CA Auditor Warns 18 State Agencies ‘High Risk’ for Waste, Fraud, Abuse of Federal COVID Funds

California’s non-partisan State Auditor, Elaine Howle, warned Governor Gavin Newsom this week that she has very serious concerns about 18 state agencies responsible for doling out $17 billion in federal COVID-19 relief funds.

These 18 departments have officially been added to the State Auditor’s “high risk” watch list for potential waste, fraud or abuse. The Auditor says the “potential mismanagement of funds could leave individuals without medical care, or money to pay for food or housing.”

Gov. Gavin Newsom’s Finance department responded practically telling the Auditor to “pound sand,” saying it believes that the State’s management of federal COVID‑19 funds does not meet the regulatory criteria, nor does adding the issue to the high risk list serve the purpose of the state high‑risk program.

The Auditor’s letter, sent to the Governor and Legislative leaders Tuesday, says state law gives her office the authority to audit any state department deemed “at high risk for the potential of waste, fraud, abuse, and mismanagement or that has major challenges associated with its economy, efficiency, or effectiveness.”

“The rush to spend the funds, coupled with changing requirements and past audit results of these departments are some of the reasons mentioned for the elevated level of concern,” Assemblyman Jim Patterson (R-Fresno) said in a California Globe interview.

“This should be a huge wake-up call by this administration and the Democrat Party, and to the people of California,” Assemblyman Patterson said. “The response from these departments is ‘there’s nothing to see here.’ The Auditor thinks there’s a whole lot to see. She is watching and will not let these things go unnoticed.”

With $71 billion in federal COVID-19 funds, the following departments are now on the auditor’s watch list:

Department of Aging

Arts Council

California Community Colleges

California State University

Community Services and Development

Department of Education

Governor’s Office of Emergency Services

Employment Development Department

Department of Finance

Department of Health Care Services

Department of Housing and Community Development

Department of Public Health

Secretary of State’s Office

Department of Social Services

California State Library

Board of State and Community Correction

Department of Transportation

University of California

“Departments that poorly manage federal COVID‑19 funding may negatively affect Californians,” the Auditor said. “A record number of Californians are now eligible for federally funded programs that help individuals maintain their health and pay for food and shelter,” the auditor said.

“According to the Governor’s Budget for fiscal year 2020–21 , almost one in five California workers who were employed in February 2020 were out of work in May 2020.” Between March and May, 5 million unemployment claims were filed. That number has grown to 8 million total unemployment claims.

“These large bureaucracies without outdated technologies impede rather than provide help to the people,” Assemblyman Patterson said.

Patterson has been the people’s champion for demanding audits of the state’s notoriously “high risk” agencies including High Speed Rail and the Department of Motor Vehicles. “In my four years left in the Legislature, I will be an outspoken and forceful watchdog for these kinds of issues,” Patterson said. “It always starts out that I am the lone ranger asking for the audit, and then some people start to notice. Eventually the media takes notice, and even some Democrats start sounding like me. It is hurting people up and down the state.”

Patterson warned that too many Democrats and Gov. Newsom appear more interested in giving cover to the agencies. “The governor goes out there every day and looks right into the camera and says ‘this is progress… we are the progressives leading the way.'”

Except as Patterson noted, “this leads to less water and higher prices to use it; less energy and higher prices to use it; higher and higher gas taxes and renewable energy. They are forcing people out of cars supposedly into public transit, which people are actually fleeing from.”

Patterson said the Auditor’s “high risk” warnings are usually reserved for “school districts really messing up,” or “cities raiding their treasuries.”

“I’ve never seen her throw a net this wide on this many agencies.”

The Auditor concluded: “Given that the purpose of federal COVID‑19 funds is to help Californians through a life‑threatening pandemic that has upended the economy, we assess the level of serious detriment as high if state departments do not properly manage these funds.”

“…adding this issue to the state high risk list aligns with the purpose of the state high‑risk program—to improve the operation of state government—and we therefore stand by our assessment and conclusion to add the State’s management of federal COVID‑19 funds as an issue on the state high risk list.”

Read the Auditor’s report for detail by agency.