California auditor finds millions of dollars in waste, misuse in state departments

SACRAMENTO, Calif. (CN) — A Friday report by the California state auditor found over $5 million in improper spending across a handful of state agencies through waste, misuse or a failure to report.

The problems cut across agencies from the California Air Resources Control Board to the Department of Alcoholic Beverage Control. Of nearly 2,700 cases reviewed between January 2024 and October, about 2,000 — roughly 74% — lacked enough information to investigate or were still pending review, the state auditor found.

In the remaining cases, auditors gathered evidence in 604 matters, conducted independent investigations or follow-ups in 72 cases and referred five cases to other agencies.

The largest amount of waste identified by the auditor was mobile phone fees.

“For instance, an agency wasted more than $4.6 million on monthly service fees for thousands of mobile devices that went unused month after month and, in many cases, for more than two years,” State Auditor Grant Parks said in the report.

The auditor found waste in the state Employment Development Department, which in 2020 significantly increased staffing to handle a surge in unemployment claims following the pandemic. The department provided mobile devices to many employees who worked remotely and maintained multiple service provider accounts on their behalf.

“… EDD had procured a total of 7,224 mobile devices such as cell phones, smartphones, and wireless hotspots to allow [unemployment insurance] call center staff to work remotely,” the auditor said. “Yet, by April 2025, 45 months after the governor rescinded the stay‑at‑home order, [the department] was still paying monthly service fees for 5,097 of those mobile devices.”

Focusing on devices unused for four or more consecutive months, the auditor found service fees for more than 6,000 devices totaled $4.6 million over nearly five years. More than half went unused for at least two years, and 99 devices were never used.

The auditor recommended reviewing wireless carrier non-usage reports, cutting service for devices inactive for three months, and adopting a formal termination policy.

The department said it implemented that process in April and adopted a departmentwide policy that took effect in early September.

“Upon leadership being alerted to the issue, we took action immediately,” said Greg Lawson, a spokesperson with the department, in a statement to Courthouse News. “We adopted all auditor recommendations, applied phone shutdown efforts right away and formalized a policy for automatic phone disconnection controls moving forward.”

The auditor found the California Air Resources Board paid more than $170,000 to an employee who no longer worked there for nearly 15 months, calling it a lapse in oversight.

The error stemmed from an employee who considered retiring in 2022 but instead took a leave of absence, using remaining vacation time before ultimately retiring.

“However, the employee began his leave of absence in July 2022, and that leave continued for about two years — much longer than his legitimately accumulated leave hours should have allowed — while he continued to receive his full salary each month,” the auditor said.

“The employee recorded leave on his timesheets each month but claimed to have not noticed any problems with his leave balances and assumed they were accurate,” he added.

The board discovered the overpayment when, in 2024, the employee said he’d retire.

The auditor recommended the board examine receiving repayment, create an audit process and evaluate whether managers need more training on leave policies.

The board told the auditor that it will, or already has, followed the recommendations.

The auditor also found that the state Department of Veterans Affairs’ Yountville Veterans Home failed to report about $400,000 in taxable housing benefits, potentially leaving employee-tenants with unpaid tax liabilities.

Separately, a manager at the Department of Alcoholic Beverage Control improperly used state vehicles for personal travel, failed to document trips and stored vehicles overnight without permits, costing the state an estimated $16,000.

State Senator Tony Strickland, a Huntington Beach Republican, praised the audit but told Courthouse News he believes far more waste exists and deeper audits are needed.

“I believe the $5 million is just the tip of the iceberg,” he added.

Strickland pointed to state-funded programs to combat homelessness and the high-speed rail project — both of which have received billions of dollars over multiple years — as prime candidates for audit.

“How do you spend billions of dollars and not really lay down any tracks?” Strickland questioned, adding that more oversight is needed.

The governor’s office referred comment to the agencies. The Assembly speaker couldn’t be reached for comment.