One in an occasional series examining government spending as California copes with recession.

Seven years after the federal government gave California $66.1 million to modernize its unemployment insurance call centers and claims processing systems, state workers are still manually processing claims that the jobless now submit online.

Neither of two projects that were to be completed with the federal money in four or five years are done as workers grapple with a computer system that is 30 years old.

The delays have hampered the state Employment Development Department's ability to quickly process thousands of applications for unemployment insurance and issue checks to the jobless in the worst recession in 28 years.

They have also forced swamped department employees to work costly overtime at night and on weekends to keep up with the surge in unemployment claims, which now total as many as 75,000 a week, EDD officials say.

In 2002, the department received $936.9 million from the federal government. Most of the money was for unemployment insurance benefits.

The sum also included $66.1 million for the EDD's unemployment insurance modernization project. It was made up of two parts: the Call Center Upgrade Project and the Continued Claims Redesign Project.

Seven years later, neither project is complete.

The call center upgrade is currently in the design phase; a deal was signed with Verizon in June 2008. Its first part will be implemented in the fall, EDD spokeswoman Loree Levy said.

The contract for the claims redesign project is currently out to bid, with vendors expected to submit proposals this month. A contract will be awarded this fall, Levy said.

Federal officials confirm they gave California money but say they haven't tracked the progress of the projects – not even once – since then.

"We don't follow the status or progress of such distributions because they don't involve grant money," said Jennifer Kaplan, a U.S. Labor Department spokeswoman.

Asked if the Labor Department is happy that it paid $66 million for improved public services that are still not in place, Kaplan said: "It's just not something I can comment on."

Dale Jablonsky, EDD deputy director and chief information officer, cited several factors – including changes in the state's bureaucratic structure – to explain the years of delays.

He said EDD was put under the umbrella of the state Labor and Workforce Development Agency; it had been under Health and Human Services.

EDD also did not have the project management skills in house to handle the modernization efforts and had to rely on officials at the state data center, Jablonsky said.

"Those kind of fluid events contributed to early delays," he said. "Then, Oracle."

The Oracle scandal was a procurement controversy in which millions of dollars of taxpayers' money was spent on a no-bid software deal. Auditors found that the contract, later canceled, would have charged the state for software it didn't need.

To prevent more "blemishes like Oracle," Jablonsky said, the state's requirements for major information technology projects were tightened considerably.

Now, state officials must conduct feasibility studies and get them approved before contract documents are drafted and issued – and that takes time, slowing down how fast officials can upgrade systems.

"They're designed so that procurements are done fairly, thoroughly, and with oversight. That creates rigor, but it also a creates a longer timeline," Jablonsky added.

The state's long project timelines for computer projects are drawing fire.

Information Week, a magazine that covers institutional information technology issues in government and the private sector, lambasted California's handling of such projects late last month.

"To call the state's current IT situation a monumental disaster would be to insult the words 'monumental disaster,' " Information Week wrote.

It listed nine California IT projects under development that will take up to 10 or 11 years and cost $3.6 billion, calling them "reality-distorting black holes."

That's no consolation to workers at EDD, where only $9.9 million of the $66.1 million it received has been spent on the badly needed projects.

EDD employees take unemployment insurance claims jobless people file online and must input some information into a separate state database because the two computer systems aren't integrated.

"Our 30-year-old computer system does not allow for information on an online application to be directly entered into a database and cross-matched against other databases to verify (a claimant's past) wages and identity information," Levy said. "Staff has to take the application submitted online and manually process it in the database."

Despite its challenges, Levy said EDD is sending benefit checks to unemployment insurance applicants within three weeks "in the vast majority of cases."

The Bee has previously reported that many unemployed people seeking benefits have encountered long delays in filing claims by telephone because the phone lines are overwhelmed.

Call The Bee's Andrew McIntosh, (916) 321-1215.