Unemployment Benefits: Fraud That Cost Billions
The Problem.
When unemployment claims surged during the pandemic, the Employment Development Department became a target for fraud. The State Auditor found the department waited months to strengthen fraud detection and paid roughly $10.4 billion on claims it later could not verify, including hundreds of millions paid to prison inmates. In one case more than 1,700 claims came from a single address. The department had no central fraud unit and no plan to measure whether its fraud tools even worked. Years later, improper payments still ran above the federal standard, adding up to about $1.5 billion more over just two recent years.
The Solution.
Proposition 41 requires audits to examine the actual and potential fraud, waste, and abuse in a program, and to assess whether the systems meant to prevent them are adequate. By putting that examination in front of voters before a tax is approved, and repeating it on a regular schedule after, the measure gives taxpayers an early warning system instead of a bill for damage already done.