It’s very typical for states to face these kinds of situations after a significant unemployment event. That makes sense - maximize public benefit and assess the fees necessary when the economy improves.

Organizationally, times are always good for Labor departments when times are bad. States that don’t come out of major events like recessions or COVID with unemployment program debt engineer it that way - they choose to pay meager benefits or make it difficult to get benefits to push spending to Federal programs.

Usually the US government arranges a debt facility to spread the pain over a longer period. My guess is this is part of a campaign to block such efforts in the budget.

There’s been a lot of reporting on fraud in unemployment during COVID. Most of it was associated with the special COVID appropriations intended to rush out relief. That stuff was outside of the normal unemployment trust funds if memory serves.

And an older WSJ article, before CA's default, that was critical of CA's decision making:

https://www.wsj.com/articles/democratic-led-states-let-their...