A report by the California State Auditor found several agencies wasted, misused or failed to report over $5 million in state funds.
The Employment Development Department wasted the majority of the funds with at least $4.6 million alone spent on service fees for thousands of cell phones, many of which were not in use for several months over the last five years.
According to the report, the department established a process to review nonusage reports provided by cellphone carriers. It now terminates any active lines not used for three months.
Susan Shelley, a spokesperson for the Howard Jarvis Taxpayers Association, said the department was reckless with taxpayer dollars because nobody was looking.
“It’s frustrating that so many California agencies don’t take these kinds of things seriously enough and they don’t have respect for the taxpayers’ dollars,” she said. “We’d like to see more attention paid, more accountability for even the smallest details when taxpayers’ dollars are involved.”
The audit found additional spending problems. The California Air Resources Board overpaid a former employee nearly $200,000 because it did not accurately track leave time. The Department of Veterans Affairs did not report over $400,000 in taxable housing benefits for employees. And several managers at the Department of Alcoholic Beverage Control misused state vehicles.
David Kline, vice president of communications and research for the California Taxpayers Association, said the findings come at a critical moment as the state faces a potential $18 billion budget deficit next year.
“I don’t think there’s any Republican, Democrat, Independent or Green Party person in the whole state who thinks it’s smart to spend millions of dollars for absolutely nothing when this money could be used for education, could be used for health care, could be used for better roadways, all sorts of things,” he said.
Kline said the audit should play a key role as lawmakers and the governor negotiate the state budget in the coming weeks.
“We think this audit should be front and center when those discussions are taking place to show that the tax dollars the state already has need to be scrutinized a lot more before anyone would even consider a tax increase,” Kline added.
Lawmakers from both parties said the report raises serious concerns.
How lawmakers are responding
Democratic Assemblymember John Harabedian chairs the state’s legislative audit committee. He argued that lawmakers should be concerned about how agencies are managing the public’s money.
“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,” he said. “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.”
Democratic State Senator John Laird is the vice chair of the committee. He said the waste from the EDD is likely because of rapid expansion during the COVID-19 pandemic.
“I know at the time other departments were actually loaning staff members to EDD, but it's possible that phones and things were left over from that,” he said. “But this is just really important to get on top of and to call on because their function and their helping people is so important.”
Laird also noted that while $5 million is a small fraction of the state's over $200 billion state budget, agencies should take the findings seriously and address waste before it happens.
Republican State Senator Suzette Valladares believes this issue stems from a failure in leadership and poor oversight.
“We need to prioritize our spending next year, but we also need to make sure that we're catching wasteful spending and we're ensuring that every agency is leading their agency the way that it's intended to and keeping an eye out for the back of the taxpayer,” she stressed.
The California State Auditor declined a request to comment.
