California FAILS Federal Program Audit: More Than Half Of COVID Unemployment Benefits Are In Question
California’s state government has been found to be in noncompliance with the requirements of seven out of 22 federal programs, according to a recent audit by the state auditor. The audit, which highlights “pervasive” noncompliance in the unemployment benefits program, raises significant concerns about the state’s ability to manage federal funds and could jeopardize essential federal funding.
The audit, conducted by Deputy State Auditor Linus Li, concluded that California did not materially comply with the requirements for seven federal programs, including one where noncompliance was pervasive. The report states, “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.”
The audit also noted that while the state complied with the remaining federal programs, it continues to experience deficiencies in its accounting and administrative practices, affecting its internal controls over compliance with federal requirements.
One of the most critical findings of the audit pertains to the state’s unemployment benefits program. The report 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. Of the 138 pandemic unemployment assistance claimants tested, 91, or 66%, had verification issues.
California State Assembly Minority Leader James Gallagher criticized the administration, stating, “While Gavin Newsom chases the national spotlight, Californians are left with an administration that can’t accomplish the basic functions of government. 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.”
The audit’s findings are particularly concerning given the state’s ongoing structural deficit in its unemployment fund. According to the Legislative Analyst’s Office (LAO), the state’s unemployment fund runs a structural deficit of $2 billion per year, in addition to a $20 billion debt and $1 billion in annual interest payments to the federal government.
To address this deficit, the LAO has recommended a significant increase in payroll taxes. Currently, businesses pay $42.00 per employee making 46,800 or more per year. However, the LAO suggests that this amount would need to rise to $889.20, or over 21 times higher than the existing base payroll tax, to cover the state’s insolvency.
The audit, conducted by Deputy State Auditor Linus Li, concluded that California did not materially comply with the requirements for seven federal programs, including one where noncompliance was pervasive. The report states, “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.”
The audit also noted that while the state complied with the remaining federal programs, it continues to experience deficiencies in its accounting and administrative practices, affecting its internal controls over compliance with federal requirements.
One of the most critical findings of the audit pertains to the state’s unemployment benefits program. The report 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. Of the 138 pandemic unemployment assistance claimants tested, 91, or 66%, had verification issues.
California State Assembly Minority Leader James Gallagher criticized the administration, stating, “While Gavin Newsom chases the national spotlight, Californians are left with an administration that can’t accomplish the basic functions of government. 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.”
The audit’s findings are particularly concerning given the state’s ongoing structural deficit in its unemployment fund. According to the Legislative Analyst’s Office (LAO), the state’s unemployment fund runs a structural deficit of $2 billion per year, in addition to a $20 billion debt and $1 billion in annual interest payments to the federal government.
To address this deficit, the LAO has recommended a significant increase in payroll taxes. Currently, businesses pay $42.00 per employee making 46,800 or more per year. However, the LAO suggests that this amount would need to rise to $889.20, or over 21 times higher than the existing base payroll tax, to cover the state’s insolvency.
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