California's nonpartisan state auditor has placed Gov. Gavin Newsom's administration and several major agencies under heightened scrutiny.
The auditor warned that persistent failures in benefit programs, financial reporting, cybersecurity, and water infrastructure could expose the state to billions of dollars in added costs and public safety risks.
In its latest "high-risk" assessment, State Auditor Grant Parks said longstanding problems across the Newsom administration have not been resolved and, in some cases, have worsened further. Eight agencies remain on the high-risk list, which is reserved for state programs vulnerable to fraud, waste, or abuse.
The California Department of Social Services was added to the list this year. The auditor said errors in administering CalFresh, the state's food assistance program, combined with recent federal law changes, could force California to assume a significant share of benefit costs.
Parks wrote that the state's added financial exposure could reach as much as $2.5 billion in federal fiscal year 2028 if error rates are not reduced.
The audit cited California's nearly 11% CalFresh payment error rate in federal fiscal year 2024.
Social services officials disputed the designation in a written response included in the report, arguing the looming costs stem from federal policy changes rather than mismanagement and should not qualify the program as "high-risk" under state law.
The auditor also renewed criticism of the Employment Development Department, which operates under the Newsom administration and oversees the state's unemployment insurance program.
The report said improper payments, including fraud, remain widespread years after pandemic-era failures drew national attention.
According to the audit, improper unemployment payments totaled about $1.5 billion across calendar years 2023 and 2024.
California's financial reporting was again flagged as a high-risk area by the auditor. The auditor warned that repeated delays in producing audited statewide financial statements undermine transparency and could put federal funding at risk.
Parks said the state has failed to demonstrate timely, reliable reporting since transitioning to the Financial Information System for California, or FI$Cal, accounting system. The state's most recent audited financial statements were released months after statutory deadlines.
Cybersecurity weaknesses across state agencies were also cited in the report. The auditor said most departments remain below minimum baseline standards, leaving government systems vulnerable despite California's position as a global technology hub.
Water infrastructure problems further complicated the assessment. The report said 49 dams rated below "satisfactory" condition are also classified as posing "extremely high" downstream hazards, meaning failure could result in significant loss of life or property damage.
Separately, the auditor's whistleblower investigations detailed waste within agencies overseen by the Newsom administration. One investigation found that the Employment Development Department paid more than $4.6 million in service fees for thousands of unused mobile devices.
Another case cited an agency that overpaid an employee for 15 months after leave balances were exhausted, totaling more than $170,000.
The auditor said the findings reflect systemic weaknesses that have persisted under the Newsom administration despite years of warnings and proposed corrective plans.
Theodore Bunker ✉
Theodore Bunker, a Newsmax writer, has more than a decade covering news, media, and politics.
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