The Unemployment Insurance Appeals Board board, which resolves workers’ challenges over jobless benefits, voted Tuesday to fire it’s top administrative officer.

The board voted 4-1 to fire Jay Arcellana, a veteran employee who serves as the agency’s top executive and administrative law judge. The decision followed complaints from the board that workers’ cases had been unnecessarily delayed, forcing workers to wait for their benefits. Arcellana rejected the allegations, and earlier referred calls to a board spokeswoman.

“I think the board needed to take action as soon as possible,” said board chairman Rick Rice, who sought Arcellana’s termination. “When the new chair comes in and essentially we have a new board in the next few months, they can begin moving forward with the management team that they find reliable.” Board members Price, Fred Aguiar, Ann Richardson and Stephen Egan approved firing Arcellana.

Board member Liz Figueroa, a former Democratic state senator from Fremont, opposed the firing.

Simmering in the background is an audit of the board by the Joint Legislative Audit Committee, which is looking into allegations brought by board representatives involving the board’s procurement and hiring practices. The audit was approved in March by the two-house committee, which plans to release its findings in October. The allegations reflect concerns “of administrative wrongdoing or irregularities, employee favoritism and nepotism,” according to state Sen. Carole Migden, D-San Francisco, who heads the Labor and Industrial Committee.

“The basic problem with this agency is that senior management doesn’t seem to understand that we are here to run this program for the benefit of the public, not for the benefit of themselves,” Rice said earlier in a separate interview.

The timing was crucial.

The term of Rice, an appointee of the governor, expires Aug. 2. At the time he was appointed last year, the Schwarzenegger administration told the Senate that Rice was viewed as a temporary appointment, and the Senate did not object.

But recently, the administration changed its mind: It asked the Senate to put Rice up for a confirmation hearing for a full term. Perata’s office declined, viewing the request for confirmation as the reneging on his agreement with the Senate.

That means Tuesday’s meeting was the last meeting at which Rice will serve as chairman, and it was Rice’s last chance to oust Arcellana.

Rice said Arcellana improperly delayed the announcement of official decisions, resulting in delays of jobless payments, and has been lax in maintaining security over the agency’s paperwork. In his written response to Migden, Rice did not mention leaks or a policy curbing public information -- a policy that people familiar with the board say has been in effect for months -- but he noted the Bush administration’s displeasure with the board’s apparent delays.

Rice rejected the suggestion that he was censoring the comments of board members or staffers. “Absolutely not. I don’t care, as long as they make it clear that they are not representing their opinions as those of the board.”

Until now, the only public indication of the looming staff change was on an agenda posted on the board’s Web site, in which the third item describes the “termination of CEA (Career Executive Assignment) appointment, executive director/ALJ.”
Migden, in a letter to Rice, was critical of the agency.

“It is premature to take an action against the executive officer until the audit is completed and there has been an opportunity for an independent entity to gather and do the necessary evaluation of the facts involved,” Migden wrote on July 17. “There are clearly serious concerns about how the board has handled various issues over the past year and the impact these actions have had on staff and the services they provide.” Migden gave Rice until Monday to respond-which he did.

Rice noted that no reason is required in the firing of a CEA employee, who has “return rights” to earlier jobs in the bureaucracy. Rice said he had been considering Arcellana’s ouster for some time.

“The final straw, for me, came when I learned of the longstanding practice of delaying decisions, resulting in the delay of benefits to the unemployed, as a budget gimmick designed to ensure that (the board) would be flush with cash, even though our unemployed claimants would have their benefits delayed.” He also noted that the Bush administration was unhappy with the delayed decisions. “Federal standards call for 60 percent of cases to be resolved in 30 days. California currently only resolves 6 percent of its cases in 30 days, and we continue to have a backlog of 46,000 cases.”

A federal audit is planned to examine the apparent delays in the board’s cases, he added.
The board has suffered negative media coverage in the past.

Last year, the San Francisco Chronicle reported that then-board chairwoman Ann Richardson tried to pay a board secretary, Claire Connelly, $10,000 to have a baby for her -- allegations that ultimately led to a protracted legal dispute and which Richardson flatly denied. Connelly’s father, Tim McArdle, was the presiding administrative law judge at the time. His daughter filed a federal complaint in June 2007 against Richardson alleging sex harassment and job retaliation.

The negative coverage played a part in costing Richardson her position as chairowoman of the board, sources said, and left negative feelings over board leaks.