𧞠Californiaâs Revealing Audit Bombshell
Billions in Waste, Fraud, and Mismanagement â and No One Is Being Held Accountable
Just before Christmas, the California State Auditor released a report that should have set off alarms across the state.
It barely made a ripple.
On December 11, 2025, the Auditor published its updated High-Risk Report, flagging eight major state agencies and programs as posing serious risks for waste, fraud, abuse, or mismanagement.
Not one agency was removed from the list.
One major program was newly added.
Several problems have been flagged for more than a decade.
All of this as California heads toward a $20 billion budget deficit next year.
This isnât bookkeeping trivia. Itâs a warning.
đ¨ What the Audit Actually Found
The report focuses on programs that touch millions of people and move tens of billions of dollars every year. When oversight fails here, the losses compound fast.
Here are the biggest red flags, in plain English:
đ CalFresh (Food Assistance) â Newly Added
Error rates around 11%, well above federal limits
Starting in 2028, Californiaânot Washingtonâwill pay penalties
Up to $2.5 billion per year in improper payments + fines
This is new, and itâs expensive.
đź Unemployment Insurance (Employment Development Department) EDD
Still plagued by pandemic-era failures
$1.5 billion in improper payments in the last two years
$500+ million in fraud in 2024 alone
Tied to the infamous $32+ billion COVID fraud disaster
Same agency. Same problems. Same results.
đĽ Medi-Cal Eligibility
On the high-risk list since 2007
Persistent data mismatches and weak verification
$1.9â$4 billion in questionable payments
When a program covers 1 in 3 Californians, small errors become massive losses.
𧞠Unused Federal COVID Funds
California received $285 billion in pandemic aid
$2 billion still unspent
$1.3 billion may expire unused by 2026
Money allocated. Needs unmet. Funds sitting idle.
â ď¸ And Thatâs Not All
The report also flags:
Delayed financial reports with multi-billion-dollar errors
Weak cybersecurity across state agencies
Failed IT megaprojects
Aging water infrastructure threatening long-term supply
None of these are new. Thatâs the point.
đ Why This Went Viral
After the report dropped, a viral post on X pulled together figures from multiple official audits and estimated $76+ billion in waste and fraud during Governor Gavin Newsomâs tenure:
~$32B in unemployment fraud
~$24B on homelessness programs with little outcome tracking
~$18B on high-speed rail with no operable track after 16+ years
Hundreds of millions more on failed tech projects
That $76B figure isnât a single line item in this report.
But every dollar comes from real audits.
đ§ The Bigger Issue
This isnât about one program or one year.
Itâs about a system where:
Spending grows faster than oversight
Emergencies suspend basic controls
Political incentives reward expansion, NOT execution
When that happens, accountability erodesâand the same agencies keep showing up on the same lists. Which is whatâs happening.
đ Want the Full Breakdown?
In the paid deep dive, I walk through each of the eight high-risk areas, explain why these failures keep repeating, and show how this audit fits into a much larger pattern of governance problems.
đđž Join the paid side below to continue.
đ Paid Analysis
The Deeper Brief: Californiaâs High-Risk State
Why $10B+ in Annual Exposure Is a Governance Failure, Not Just a Budget Problem
Thank you to my paid subscribers. This section is where we slow the news cycle down and actually examine the machinery.
The California State Auditorâs 2025 High-Risk Report is not a political document. It is not advocacy. Itâs a statutory warning system designed to flag failures that pose serious detriment to the state or its residents.
