California's Unemployment Agency Spent Millions On Unused Cellphones, Audit Says

California’s unemployment agency kept paying cellphone bills for four and a half years without checking whether its workers were actually using the devices.

That’s how it racked up $4.6 million in fees for mobile devices its workers were not using, according to a new state audit detailing wasteful spending at several government agencies.

The Employment Development Department’s excessive cellphone bills date to the COVID-19 pandemic, when it shifted call center employees to remote work and faced pressure to release benefits to millions of suddenly unemployed Californians.

It acquired 7,224 cellphones and wireless hotspots by December 2020. State auditors analyzed 54 months of invoices since then and found half the devices were unused for at least two years, 25% were unused for three years and 99 of them were never used at all.

The investigation, which auditors opened after receiving a tip, identified 6,285 devices that were unused for at least four consecutive months, and said the department spent $4.6 million on monthly service fees for them.

From the beginning, the department had about 2,000 more cellphones than call center employees, according to the audit. The gap widened over time after the pandemic ended and the department’s staffing returned to its normal headcount.

As of April, the audit said the department had 1,787 unemployment call center employees, but was paying monthly service fees for 5,097 mobile devices.

“Although obtaining the mobile devices during COVID-19 may have been a good idea to serve the public, continuing to pay the monthly service fees for so many unused devices, especially post-COVID-19, was wasteful,” the audit said.

Department officials told auditors they were unaware of the spending, but auditors pointed to regular invoices from Verizon that showed which phones were not being used.

“We would have expected EDD management to have reconsidered the need to pay the monthly service fees for so many devices that had no voice, message, or data usage,” the audit said.

The unemployment department began acting on the auditors’ findings in April, when it canceled service plans for 2,825 devices. It has since implemented a policy to terminate service plans for devices that go unused for 90 days.

The California state auditor highlighted the mobile devices in its regular report on “improper activities by state agencies and employees.” The audit also showed that the California Air Resources Board overpaid an employee who was on extended leave as he prepared to retire by $171,000.

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