California did not materially comply with the requirements for seven of the 22 federal programs the state auditor examined, including “pervasive” noncompliance in its unemployment benefits program, which could put essential federal funding at risk.
“This report concludes that the State did not materially comply with certain requirements for seven of the 22 federal programs or clusters of programs (federal programs) MGO audited, including one program for which the noncompliance was pervasive,” wrote Deputy State Auditor Linus Li. “Additionally, although MGO concluded that the State materially complied with requirements for the remaining federal programs it audited, the State continues to experience certain deficiencies in its accounting and administrative practices that affect its internal controls over compliance with federal requirements.”
The audit found that even in 2023 — years after the state made $55 billion in fraudulent COVID lockdown-era benefits payments — the state likely made “potentially ineligible payments” of nearly $200 million. The audit also found that of 138 pandemic unemployment assistance claimants that were tested, 91, or 66%, had verification issues.
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“While Gavin Newsom chases the national spotlight, Californians are left with an administration that can’t accomplish the basic functions of government,” said California State Assembly Minority Leader James Gallagher to The Center Square. “The federal government is right to take a look at this spending and decide if it’s appropriate to keep throwing resources at an administration that treats it like Monopoly money.”
Last year, the state’s Legislative Analyst’s Office said the state’s unemployment fund runs a structural deficit of $2 billion per year, beyond the $20 billion debt and $1 billion in annual interest payments to the federal government. Because the unemployment fund is paid for by payroll taxes on employers and their employees, the LAO said payroll taxes would need to rise from $42 per employee making $46,800 or more per year, to $889.20, or over 21 times higher than the existing base payroll tax.
