“The lack of transparency in our current approach to homelessness is pretty frightening,” said Assemblymember Josh Hoover.
Minnesota is not an outlier.
California, it turns out, may be facing a problem just as severe, if not worse. A recent state audit estimates that as much as $72 billion may have been “lost” to fraud and improper payments, according to initial reports. And like Minnesota, social services sit at the center of the damage. Food assistance programs alone cost the state an estimated $2.5 billion—programs riddled with payment errors to COVID-era relief spending that evaporated with little accountability.
Those initial reports may not have been clear in their reporting that the $72 billion figure reflects the total amount of funds managed by statewide programs and agencies flagged as high-risk due to potential vulnerabilities to waste, fraud, or mismanagement. While still a staggering sum, it does not mean $72 billion had already been misappropriated or counted as a confirmed loss.
Still, in conversation with Fox News’ David Marcus, Democrat Congressman Rohit Khanna called the findings “staggering.” Marcus pointed out the very fact that Democrats are now calling out the fraud speaks to how sweeping—or perhaps how egregious—it is.
“The scale of fraud in Sacramento with the IG report of $72 billion is staggering,” Rep. Khanna said. “Waste and fraud during COVID, with infrastructure projects, and services. We need bold new leadership that will clean up Sacramento.”
One cannot mention the failure of state-sponsored social services without mentioning California’s alarming homelessness problem. The Golden State contains roughly 30% of the nation’s total homeless population and, even worse, 47% of its unsheltered individuals. Audit data reveals that, as of last year, the state spent roughly $24 billion on homelessness programs since 2019, but homelessness still increased by about 30,000 people over that five-year period, pushing the statewide total past 180,000.
San José illustrates this example clearly. Between the 2020-21 and 2022-23 fiscal years, San José’s homelessness budget for managing encampments exploded from about $919,000 to more than $13 million, and homelessness prevention spending more than doubled in a relatively short span of time. The 2024-2025 Adopted Operating Budget increased that number to $220.4 million for homelessness-related expenditures.
How’d the city do after spending hundreds of millions of dollars? In 2022, the homeless population was 6,650—an all time high. Today, that number sits at 6,503. That’s technically an improvement, which is more than can be said for many California cities. But it cost San José City residents half a billion dollars to reduce the homeless population by less than 150.
By that math, it takes about $3.3 million to reduce the homeless population by one person. At that rate, the state may as well be buying each of them a $3 million luxury home.
“It poorly reflects on the city internally and how they work with the providers,” Todd Langton, founder of nonprofit Agape Silicon Valley, said regarding the news that many nonprofits did not meet performance targets or reporting requirements with regard to homelessness in San José. “There’s lack of coordination, there’s lack of accountability, lack of processes and too much emphasis on volume versus outcome.The report card is a D+ at best.”
Beyond looking at the abysmal performance numbers, state officials admit they don’t have a good mechanism to track whether the money dumped into social services is actually working. Programs that receive hundreds of millions in funding often do not provide clear metrics, and some jurisdictions can’t even say how many people enter permanent housing after leaving shelters.
“The lack of transparency in our current approach to homelessness is pretty frightening,” remarked Assemblymember Josh Hoover, who co-authored the request for the recent CA audit.
Therefore, it’s a fair question to ask where those funds are being spent—because they’re not solving the problem they were allocated for in the first place.
“On top of all of this, nearly every blue state and city in America adds a budget line for DEI or funds reserved for ‘marginalized’ populations to almost every spending bill they pass,” wrote Marcus. “This is at the very least wasteful, but even if no crime is being committed, is giving a nonprofit millions of dollars to make an anti-racist PowerPoint presentation not graft in its own way?”
If Minnesota’s $9 billion social services scandal has taught anything, it’s that all it takes is one determined citizen journalist with a camera phone to shine a light on systemic corruption. Nick Shirley’s now-viral video exposing widespread daycare fraud shows just how much can be uncovered when someone is willing to ask the right questions and follow the paper trail.
What’s almost as astonishing as the fraud itself is how little the legacy media did to investigate it when it was right under their proverbial noses.
“The story was just here for the taking. 60 Minutes didn’t want to do a piece? Fox News didn’t want to make Tim Walz look bad? Not one person thought to just go around and be like ‘let’s look at all the businesses that got these grants and see if they’re even there…’ Who knows how many other stories are like this where it’s just so blatantly obvious…” said podcaster and comedian Robbie Bernstein. “How is it that easy to defraud the government?”
Private citizens are increasingly stepping in to do the oversight work that states like Minnesota and California have struggled—or failed—to perform. Andrew Torba, for example, created a “Government Funding Transparency Tracker” called YouFundThis.com, a searchable database tracking over 55,000 funding records and $46 billion in federal subsidies and loans. Users can see exactly which businesses received federal grants, SBA loans, and state subsidies. This week, in the wake of the Minnesota scandal, Torba unveiled DaycareData.com, allowing anyone to browse and search 79,000 daycare providers to examine their funding records, and he has also just added PPP loan data.
Tools like these are lowering the barrier for the next Nick Shirley to investigate. It’s only a matter of time before a determined investigator or citizen journalist blows the lid off the next massive fraud scandal in California. With $72 billion in high-risk, mismanaged social services funds; massive homelessness expenditures that show little evidence of solving the crisis; and prior history of $32 billion EDD fraud, the potential for systemic abuse is staggering.
Much like in Minnesota, the story is there, the tools are there, and the gaps in oversight are there—just waiting for someone to put the pieces together.
