California audit reveals mixed bag: Some fiscal wins, but millions lost
As we head into a new year, California’s state auditor found mixed results on the state’s handling of money and government agencies. The auditor gave good reviews for the state treasurer’s handling of securities, while some agencies were found to have wasted significant amounts of money.
California state treasurer
The most recent report analyzed state treasurer Fiona Ma’s accounting for nearly $200 billion the state holds in securities. Those securities include money held on behalf of the state, local governments, banks posting collateral and companies or agencies required to put up financial guarantees.
“We found that the statement presents fairly the securities accountability of the State Treasurer’s Office,” the report reads.
Most of that money is held in the pooled money investment account.
That account is where the state holds and invests cash from state and local governments and earns interest while it’s being held. The treasurer manages that pool, and the auditor found securities bought with that money have been correctly accounted for.
Overall, the auditor found no material discrepancies were found and Ma didn’t overstate or understate what’s being held.
Unemployment cellphones
It’s a bit of a different story when it comes to the auditor’s review of several state agencies.
That includes the state’s unemployment agency or Employment Development Department (EDD), which wasted at least $4.6 million buying more than 6,200 cellphones during the COVID-19 pandemic.
“Whether it’s a cent, whether it’s a dollar, whether it’s $4.6 million, it’s inexcusable to waste any of that money,” Democratic Assemblymember John Harabedian, who chairs the state’s legislative audit committee, said to KPBS. “I’ll say to taxpayers and constituents, demand more and demand better outcomes. And that is a very reasonable reaction for them to have and we need to do better, period.”
The pandemic caused a huge surge in unemployment claims. Because of that, the state hired nearly 4,000 more call representatives and purchased more than 7,000 cellphones and hotspots to allow those new workers to operate remotely.
Roughly 800 of them were used. However, auditors found that 72% of those devices went unused for a year, and 7% went unused for four years, and EDD was paying the monthly fees for about 2,000 more mobile devices than call center staff.
State auditors even found a storage room in the EDD branch office that had 420 unused cellphones.
The auditor said EDD reviewed their report and immediately began implementing recommendations.
“Beginning in April 2025, EDD established a process whereby its IT Branch actively reviews the nonusage reports provided by the carriers and terminates any active lines that EDD has not used for 90 consecutive days,” the auditor’s report reads. “EDD formally adopted this process in a departmentwide policy that it put into effect on September 3, 2025.”
California Air Resources Board
The auditor also found the California Air Resources Board significantly overpaid an employee on leave.
In 2022, an employee decided to take a leave of absence to use up remaining vacation time and other leave balances before retiring.
At most, an employee is allowed to take 180 days of leave before retirement. But this leave lasted two years, with that employee continuing to receive his full salary each month.
“Although the employee’s supervisor approved the indefinite leave of absence, the supervisor’s manager and management in Human Resources (HR) denied knowledge of the leave,” the auditor’s report reads.
The full overpayment ended up being more than $170,000.
The agency only discovered the problem after the employee announced his decision to retire.
Department of Alcoholic Beverage Control
The auditor’s report also found that the manager of the Department of Alcoholic Beverage Control misused state vehicles to commute and for other personal business, including taking a child to and from school.
The report said that the manager’s supervisor condoned the use of that vehicle.
The auditor believes that the misuse totaled nearly $5,000.
“In addition to this, we identified many other questionable trips, but we were unable to determine whether these trips were work related,” the report reads.
Following that investigation, state auditors investigated the vehicle use of several other managers and found an additional $16,000 of misuse.
In response, the agency placed one manager on administrative leave, and further corrective action was pending based on their own review.
Department of Veterans Affairs
Auditors also found that a veterans’ home in the state did not report some taxable housing benefits.
Their investigation found Yountville Veterans Home, which is north of San Francisco, did not report more than $400,000 in taxable housing benefits for employee-tenants who rented housing from 2023 through 2025.
Those employee-tenants may now have significant tax liabilities.
Yountville employs a manager to specifically ensure the agency reports taxable fringe housing benefits.
“The manager acknowledged that they have not reported taxable fringe housing benefits since they started in their position,” the report reads.
As a response, CalVet will report those benefits and notify any employee-tenants of any tax liabilities.
Department of Parks and Recreation
When it comes to the Department of Parks and Recreation, auditors found that two employees submitted altered or newly created receipts instead of the receipts that came with their original purchases after using their department-issued credit cards.
“We found that Employees A and B failed to record their purchases into State Parks’ inventory as required, and these two employees did not follow the separation of duties in the purchase process as state policy requires,” the report reads.
Purchases on those receipts totaled more than $40,000.
Following the auditor’s report, the department suspended those employees’ card privileges until they completed their own investigation. All employees will also receive refresher training on proper procedures.
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Ella Rae Greene, Editor In Chief
