California auditor finds ongoing mismanagement of COVID-19 reduction

California has acquired tens of billions of {dollars} in federal COVID-19 reduction, one thing its auditor says was mismanaged by state businesses and created “substantial threat” to residents.

State Auditor Elaine Howle has launched her annual State Excessive-Threat Audit Program report, which maintains an inventory of potential liabilities in respect to sure departments in California’s state authorities.

Howle’s workplace warned final August of the potential mishandling of federal COVID-19 reduction funds. A yr later, she mentioned it’s nonetheless a difficulty and a few facets have turn out to be extra extreme.

“Mismanagement of federal COVID‑19 funds by varied state businesses has created a considerable threat to the State and its residents,” she mentioned.

She listed the Division of Finance (Finance), the Employment Improvement Division (EDD) and the California Division of Public Well being (Public Well being) as sources of mismanagement.

One facet of misuse, she mentioned, got here within the type of an imbalance in reduction funds between extra populous counties and predominantly rural counties with fewer folks. This, she mentioned, stemmed from points on the Division of Finance.

“In January 2021, we reported … that Finance’s allocation of funds from the federal Coronavirus Aid Fund (CRF) had resulted in smaller counties receiving considerably much less funding per individual than bigger counties,” mentioned the report, which was launched Thursday. “As a result of our overview of COVID‑19 case information for all counties confirmed that the wants of many smaller counties had been no less than the identical, if not higher, than the wants of bigger counties, Finance’s inequitable allocation of CRF funds elevated the chance that smaller counties’ COVID‑19-related funding wants had been unmet.”

The state’s Employment Improvement Division was answerable for distributing a bigger sum of unemployment checks than every other state had in trendy historical past. Within the rush to get folks funds, the division paid billions of {dollars} in claims that since have been discovered to have been fraudulent, Howle mentioned.

“Particularly, EDD waited about 4 months to automate a key antifraud measure, took incomplete motion in opposition to claims filed from suspicious addresses, and eliminated a key safeguard in opposition to improper funds with out totally understanding the importance of the safeguard,’ the report mentioned.

Unemployed Californians skilled delays and confusion with state distribution of unemployment funds. The U.S. Division of Labor estimated in March that one-tenth, roughly $63 billion, of all pandemic-related unemployment payouts, had gone out improperly.

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