$32 Billion Lost: California Unemployment

A recent high-risk update from the California State Auditor and a speech by U.S. Representative Kevin Kiley (R-CA) on the House floor have brought renewed scrutiny to the management of several state agencies under Governor Gavin Newsom. The reports detail significant financial losses due to unemployment and welfare payment errors, lack of accountability in homelessness spending, and a federal indictment involving a former Newsom aide.

Story Highlights

The California State Auditor’s latest high-risk list includes eight state agencies flagged for waste, fraud, and mismanagement, with four of those added during Governor Newsom’s tenure, including the Department of Social Services.
The Employment Development Department (EDD) lost approximately $32 billion to improper unemployment payments during the COVID-19 pandemic.
The Department of Social Services was added to the high-risk list over projected errors in the CalFresh food assistance program estimated at $2.5 billion.
Audits show that California has allocated approximately $24 billion toward homelessness programs but lacks comprehensive metrics to track outcomes.
Dana Williamson, former chief of staff to Governor Newsom, was indicted on November 12, 2025.

State Agencies Face Scrutiny Following Audit and Congressional Speech

On December 19, 2025, U.S. Representative Kevin Kiley addressed the House of Representatives regarding the California State Auditor’s latest high-risk update, which details persistent failures in state oversight. The audit flags eight state agencies for elevated risk of fraud, waste, and abuse, noting that four agencies, including the Department of Social Services, have been added to the list during the Newsom administration.

Beyond the agency risks, California has missed its Annual Comprehensive Financial Report deadline for six consecutive years, a lapse that can negatively affect its credit ratings and eligibility for federal funding. Additional audits have cited instances of nepotism and “ghost payrolls”—payments to former employees for months after their departure—at agencies such as Caltrans and the Department of General Services.

One fair critique is the lack of accountability and the corruption in Sacramento. The reports of $70 billion in fraud is appalling. We need anti-corruption measures and public excellence so the tax dollars go to healthcare, childcare, & education. I believe folks like @TomSteyer… https://t.co/frykKtDb4t

— Ro Khanna (@RoKhanna) December 27, 2025

Financial Losses Detailed in Unemployment and Welfare Programs

During the COVID-19 pandemic, the state’s Employment Development Department (EDD) incurred an estimated loss of $32 billion due to improper unemployment payments stemming from lax control measures. Reports indicate that substantial incorrect payments have continued post-pandemic. Furthermore, the Department of Social Services has been included on the high-risk list due to a projected $2.5 billion in errors in the CalFresh food assistance program.

While many states faced unemployment fraud challenges, the scale of California’s losses has been linked to the size of its welfare systems. Dissatisfaction with EDD’s functionality was a notable factor cited by small-business owners during the 2021 recall effort against Governor Newsom.

(California Globe) @CaliforniaGlobe The California State Auditor published a scalding report Friday that is an unvarnished indictment of Governor Gavin Newsom and his administration. The report should have everyone living in California horrified.

The Auditor’s report finds Gavin… pic.twitter.com/5eNtmuVrGL

— Mike Netter (@nettermike) December 17, 2025

Lack of Accountability in Homelessness Spending

State audits indicate that California has spent approximately $24 billion on homelessness programs. However, auditors have stated that the state is unable to comprehensively track the outcomes of these funds, despite California now housing half of the nation’s unsheltered homeless population. In response to these issues, the U.S. Attorney for California’s Central District has launched a Homelessness, Fraud, and Corruption Task Force to investigate matters across seven counties. This federal probe has been highlighted as an example of external scrutiny on state policies.

Indictment of Former Gubernatorial Aide

On November 12, 2025, federal prosecutors indicted Dana Williamson, who previously served as Governor Newsom’s chief of staff. The charges include conspiracy, fraud, and filing false tax returns. Prosecutors allege that Williamson fraudulently claimed over $1 million in bogus deductions, drawing the funds from dormant campaign accounts for private travel and luxury hotels.

Governor Newsom has publicly distanced himself from the case, which remains ongoing as Williamson appeared in court following the indictment. The case has been used in political discourse to draw attention to internal government corruption alongside the systemic issues cited in agency audits.

Watch: California State Auditor’s Office finds more than $5M in waste