Dead Phones in a Closet: California’s $5 Million Accountability Problem

The phones sat in storage for years. Some were still in their original packaging. Ninety-nine of them were never activated at all. Yet California taxpayers kept paying the monthly service bills — month after month, long after any conceivable need had passed.

That is the picture the California State Auditor’s Office documented in a December 2025 report covering improper spending across multiple state agencies. The findings are not catastrophic in the way that billion-dollar scandals are. The total: $5.1 million. But what they describe is something arguably more corrosive than a single act of fraud — a culture of institutional inattention that costs the public money while nobody in management bothers to notice.

7,224 Phones and a Bill That Never Stopped

The largest finding targets the Employment Development Department, the agency that handles unemployment insurance for millions of Californians and which has been dogged by mismanagement controversies for years.

During the COVID-19 pandemic, EDD acquired 7,224 mobile devices — cell phones, smartphones, and wireless hotspots — to allow its call center staff to work remotely as unemployment claims spiked. That part was defensible. What followed was not.

The auditor reviewed 54 months of wireless billing from November 2020 through April 2025, focusing on a single Verizon account tied to EDD’s Unemployment Insurance Branch. What investigators found: 6,285 devices — 87 percent of those reviewed — had gone unused for at least four consecutive months. Of those, 5,229 sat unused for more than a year. Nearly 3,900 collected dust for more than two years. And 478 devices had not been touched in over four years.

By April 2025 — 45 months after Governor Newsom rescinded the state’s stay-at-home order — EDD was still paying Verizon’s monthly service fees on more than 5,000 of those devices.

Total waste: $4.6 million.

“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 auditor’s report stated.

When investigators visited an EDD storage room, they found it filled with boxed-up phones that had not been touched in years. EDD management, when confronted, said they were unaware of the spending. The auditor found that explanation hard to accept: Verizon had been sending the department monthly non-usage reports the entire time.

“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 report said.

It is also worth noting that the $4.6 million figure is almost certainly an undercount. Auditors reviewed only one of several Verizon and T-Mobile accounts EDD maintains.

The Waste Did Not Stop at EDD

The auditor’s report, compiled under the California Whistleblower Protection Act, reviewed 2,636 allegations of improper governmental activity between January 2024 and October 2025.

At the Veterans Home of California-Yountville, management failed to report approximately $400,000 in taxable housing benefits provided to employees who rented state-owned housing on facility grounds. Those workers may now face significant unpaid tax liabilities they did not create.

At the Department of Alcoholic Beverage Control, a manager used state-owned vehicles for personal commutes and private errands, stored them at his home without authorization, and failed to log trips as required. Clear rules govern the use of government vehicles. He ignored them.

At the Department of Parks and Recreation, two employees submitted altered receipts to disguise personal purchases as work-related expenditures. One allowed other employees to use his purchasing card. Neither properly recorded their transactions.

Of the 2,636 allegations reviewed, roughly 2,000 — about 74 percent — lacked sufficient information to investigate or were still pending review at the time of publication.

The Structural Problem

Republican State Sen. Suzette Valladares placed the findings squarely at the feet of leadership.

“We need to prioritize our spending next year, but we also need to make sure that we’re catching wasteful spending and we’re prioritizing oversight,” she said.

The report lands as California confronts an $18 billion budget shortfall for 2026-27, according to the Legislative Analyst’s Office. Some Democratic legislators acknowledged the findings while urging perspective — $5 million is a fraction of the state’s $200-plus billion annual budget. Technically true. But that framing misses the point.

The $5.1 million documented here is what auditors found when they looked. The question California’s taxpayers should be asking is how much more sits in storage rooms, on fuel logs, and in expense reports that no one has examined yet.

EDD has since terminated service on more than 4,600 inactive lines and implemented a policy requiring cancellation of any device unused for 90 consecutive days. That is the right response — four years late.