Government Waste

Recent independent reports suggest that state government agencies and departments routinely spend on programs and projects with little accountability to taxpayers, failing to consider what is the most efficient and effective way to stretch tax dollars to the fullest.

Eliminating waste, fraud and abuse in state government is essential to our efforts to solve California's long-term budget problems once and for all.

Below are a few examples of government waste highlighted by nonpartisan government watchdogs and independent state auditors.  These examples only scratch the surface of the billions of dollars in ongoing wasteful and fraudulent state spending.

Fast facts

According to a 2010 report by the California Taxpayers Association, audits and news media accounts reported that more than $3.4 billion was wasted by state and local governments as a result of inefficiency, fraud and mismanagement.

By eliminating wasteful, inefficient and fraudulent spending and programs, Cal Tax found that state government could have saved approximately $1.5 billion - funds that could be used to eliminate the need for painful cuts to K-12 classrooms and our public colleges and universities.

Examples of fraud and abuse

Losing High-Speed Rail Bidders will get $2 million each
Only one of the five construction firms will be awarded the $1.8 billion high-speed rail contract for the first 30-miles of track. However, a recent report by the U-T San Diego uncovered that the remaining four companies will get paid $2 million each, simply for submitting a bid. The California High-Speed Rail Authority claims payouts like these are supposed to attract more bidders and competitive proposals. The high-speed rail project is slated to cost $68 - $98 billion, with nearly $3.3 to $11.7 billion guaranteed by the federal government.
 
Cal Fire hid Millions of Taxpayer Dollars in Secret Account
Following the discovery of nearly $54 million in hidden funds by the Parks Department, the Los Angeles Times reported another abuse of taxpayer money by the Department of Forestry and Fire Protection (Cal Fire).   The Department set up an account with the California District Attorneys Association instead of depositing it into the General Fund. Since 2005, Cal Fire officials have hidden nearly $3.6 million, even while the Legislature and Governor Brown implemented the $150 fire tax to cover the Department’s budget gaps.
 
K-12 School Districts Literally Steal Kid’s Lunch Money
The Sacramento Bee highlighted that several K-12 school districts have been ordered to repay nearly $170 million in meal money, because schools used lunch funds for sprinklers, roof projects, and other “disallowed charges.” The food service program provides around 2.4 million free or reduced-priced lunches every day in California’s public schools. According to the article, the California Department of Education is responsible for monitoring the meal program, but has no sustained funding to ensure compliance.
 
California Bureaucrats Earn $80,000 Travel Bill, on Taxpayer’s Dime
Several members of the California Department of Veteran’s Affairs (CalVet) have incurred excessive travel expenses, all paid for by California taxpayers. According to a CBS 13 Sacramento report, officials appointed by the governor have spent $82,000 on travel in 18 months. A majority of the travel arrangements appear to violate Governor Brown’s 2011 mandate that banned all “non-mission critical” travel. It was also discovered that CalVet leadership approved each other’s trips and have racked up enough frequent flyer miles for around 30 free flights, all on the taxpayers’ dime.
 
 
 
CalVet Officials Get Free Parking, at the expense of Disabled Veterans
Officials at CalVet are using parking spaces reserved for visitors and disabled veterans, instead of parking in designated employee areas. CBS 13 Sacramento discovered that several high-ranking CalVet officials avoid paying for parking on the street, an instead occupy 2-hour parking spots for visitors. Several disabled veterans have had to park across the street instead of having access to visitor parking spots in front of the Department of Veterans office building.
 
Taxpayers will Pay $5.6 Million so people can walk on partially-completed Bay Bridge
Californians will get a change to walk on the newly completed section of the new Bay Bridge before it opens on Labor Day weekend. Unfortunately, taxpayers will have to pay nearly $6 million to do so. A Contra Costa Times article examined the cost of letting nearly 200,000 walk on the newly completed suspension bridge. According to the article, previous anniversaries for the Golden Gate Bridge and even the San Francisco Giants World Series parade were paid for with private funding. Now, state officials want to add another $5.6 million onto the most expensive public works project ever built in California history.
 
CalPERS Managers Working Two Paid Positions
Since June of 2011, CalPERS have paid 50 managers a combined $45,000 for overtime work, according to the Sacramento Bee. These CalPERS employees are paid on salary and are prohibited from receiving overtime. According to the report, a rarely used section of the state personal manual allows for “Additional Appointments.” CalPERS has only released pay data for November 2011, where 50 managers were paid $45,000, or about $900 each. CalPERS officials said they needed help with a new computer system, and the practice will end in July of 2013.
 
In-Home Care Payments Made to Dead Patients
According to the State Controller's Office, poor oversight of the In-Home Supportive Services program resulted in $11 million being distributed to patients or providers of care that were deceased.  A 2009-10 investigation of In-Home Supportive Services by the Sacramento County District Attorney's office found 19 cases of fraud.  The Schwarzenegger Administration estimated fraud and abuse could account for 25 percent of in-home care costs statewide.  Unfortunately, the Legislature has repealed anti-fraud measures to ensure IHSS money was spent only on those who are in need.

State E-Waste Recycling Program Losing Tens of Millions to Fraud
According to an investigation by the Sacramento Bee, the state's e-waste recycling program has lost tens of millions of dollars due to fraud, the result of illegal material being smuggled in from out of state.  The paper reported $23 million in fraudulently submitted claims that are yet-to-be-paid and another $30 million in fraudulent claims that have been paid.

Government Employees Receiving Excessive Paid Vacation Time
According to a report in California Watch, state employees have received millions of dollars for unused vacation time, above the set limits.  The report found that at least $100 million, and likely tens of millions of dollars more, was paid to state employees who went over the cap and retired between 2006 and mid-2007.

State Fails to Recoup Overpayment for CalWORKs and Food Stamp Programs
Since 2003, counties have been overpaid millions of dollars by the state from food stamp recipients, yet the Department of Social Services has taken few steps to recover these overpayments.  By failing to take action, the state has lost $12.45 million and another $1.1 million in interest.

Examples of wasteful and inefficient state spending

State Could Waste Over $6 Billion on High Speed Rail Project
A recent analysis by the Legislative Analyst's Office found that the state could end up wasting over $6 billion in state tax dollars as it works to construct a high speed rail system throughout California. 

 
 
State Fails to Implement Recommendations of State Auditor, Loses Out on $1.2 Billion in Potential Taxpayer Savings
The nonpartisan State Auditor's Office audited the operations of several state agencies between 2003 and 2010, and concluded that the state could have saved taxpayers approximately $1.2 billion had their proposals to reform operations and improve efficiency been enacted.  For example, the state could have saved $13 million in Medi-Cal savings by eliminating overbilling by equipment providers.

State Could Streamline Management of State Employees
The bipartisan Little Hoover Commission has identified two state departments with oversight over state employee management - the State Personnel Board and the Department of Personnel Administration.  Eliminating the State Personnel Board and merging its personnel management operations within the Department of Personnel Administration could save taxpayers.

Streamlining Division of Juvenile Justice Could Lead to Better Oversight of Juvenile Justice Programs
The Little Hoover Commission recommends eliminating the Division of Juvenile Justice within the California Department of Corrections and Rehabilitation, and instead consolidating all statewide juvenile justice crime prevention efforts within a Governor's Office of Juvenile Justice.  This would streamline operations and improve oversight of county programs funded with state tax dollars.

Utilizing Public-Private Partnerships, Increasing Bond Oversight Will Result in Major Savings for Taxpayers
Debt service on statewide general obligation bonds is one of the fastest growing areas of the state spending.  Every dollar we spent paying back bonds is another dollar we don't have to spend on education, public safety and other priorities.  The Little Hoover Commission recommends better management of bond funds, better setting of priorities and goals and more accountability.  The Commission also recommends utilizing public-private partnerships for statewide infrastructure projects in lieu of general obligation bonds, to reduce future debt service payments.

Department of Public Health Program Wastes $5.1 Million on Non-Healthcare Services
The State Auditor's Office found a lack of accountability in the Department of Public Health "Every Woman Counts" program, which provides cancer screening services to women.  Their report found that if it had redirected half of what it spent on contracts for non-healthcare services, it could have dedicated an additional $5.1 million to pay for cancer screening, allowing an additional 41,500 women to receive healthcare services.

Taxpayers Spend $2.6 Million to Rent a Vacant Building
In 2009 and 2010, the state spent $1.3 million a year to rent a vacant office building in Rancho Cordova for EdFund, an auxiliary of the California Student Aid Commission.  These dollars could have provided financial aid for up to 1,000 college students.  In 2011, the owner of the building filed a $40 million claim with the state for unpaid rent.  The Department of Corrections and Rehabilitation and the Department of General Services also wasted $580,000 over a four year period by leasing 5,900 square feet of office space that went unoccupied.

Employment Development Department Mismanages Taxpayer Dollars
A report in the Sacramento Bee found that technology staff at the Employment Development Department mismanaged projects that were funded with federal stimulus dollars, resulting in $53 million in overtime costs.  This is in addition to a five-year delay on other projects and a previous cost overrun of more than $80 million.

Taxpayers Spend Tens of Thousands to Replace Waterless Toilets
Eight years ago, the California Environmental Protection Agency installed waterless toilets in their new headquarters building, which they said saved millions of gallons of water every year and lowered energy costs.  But in 2010, CalEPA removed the 56 waterless toilets based on complaints about how sanitary they were and the odors emitted, costing taxpayers $25,000.  CalEPA acknowledged that they had been spending $50,000 a year in additional cleaning costs around the waterless toilets. 

University of California Wastes Hundreds of Millions of Dollars on Administration
In 2010, officials with the University of California announced plans to cut $500 million in administrative "waste."  Examples of university waste include giving nearly every employee in the UC Office of the President their own printer.  Cutting down on printers has saved $300,000. 

Department of Corrections Wastes $13 Million in Prescription Drug Delivery to Inmates
A report by the State Inspector General found that the Department of Corrections and Rehabilitation wasted at least $13 million through 2009 in the way it provides prescription drugs to inmates.  Poor management and inefficient operations in identifying and restocking medications resulted between $7.7 million and close to $20 million in wasted tax dollars.  In addition, the State Auditor found that Corrections spent $50,000 to lease 29 parking spaces at a private parking facility that were not used.

Eliminating or Reducing the Backlog of State Disputes over Prescription Drug Rebates Will Save Taxpayers Hundreds of Millions
The Department of Health Services is working to eliminate its backlog of disputes with prescription drug companies over rebates.  By resolving this backlog of disputes over prescription drug costs, the State Auditor estimates the state could save at least $285 million (based on the claim backlog reported through December 2006).

Eliminating State Mandated Local Programs Could Save Taxpayers Billions
According to a report by the State Auditor's office, the state's liabilities for mandated local programs was $5.2 billion as of June 30, 2010.  The Auditor recommends eliminating mandates that are no longer necessary and suspending those that won't adversely affect public health and safety, to generate significant ongoing savings.

Sources Two sources were invaluable in helping to prepare this report.  "Making Government Work," Cal Tax Research Bulletin, March 2011