Audit uncovers more California mismanagement – San Bernardino Sun

Watch closely and see if California can turn a bad report card into a full-ride scholarship.

The bad report card is California’s abysmal record of waste, fraud, abuse and mismanagement. The full-ride scholarship is the continued employment, even re-election, of everyone responsible for it.

The California State Auditor has just released a report on its “state high-risk government agency audit program.” To land on the high-risk list, an agency or statewide issue must meet four conditions, starting with “waste, fraud, abuse or mismanagement” or “impaired economy, efficiency or effectiveness” that may result in “serious detriment” to the state or its residents.

The other conditions are the “likelihood” of waste, fraud, etc., the lack of corrective action, and the potential for corrective action to fix the problem.

Guess how many agencies and statewide issues meet the “high-risk” conditions. If you guessed all of them, you may be psychic, but it’s currently seven. At least it was seven until this latest report. Now it’s eight.

The new “high-risk” agency is the California Department of Social Services. It joins the list because the One Big Beautiful Bill signed into law earlier this year holds states accountable for a high “payment error rate” by making them pay a portion of the cost of benefits, in this case CalFresh benefits, that previously had been covered entirely by the federal government.

The California Department of Social Services administers the Supplemental Nutrition Assistance Program, also known as SNAP, food stamps or CalFresh. Payment errors result from the lack of accurate verification of eligibility. This can be an overpayment to people who are not entitled to the benefits or an underpayment to people who are entitled to the benefits but are denied or paid the wrong amount.

The federal government has required states with a high payment error rate, 6 percent or above, to prepare a Corrective Action Plan. California has been submitting them every year since 2017.

But now federal law has been changed. States with high payment error rates have to “shoulder part of the cost of the program’s benefits,” as the auditor put it. Shouldering the cost will run California $1.2 billion if the state can get the payment error rate down to the range of 8-10 percent. It has been as high as 13.4 percent. Currently it’s almost 11 percent, and that means the state’s share of the program cost will be $2.5 billion.

For California’s elected officials, the challenge will be how to spin this story into a Grimm’s Fairy Tale, the one where the evil spray-tanned witch lures innocent children to a solid gold cottage and steals their lunch money.

But the reality is this: California has a major problem verifying the eligibility of individuals for government benefits. It’s not only CalFresh that has a high payment error rate.

Also on the “high-risk” list is the Employment Development Department, which the auditor says “continues to struggle with improper payments, claimant service and eligibility decision appeals.”

And still on the high-risk list: “the state’s management of federal COVID-19 funds.” The federal government provided $285 billion to California over two years. About $2 billion remains, which the auditor called “a significant amount for the State to manage.” Because of mismanagement, the state lost out on $820 million that expired unspent.

The auditor’s report notes that the state’s “late financial reporting remains a high-risk issue.” Late reporting can affect California’s cost of borrowing, making those massive statewide bond measures on your ballot even more expensive for taxpayers.