State Tech Systems on the Ropes: Lessons From California’s UI System Debacle

(Editor’s note: John Thomas Flynn was California state CIO from 1995-99.)

If you live in California, you probably already know the story of the state government unemployment insurance (UI) system’s performance debacle over the past year.

And if you live elsewhere – and the story got lost in the avalanche of pandemic-driven bad news over the past 11 months – here’s a catch-up along with some lessons for state governments that need to start digging out a deep technology hole.

California Crisis Redux

A happy ending to the story would be nice, but unfortunately, there is none in sight at the moment. Sacramento is continuing to reel from the greatest California state government computer-related fiasco in a quarter century, and perhaps largest ever in the U.S. And the situation only seems to be getting worse.

At the onset of pandemic conditions in early 2020, the state’s 40-year old legacy UI system began to show cracks from a surge in unemployment claims. In practical service terms, claimants weren’t able to access the online UI registration system, or receive assistance through the help desk of the UI call center.

Horror stories soon followed as unemployed workers – faced with mortgage and rent bills, utility shutoff warnings, and other financial obligations – went weeks, and even months, without getting the unemployment benefits that were owed to them.

Beyond the human tragedy facing millions of laid-off California workers as a result of UI system failure, it took only a few months for the situation to morph into what has become the largest, and most spectacular state IT project failure since the California Department of Motor Vehicle (DMV) database modernization debacle in the mid-1990s.

At that time, the administration of Gov. Pete Wilson was castigated relentlessly by the legislature, the state auditor, and the media for wasting a now seemingly “small” $50 million on a DMV IT project. Senior officials in the governor’s office considered it the darkest days of their administration.

The high-profile tech failure led to the initial creation of the California chief information officer (CIO) position – and my appointment to the office in 1995.

Having just served a three-year stint as the first-ever CIO for the Commonwealth of Massachusetts, one of the first questions I was asked in my new role in Sacramento was the greatest difference between the IT challenges in California versus the Bay State. I replied that most of the problems were quite similar, but everything in California had three or four more zeros at the end of it.

The situation now facing California Gov. Newsom’s administration – unfortunately – looks like the next sequel to Back to the Future.

According to the latest reports, the state’s Employment Development Department (EDD) –the agency responsible for the UI system, has now admitted that a staggering $11 billion in fraudulent claims were paid out erroneously. And it said it’s investigating $19 billion in further suspicious applications.

To demonstrate the scale of the problem, that $30 billion represents the total entire annual budget for more than half of the states in the country.

Learning Lessons the Hard Way

Why do these state IT debacles continue to happen, particularly in California?

It will take a book for me to explain all the sordid details – at least one positive aspect of my pandemic-imposed isolation – and I expect to publish the longer story this summer.

In that effort, I have laid out many of the issues and arguments garnered from my vantage points as a former state CIO, president of the National Association of State Chief Information Officers (NASCIO), a member of a U.S. Government Accountability Officer (GAO) IT advisory board, a systems integrator serving the public sector, and a host, moderator, and journalist interviewing most of the state CIOs in the country.

In a nutshell, what has been missing in most government IT programs has been executive program leadership engagement.

I’m not talking about CIOs, chief technology officers, or IT project managers, although those are critical components. I mean executive program or business leaders who are responsible for all phases of the programs and services their agencies and departments provide, and all of which depend on mission-critical computer systems to function properly.

Too often, these program leaders are wont to explain away computer system problems in the departments they oversee by blaming old, legacy systems. But at some point, that becomes a  ‘dog ate my homework’ kind of excuse that’s not acceptable anymore.

Rather, program leaders – who often are political appointees, should become fully aware of the challenges facing their mission-critical systems when they begin their job And if the danger signs are there, they need to assume responsibility and take charge, and escalate the call for adequate funding to prevent a catastrophic failure, the human tragedy and a public relations nightmare like that now enveloping the Newsom administration.