California is broke fiscally and operationally. For proof just look at the auditor’s statement of its 2023 Financial Statements.
What a broken and broke mess.
Chriss Street at Mountaintoptimes on Substack reported on the latest fiscal mess that California is in.
Street reports:
California State Auditor Grant Parks noticed the Governor Newsom and Legislature leaders that the Internal Control and Compliance Audit Report for the Fiscal Year Ended June 30, 2023 issued a qualified opinion and cannot be relied upon as true and correct.
The Auditor is unable to certify that the California Employment Development Department (EDD) accrued $46 billion estimate for fraudulent payments to be repaid to the federal government cannot be relied upon as 100% of the state liability.
Note that a qualified opinion is absolutely terrible. In the corporate world, this would be a disaster.
Street shares more:
Auditors disclosed for the first time that EDD has still not completed its eligibility determination work regarding a significant number of questionable claims that arose during 2022 and 2023. Based on its inability to obtain sufficient and appropriate audit evidence, the California State Auditors concluded that EDD balances and Other Liabilities cannot be relied upon as “free from material misstatement.”
California State Auditor’s opinion in accordance with the Government Auditing Standards issued by the Comptroller General of the United States:” “identified six deficiencies in internal control over financial reporting that we consider to be material weaknesses and eight other deficiencies that we consider to be significant. Deficiencies in the State’s internal control system could adversely affect its ability to provide accurate and timely financial information.”
California State Auditor issuing a “qualified opinion” on December 5, 2024, serves as a “collectively comprise” for the integrity of State of California’s basic financial statements.
The Auditor stated that due to issues pertaining EDD, “we were unable to obtain sufficient and appropriate audit evidence about the Federal Fund balances for “98 percent of Other Current Liabilities within Governmental Activities”:
The qualified integrity for State of California’s financial statements include:
• 92 percent of the assets and deferred outflows, and 94 percent of the revenues for the University of California and the California Housing Finance Agency;
• 100 percent of Water Resources, State Lottery, and California State University funds;
• 87 percent of the assets and deferred outflows, and 52 percent of the revenues of the Golden State Tobacco Securitization Corporation, the Public Building Construction, the Public Employees’ Retirement, the State Teachers’ Retirement, the State Water Pollution Control Revolving, the Safe Drinking Water State Revolving, and the 1943 Veterans Farm and Home Building funds.
The California State Controller furthermore stated: “the financial statements of the Golden State Tobacco Securitization Corporation, the Public Works Board Building Construction Fund, the State Lottery Fund, and the Campus Foundations of the University of California, which represent 14 percent of the university’s total assets and deferred outflows of resources and 4 percent of its revenues, were not audited in accordance with Government Auditing Standards.