California could get $71 billion in coronavirus help. Auditor warns it could be wasted

Many of the California state departments receiving federal coronavirus money have histories of mismanaging funds and struggling with clunky computer programs, California State Auditor Elaine Howle said in a Tuesday report.

Howle announced her office will monitor and track an estimated $71 billion in new federal money for the state, designating the state’s management of the money as being at “high risk” for waste, fraud and abuse.

Her office intends to track an estimated $40 billion in unemployment benefits being processed by the Employment Development Department, $10.2 billion for the Department of Health Care Services, $9.5 billion in Coronavirus Relief Fund money being processed by the Department of Finance and a range of other spending at a total of 18 departments.

In a report announcing plans to track the funds, Howle cited her office’s past findings involving some of the departments.

The Department of Health Care Services made $4 billion in questionable Medi-Cal payments due to “pervasive discrepancies between state and county determinations of beneficiaries’ eligibilities for these services,” the report says, citing a 2018 finding.

The report raises concerns about how well departments will be able to break out coronavirus spending using its troubled software program, Fi$Cal. The program has delayed the processing of annual financial reports for departments, which ultimately could threaten the state’s credit rating, the report says.

The audit also cited a history of problems for departments of tracking and managing payments to third-party vendors.

It raises concerns about the Employment Development Department’s ability to catch up with a backlog in processing unemployment insurance claims while also weeding out fraudulent claims.

The report says the Department of Finance challenged the auditor’s decision to add COVID-19 funding to its high-risk list. The department said that since the money is new, the auditor can’t demonstrate that state agencies haven’t taken sufficient actions to prevent risks from mismanagement.

This story was originally published August 26, 2020 at 6:00 AM.