inmates starting in 2028. The for-profit facilities “contribute to over-incarceration” and “do not reflect our values,” Gov. Gavin Newsom said in a statement when signing the bill.

Days before the law was set to go into effect, ICE signed new contracts for its facilities in California. The federal 9th Circuit Court of Appeals later overturned the state’s ban on private prisons.

Bonta, who wrote the unsuccessful ban as an Oakland assemblymember, told CalMatters in November that the state might not be able to stop ICE from opening another detention facility outside of San Francisco.

“It’s a matter of federal jurisdiction,” Bonta said. “It’s federal. I disagree, but my office’s disagreement was considered, and the court determined that it was a federal issue.”

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CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Elizabeth “Betty” Walker (née Carpenter) passed away peacefully at home on November 13, 2024, with her family by her side. Betty was born on February 6, 1924 in Brownhills, England to Dora and David Carpenter, the fourth of eight children.

At nearly 101 years old, Betty lived a tremendous life — powered by her fighting spirit. During WWII, she worked as a bomb inspector, a critical role during the war effort, and met her first husband, an American soldier. She always dreamed of emigrating to America, and in 1947, she set sail on the S.S. America to realize this dream. She moved to Humboldt County in the early 1950s, after a brief period in Arkansas.

After her divorce, Betty began working at Ten Window Williams Jewelers in Old Town Eureka, where she developed lifelong friendships with owners, Bill and Mollie Williams. She became a familiar face in commercials and advertisements for the store and even served as the trophy girl for races at Redwood Acres. It was at Ten Window Williams that she met her second husband, Earl Walker of Walker & Sons Logging out of Blue Lake, California, when he came in to purchase a watch. After a brief courtship, the couple married in 1957 at the Little White Chapel in Las Vegas, Nevada.

Throughout her life, she was fiercely loyal to her family and friends and did everything in her power to promote the betterment of their lives. Inspired by her son Ron, who was born with Down Syndrome, Betty became a passionate advocate for individuals with disabilities. As an example of this, she was the president, and later chairperson, of Humboldt Community Access and Resource Center (HCARC), and was awarded Humboldt County’s “Citizen of the Year” in 1977 for her dedication. She was also instrumental in starting the Glen Paul School for special education. Though she remained in Eureka for most of her life, the family lived in Scottsdale, Arizona for five years during the 1960’s where Betty served on the Scottsdale Beautification Commission.

A secret to Betty’s longevity was her passion for projects and many hobbies. She maintained beautiful gardens and a large property, which was featured in the Eureka Times-Standard; she loved creating unique crafts and gifts for her children and grandchildren and could whip up just about anything on her beloved sewing machine; she enjoyed her Victorian dollhouse and creating many additions and details — including decorating it for the holidays; and she was also a fantastic cook and baker — famous for her pumpkin and blackberry pies, lemon torte, and salmon with parsley sauce. She loved reminiscing every Saturday with her sister Gladys, who passed away earlier this year, about their childhood in England and Betty’s many visits home, including sailing famed ocean liners, the R.M.S. Queen Mary and the R.M.S. Queen Elizabeth.

Betty is survived by her five children: Linda Savage (Clark) of Monterey; Larry Walker (Lola) of Delta, Colorado; Wanda Dewalt (Don) of Phoenix; Ken Walker of McKinleyville; and Ron Walker of Eureka. She shared a special and unique bond with each of her grandchildren, including Jenny Savage (Jordan Pratt-Thatcher) of Big Sur; Katie Savage (Michael Handy) of Cayucos; Meagan Savage of Long Beach; Kimberly Walker of Phoenix; Charles Holmes of Phoenix; Jody Walker (Gareth Carter) of Brownhills, England; and Sindy Weals (Darren) of Brownhills, England. Her love extended to her great-grandchildren and great-great-grandchildren, who will also continue her legacy. She was preceded in death by her seven siblings; husband, Earl; and grandson-in-law, Michael Handy, who passed the day before Betty.

The family wishes to express heartfelt gratitude to Betty’s daughter, Linda, for her loving care during Betty’s final months, ensuring her wish to remain at home was fulfilled. They also extend special thanks to Betty’s dear friends, Dr. Don Iverson, Teresa Pearl, and Darla Dale, for their enduring friendship, love, and support, as well as Hospice of Humboldt for their compassionate care.

A celebration of life will be held for friends and family early next year. In lieu of flowers, please consider a donation to Shriners Children’s or Hospice of Humboldt.

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The obituary above was submitted on behalf of Betty Walker’s loved ones. The Lost Coast Outpost runs obituaries of Humboldt County residents at no charge. See guidelines here. Email news@lostcoastoutpost.com.

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The City of Eureka’s plans to expand the city’s affordable housing supply are moving right along. 

At last night’s meeting, the Eureka City Council unanimously approved development agreements with Dishgamu Humboldt, a community land trust operated by the Wiyot Tribe, and the Rural Communities Housing Development Corporation (RCHDC) for up-and-coming affordable housing projects. Three city-owned sites are slated for development, including a parking lot at the corner of 5th and D streets, another at 6th and L streets and the “Sunset Heights” property, a mostly vacant 3.5-acre site overlooking Highway 101 between Henderson and Harris streets. 

Speaking at last night’s meeting, Eureka City Manager Miles Slattery noted that the city established a memorandum of understanding with each entity last year. Approving a disposition and development agreement (DDA) is the next step in the process, he said.

“These disposition and development agreements are helpful for developers because it helps with being more competitive with funding,” Slattery explained. “For the Wiyot project, they’re looking at some tax credits that are mainly set aside for tribal organizations. They’re looking at applying for those [credits] in July 2025. … They’re in the process of going through the design elements for both 5th and [D] as well as 6th and L and will be going to design review prior to that date in July 2025.”

RCHDC is a little further along in the process, Slattery added. The Sunset Heights project will be presented to the Eureka Planning Commission at its regular meeting on Dec. 11.

The city’s plans to convert parking lots into housing have drawn criticism from some business owners in downtown and Old Town, as well as Citizens for a Better Eureka, a special interest group funded by Rob Arkley’s financing firm Security National. As many of our readers will recall, Arkley recently spent more than $1.6 million on Measure F, a failed ballot measure that sought to protect downtown parking lots by halting the city’s housing development plans. Eureka voters rejected the measure by a margin of more than two-to-one.

However, the city is still tied up in litigation with Citizens for a Better Eureka over claims that the city failed to comply with the California Environmental Quality Act (CEQA) when it designated several city-owned parking lots as surplus to make way for affordable housing developments. The ongoing lawsuit was not discussed at last night’s meeting.

Councilmember Kati Moulton made a motion to approve the disposition and development agreements. The motion was approved 4-0, with Councilmember G. Mario Fernandez absent.

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Harris Medical Center

Earlier in the meeting, the city council unanimously approved a general plan amendment and zoning reclassification for the Harris Medical Center project, a multi-use housing development and medical facility slated for the former Apostolic Faith Church on Harris Street, near Henderson Center. 

The project plans, submitted by Dr. Deepak Stokes, an OB-GYN currently working with Providence Medical Group, include an urgent care clinic, medical spa, office space, a commercial café and up to 12 dwelling units – two units in the existing building and 8-10 units in two new two-story residential units – along with associated site improvements. 

Julian Berg, an architect with NorthPoint Consulting Group, said the project will include a mix of multi-family housing, including apartments and townhomes. 

“Having been born and raised here, it’s really exciting to be doing a mixed-use project like this,” Berg told the council. “I really believe in this kind of development because it creates a more dynamic and safe neighborhood. When you have housing, office, commercial space and, of course, health care all in the same vicinity, it creates a much better community space. … We desperately need more medical facilities, so it’s really great that Dr. Stokes is here to help us with that.”

Councilmember Renee Contreras-DeLoach agreed, adding that the project will address “numerous needs” for folks living near Henderson Center.

“This is what we hope for as a city, right? Getting to see something be redeveloped into something that’s going to be far more useful and contribute in so many positive ways to the community,” she said. “I think that this development is that.”

After some additional discussion, Contreras-DeLoach made a motion to approve the general plan amendment and zoning reclassification. The item passed 4-0.

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A recording of last night’s meeting can be found at this link.

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PREVIOUSLY

• The Blue Lake City Council Race Could Very Well End in a Tie. Here’s How It Would Get Decided.

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It happened. The Blue Lake City Council race ended with an exact tie for the third of three available seats this election season. The final election report, released Tuesday evening, shows that two candidates — incumbent councilmember/mayor Adelene Jones and challenger Kat Napier — each received 245 votes.

As we explored in a post last week, California Elections Code 15651 says that such ties must be resolved via a random selection process like drawing straws or pulling a name out of a hat.

Blue Lake City Manager Mandy Mager told the Outpost in an email that the city will hold a special meeting next Tuesday, Dec. 10, to resolve this tie and seat the new council, which will include victorious candidates Michelle Lewis-Lusso and John Sawatzky, who defeated incumbents Christopher Guy Firor and Christopher B. Edgar.

”During the meeting, the City Attorney and the City Clerk will introduce the tie-breaking process and will conduct the action,” Mager explained. 

What exactly will this drawing of lots look like? Mager said Jones and Napier’s names will be placed in envelopes, which will then be deposited into “some form of container.” A designated person (she didn’t say who that person will be, nor who will designate them) will draw an envelope from the container to determine the winner. That person — either Jones or Napier — will then immediately be seated alongside their fellow council members, and the meeting will commence. 

Dramatic! 

We reached Jones via phone earlier today. She said that as far as she can determine after discussing the matter with a former city clerk, this has never happened before in the City of Blue Lake.

“Unprecedented,” Jones remarked.

She said she’s been in contact with Humboldt County Clerk/Recorder and Registrar of Voters Juan P. Cervantes. She shared with him some concerns she had regarding people who may have cast ballots despite living outside of city limits, but Cervantes confirmed to her that all tallied votes had been verified.

A voicemail left for Napier was not returned by the time this post was published. 

Jones said this election cycle had more tension than she’s ever seen before in Blue Lake. She said a small group of people started coming to meetings “very upset.”

“It seemed to start when we talked about the need for low-income housing,” she said. “Some folks didn’t want that to happen.”

The city of Blue Lake has been mandated by the state of California to plan for at least 40 new units of housing, and with limited available real estate within city limits the council approved a multi-use residential and commercial project in the industrial Powers Creek District, to be built by Danco. 

“I have toured the projects that [Danco] did in Arcata,” Jones said. “They’re very nice. They have a manager onsite, energy efficiency and common grounds. I was in support of this, and that made some people not happy.”

She said that if the new council members plan to block new housing development they’ll have to deal with repercussions from the state, which has the authority to force local jurisdictions to plan for residential development. 

“I don’t know how they’re gonna fight the state,” Jones said. “The state can do what it wants.”

In recent weeks, Jones has been meeting up with a small group of supporters outside of the post office to discuss the latest developments, including each new report coming out of the Elections Office.

“All of my supporters have been very sweet,” she said. “We’ll see what happens.”

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No surprises in the rest of the final election report. Donald Trump got about 33.5% of the presidential vote countywide, compared to 62% for Kamala Harris. That’s a slightly higher percentage for Trump from four years ago and significantly higher than eight years ago, but due to lower overall turnout Trump actually received fewer Humboldt County votes than in 2018 2020.

Assembly candidate Chris Rogers will succeed Jim Wood, coasting to victory across the district, including here in Humboldt, where he outperformed Republican challenger Michael Greer 62.75% to 37.25%.

Incumbent U.S. Congressman Jared Huffman likewise clobbered his opponent, Chris Coulombe.

In Arcata, incumbents Stacy Atkins-Salazar, Sarah Schaefer and Alexandra Stillman all won their re-election bids, as previously reported. Likewise in Eureka incumbents Kati Moulton and Scott Bauer defeated challengers Kenny Carswell and Thavisak “Lucky” Syphanthong, respectively.

The strength of incumbents was also on display in Ferndale, where sitting council members Leonard Stephen Lund and Phillip Ostler were re-elected.

In Fortuna, incumbent Tami Trent was re-elected alongside Fortuna Ace Hardware owner and council newcomer Jerry D. King.

Humboldt County’s half 1 (per)cent sales tax initiative, Measure O, passed easily while Eureka’s pro-parking initiative, Measure F, went down in flames. 

Here’s a statement from the Elections Office, with a link to the elections results webpage:

All ballots for the Nov. 5, 2024, General Election have been verified and counted. The Humboldt County Registrar of Voters certified the election on Tuesday, Dec. 3. The certified results and official canvass certification is expected to be presented to the Humboldt County Board of Supervisors on Tuesday, Dec. 10.

“As we certify the results of the November 5th General Election, I want to extend my heartfelt gratitude to the election workers, community members and voters who made this process possible,” said Humboldt County Clerk, Recorder and Registrar of Voters Juan P. Cervantes. “To those who gave up their weekends, worked long hours after their regular jobs, and prioritized participating in the democratic process - thank you. Your dedication is the foundation of our democracy. Democracy thrives on responsibility and daily acts of engagement. It is upheld by those who understand that their role extends beyond casting a ballot and continues through actions that ensure its promise remains strong in Humboldt County.”

For more information on the results of the election, please visit the Elections Results webpage or call 707-445-7481.

Save a spot for the Cal Poly Humboldt community in your prayers today. The campus is currently without sushi.

Yesterday afternoon, the county’s Division of Environmental Health issued a shutdown order to the Advanced Fresh Concept Franchise Corp.’s local sushi franchise location, there on the Cal Poly Humboldt campus.

Shouldn’t be that hard of a fix: The health inspectors dinged AFC Sushi for too-tepid water in the handwashing station, and could find no evidence of sanitizing solutions or testing strips at the facility. When those things are fixed, AFC Sushi — North America’s largest sushi franchise, we are told — can get rolling again.

Until then, students will either have to go across the footbridge to get their sushi in town, or else eat something other than sushi.

DOCUMENT:

• AFC Sushi Inspection, Dec. 3, 2024.

PREVIOUSLY: Missing Eureka Man’s Car Found Just Outside City Limits; Search Continues

# # #

The Eureka Police Department continues to search for missing local man Michael Bounds, who was last seen by family on Nov. 27. EPD has released the following update on the case: 

During the investigation and working in collaboration with the family, Criminal Investigations Unit personnel obtained surveillance footage of Bounds at Murphy’s Market in Glendale/Blue Lake area on November 27, at about 3:00PM. The attached images from the surveillance footage shows Bounds current appearance and the clothing he was last seen wearing.

If you have any information, please contacted EPD’s Criminal Investigation Unit at 707-441-4300.

Kim Tanner didn’t expect to become a fraud detective when she filed for disability with the California Employment Development Department.

But in mid-July, $3,161 vanished from her online account with the state’s new debit card contractor, Money Network, according to Tanner’s complaints to government regulators. Someone had gotten access to her online debit card account, added a new bank account and transferred out her money, all without any notifications, she wrote in the complaints.

Tanner said Money Network told her it could take 90 days to investigate, and that she may or may not get a full refund, leaving her short on rent money. She turned to social media and saw similar horror stories on Reddit and Facebook. “My head exploded,” Tanner said. “This was happening to tons of people.”

So she started filing complaints. First with Money Network, its parent company Fiserv and the EDD. Then with a state senator and a half-dozen financial regulators.

“It just went on and on and on,” said Tanner, who got her money back via paper check about a month and a half later, after a federal agency intervened. “This needs to be investigated.”

A CalMatters investigation a year ago exposed how the EDD’s unemployment system crashed during the pandemic, the result of historic job losses, years of missed warning signs and poor contractor performance. As a result, the system at first failed to stop widespread fraud, then cut off access to millions of real people who used it as a crucial lifeline.

Now, even with a new payment contractor in place, concerns about fraud linger for people who rely on unemployment and disability programs run by the EDD. Multiple lawsuits and 74 federal consumer complaints about government debit cards have been filed by Californians against Money Network this year alone. The EDD and the company say the debit card fraud is smaller scale than the varied forms of fraud during the pandemic.

On top of the fraud complaints, a report released Monday by the Legislative Analyst’s Office warns that lawmakers are failing to address a bigger unemployment problem: a “broken” financial model, one that threatens the whole system.

California’s unemployment fund is still $20 billion in debt to the federal government after the state took out loans to cover pandemic benefits, costing taxpayers $1 billion in annual interest — more than the state spends on child welfare. Now, after years of ignoring calls to modernize the state’s 1980s-era unemployment tax code, the system is on track to lose $2 billion a year as it fails to bring in enough revenue to cover unemployment expenses, according to the report.

The Legislative Analyst’s Office, which provides fiscal and policy advice to state lawmakers, says the state needs to bring unemployment taxes in line with other states to cover the deficit.

“This is entirely avoidable,” said LAO policy analyst Chas Alamo.

Caption: First: Kim Tanner at her home in Carlsbad. Last: Kim Tanner scrolls through the “MoneyNetworkFraud” subreddit on her computer. The California Employment Development Department contracted Money Network to handle debit card payments after the agency faced scammers and hackers during the pandemic. Oct. 11, 2024. Photos by Adriana Heldiz, CalMatters

The recommendations could force a reckoning for lawmakers caught between business and labor advocates. Business groups have fought tax increases, favoring California’s current lowest-in-the-nation unemployment tax base. Labor groups argue that taxes must go up to stabilize the system. Then, they say, lawmakers should evaluate measures to expand which workers are eligible for unemployment or raise California’s $450-a-week maximum payment, which is also lower than many other states.

What happens next will be one test of how legislative leaders respond to voters’ rebuke of Democratic leadership nationwide, with the Legislature’s Democratic leadership pledging to do more to make California a less expensive place to live.

Meanwhile, the EDD has already secured funding for an unprecedented five-year, $1.2 billion effort called EDDNext to finally modernize the call centers, software and websites that power the state’s job safety net — a more ambitious version of past modernization efforts that crumbled during the pandemic.

Whether or not history will repeat itself is complicated by unanswered questions about what went wrong at the EDD during the pandemic and how the state scrambled to recover.

Former California labor chief Julie Su went on to become acting U.S. labor secretary and one of the longest-unconfirmed presidential nominees in history, thanks in part to criticism over unemployment fraud.

Gov. Gavin Newsom’s administration has denied CalMatters’ repeated requests for internal records from this period, citing an exemption that allows the governor to keep his communications secret if he chooses.

The fraud factor

During the pandemic, a wide range of fraud schemes hit the unemployment system at once. Global hackers used large-scale identity theft. Low-level social media scammers and prison inmates adopted fake names to file for benefits under emergency federal programs that waived normal identity checks. Debit card scammers cloned insecure EDD cards then run by Bank of America and drained the accounts.

Millions of real California workers got caught up in the mess, state audits found. Some saw their EDD accounts flagged as suspicious due to clerical errors, communication failures or faulty fraud software. Laid-off workers saw EDD debit cards overdrawn by thousands of dollars or cut off as the bank and the state scrambled to rein in fraud.

California and other states were partially let off the hook when the federal government agreed to absorb the bulk of the billions lost to fraud in emergency programs. After Bank of America pulled out of the unemployment business last year, the EDD tried to turn the page on debit card fraud by hiring Georgia finance tech company Money Network to take over.

The scope and details of the current fraud that workers allege isn’t clear. State auditors and financial regulators haven’t analyzed it; lawsuits and regulatory complaints only show that money disappeared from workers’ accounts, not how it was taken.

The Consumer Financial Protection Bureau, which previously fined Bank of America $100 million over what it called “botched” pandemic unemployment payments, declined to answer questions about new complaints. The bureau’s public records show that Californians have filed 149 complaints against Money Network since 2022, when the company first started running a different state debit card program, with 101 complaints mentioning government cards.

Money Network said in a statement that “only a small percentage of EDD recipients have reported suspected fraud,” and that anyone concerned should “call the number listed on the back of their card.”

The EDD and Money Network also now allow direct deposit, giving people the option of skipping debit cards altogether. Since direct deposit launched in June, about 15% of new applicants have opted for debit cards, the EDD said in a statement. The agency could not immediately say how many of its hundreds of thousands of existing customers still use debit cards.

“Anyone who suspects they are a victim of fraud should take steps to protect themselves and file a fraud report,” the EDD said in a statement.

A flyer for identity theft resources and information sits on top on other various documentation related to Kim Tanner’s financial fraud case on her desk at her home in Carlsbad on Oct. 11, 2024. Photo by Adriana Heldiz, CalMatters

Lea Bitton was still reeling from a high-risk pregnancy when it happened to her.

One evening in June, the Orange County resident logged into her Money Network disability account and realized that $4,000 was missing. She relied on the EDD money to cover her family’s costs during parental leave.

Someone Bitton didn’t know had hacked into her account, according to a lawsuit she filed against Money Network. Similar to Tanner’s case in Carlsbad, a new electronic transfer was set up for someone with a different name and bank account, and Bitton was never asked to authorize the change before the money disappeared.

Matthew Loker, Bitton’s attorney, said the fraud appears similar to some EDD debit card fraud cases that he handled during the pandemic.

“It’s deja vu a little bit,” Loker said. “It’s a difficult problem, but it shouldn’t be the consumers who are left holding the bag.”

If fraud occurs once unemployment or disability money has already been transferred from the EDD to Money Network, the state’s contract says that Money Network is responsible for investigating and reimbursing clients if necessary. But some people with EDD Money Network debit cards say that it isn’t always easy to figure out how to start that process.

In Los Angeles, Greg Zekowski filed for unemployment while in between film projects. He hadn’t even used his EDD Money Network debit card yet, he said, when he logged into the online account and saw several unfamiliar charges to Uber and other retailers.

He called Money Network. “Their response was, ‘The problem is EDD,’” Zekowski said.

So he called the EDD: “Their response was, ‘It’s all them.’”

The EDD and its contractors aren’t alone. The state’s food assistance and college financial aid programs are also among the many financial systems facing mounting fraud risks.

One broader challenge is how few financial institutions bid on government benefit projects. The lack of options puts more pressure on agencies working to secure debit cards and other payments, according to a 2023 report by the Consumer Financial Protection Bureau.

“Providers may face minimal competitive pressure from program innovation, new entrants, or customer choice,” the report authors wrote, “which may exacerbate or cause the issues with fees and customer service that benefits recipients face.”

A financial cliff

While the EDD and the people who rely on it play whack-a-mole with fraud, California has big decisions to make about the future of the state’s job safety net.

If the state continues to do nothing, the LAO projected this week, it will have no unemployment reserves and become even more reliant on loans from the federal government to weather future recessions, likely costing taxpayers billions more in interest.

Or the state can bite the bullet, as many others have, and change the way it pays for unemployment.

The offices of the Employment Development Department in Sacramento on Jan. 10, 2022. Photo by Miguel Gutierrez Jr., CalMatters

First, the LAO recommends that businesses pay a flat 1.9% unemployment tax while digging out of debt. California companies also currently only pay unemployment taxes on the first $7,000 a worker earns each year. Instead, the LAO recommends taxing employers on workers’ first $46,800 in earnings — higher than some neighbors like Nevada, but lower than Washington, Idaho and Oregon.

“We understand that the scope of the recommendations that we’re putting forward in this report are significant,” said LAO analyst Ann Hollingshead. “This is just an honest reflection of the severity of the underlying problems in the system.”

State lawmakers last revamped unemployment taxes in 1984. And businesses are already voicing opposition to temporary tax hikes to pay down California’s deep federal debt. One bill to recalibrate how the system is paid for — raising unemployment taxes to eventually increase weekly benefits — died in committee this year.

Robert Moutrie, a policy advocate for the California Chamber of Commerce, said that the business group is still reviewing the details of the LAO proposal. In the past, the Chamber has favored tightening unemployment eligibility to reduce benefit payments, labeling any form of tax increases and proposals to expand the unemployment system “job killers.”

Daniela Urban, executive director of the Sacramento Center for Workers’ Rights, said there is broad agreement on how unstable the current situation is but discord on where to go from here. She and other labor advocates say that unemployment is one area where California businesses have long underpaid compared to other states, and that the system has not kept up with non-traditional jobs and increasing costs of living.

“We’re in a huge hole, and that’s not financially acceptable,” Urban said. “But how and when to make those changes I think is what the contention is.”

In addition to the funding hole, the pandemic revealed other problems at EDD. Tech systems buckled: jammed call centers, spotty online accounts and a patchwork behind-the-scenes process for tracking unemployment claims. The agency is currently overhauling these systems with EDDNext.

Last year, the agency hired Salesforce to remake the MyEDD online system that workers use to manage their accounts. It brought in Amazon Web Services to update and integrate EDD phone systems that left as many as 40 million calls a month unanswered during the pandemic.

Early next year, the state will award a contract for the biggest chunk of the project — a new central system for EDD personnel to manage claims, which comes with more than 600 pages of specifications.

“We are making tremendous investments in modernizing EDD and the work is going well,” the agency said in a statement.

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CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.