California Faces Federal Program Compliance Issues, Risking Essential Funding
California is under scrutiny for failing to comply with federal program requirements, putting essential funding at risk. A recent audit found that the state did not meet the requirements for seven out of 22 federal programs examined, with “pervasive” noncompliance in its unemployment benefits program.
Deputy State Auditor Linus Li highlighted the state’s failure to comply with certain federal program requirements, noting that noncompliance was widespread in some areas. The audit also revealed ongoing deficiencies in the state’s accounting and administrative practices, impacting internal controls over compliance with federal requirements.
Despite a previous $55 billion in fraudulent COVID benefits payments, California continued to make potentially ineligible payments of nearly $200 million. Verification issues were found in a significant number of pandemic unemployment assistance claimants, raising concerns about the state’s oversight and accountability.
Assembly Minority Leader James Gallagher criticized Governor Gavin Newsom’s administration for its inability to fulfill basic governmental functions. He emphasized the need for federal scrutiny of the state’s spending practices, questioning the wisdom of providing resources to an administration that mishandles funds.
The state’s Legislative Analyst’s Office previously reported a $2 billion annual deficit in the unemployment fund, in addition to a $20 billion debt and $1 billion in annual interest payments to the federal government. To address this financial crisis, the office suggested a substantial increase in payroll taxes on employers and employees, potentially raising taxes over 21 times higher than the current rate.
California’s compliance issues with federal programs raise concerns about the state’s financial management and accountability. As federal funding hangs in the balance, California must address these deficiencies to ensure the effective utilization of resources and uphold its obligations to taxpayers.
