California's unemployment agency wasted $4.6 million on unused phones
Summary
A California State Auditor investigation found the Employment Development Department paid $4.6 million in monthly service fees for 6,285 mobile devices that sat unused for four or more consecutive months -- some for over four years -- a leftover of its COVID-19 unemployment-claims staffing surge. By April 2025, EDD had 1,787 call representatives answering unemployment claims, but was still paying monthly fees for 5,097 phones set aside for that job.
The problem: the pandemic quadrupled EDD's unemployment call staff, from 1,264 to 5,139, and they had to work from home. The approvals: EDD procured 7,224 devices on Verizon lines, billed monthly, with branch staff meant to review the invoices. Where it goes wrong: staff fell to 1,787, nobody checked usage, and 5,097 lines kept billing. $4.6 million over 54 months. How it's caught: a whistleblower, then the State Auditor.
The problem ·In March 2020 the Governor's stay-at-home order and a surge of unemployment claims hit California's Employment Development Department at once. Its Unemployment Insurance Branch grew its call-representative staff from 1,264 that March to 5,139 by September, and the new workforce had to answer claims from home. That is why the department needed thousands of mobile devices it had never needed before.
The approvals ·EDD procured 7,224 cell phones, smartphones and hotspots by December 2020, carried on Verizon lines in one of the department's 22 wireless accounts and billed monthly in state funds. The record shows an agency-level decision under emergency conditions, not a legislative appropriation. The control, on paper, was that designated staff in each branch reviewed the invoices.
Where it goes wrong ·Nothing tied the number of lines to the number of people. Staffing fell to 1,787 by April 2025, but EDD was still paying for 5,097 devices for that job. Verizon had sent nonusage reports since 2017 and its invoices listed usage beside charges, yet the UI Branch said its staff never checked. Roughly 420 devices sat boxed in a storage room. Of 7,250 devices procured, 87 percent went unused for four or more consecutive months, 99 were never used, and the fees came to $4,623,352 over 54 months.
How it's caught ·A whistleblower complaint sent the State Auditor in under the Whistleblower Protection Act; Report I2025-1 calls EDD's claim of ignorance implausible. Once the investigation began, EDD cut 2,825 lines on April 13, 2025 and adopted a 90-day nonusage cutoff departmentwide on September 3, 2025. The Joint Legislative Audit Committee heard the report in December 2025. What no one has examined: the rest. Auditors reviewed one of EDD's 22 Verizon accounts.
The emergency explains the purchase. It does not explain the years of billing that followed. The data to stop it was on every invoice; the missing piece was anyone assigned to read it. And the auditor's $4.6 million is a floor, not the total.
A pandemic hiring surge, then a phone bill that never shrank
In March 2020, EDD's Unemployment Insurance (UI) Branch had 1,264 call representatives. By September 2020⧉, as claims surged during the pandemic, that number had grown to 5,139. To let this expanded workforce operate remotely, EDD procured a total of 7,224 mobile devices -- phones, smartphones, and wireless hotspots -- through December 2020. But staffing didn't stay at pandemic levels: by April 2025, EDD's UI call representatives numbered just 1,787. The devices, and the bills for them, didn't shrink to match.
View data as table
| Mobile devices billed monthly | 5,097 |
|---|---|
| UI call representatives on staff | 1,787 |
Phones that sat in boxes for years
Of the 7,250 devices the UI Branch procured between November 2020 and April 2025, 87% went unused for at least four consecutive months⧉, more than half sat unused for at least two years, and 7% -- 478 devices -- went unused for four-plus years. Ninety-nine devices were never used at all since EDD started paying their monthly fees in 2020. Investigators found roughly 420 of the unassigned devices stockpiled in a UI Branch storage room, sitting in boxes and on shelves; of 14 devices sampled there, nine hadn't been used in 33 consecutive months, and one had never been used.
View data as table
| Total devices procured | 7,250 |
|---|---|
| Unused 4+ consecutive months | 6,285 |
| Unused 1+ year | 5,229 |
| Unused 2+ years | 3,878 |
| Unused 3+ years | 1,804 |
| Unused 4+ years | 478 |
EDD says it didn't know. Auditors don't buy it.
EDD management told investigators it hadn't realized it was paying for so many unused devices. The auditor called that explanation implausible⧉: EDD had received monthly nonusage reports from its carrier, Verizon, since 2017, and Verizon's own invoices listed usage and charges side by side for every phone line. EDD said designated staff in each branch were supposed to review those invoices -- but the UI Branch told investigators its staff never actually checked whether the devices were being used.
Fixing it -- and how much of this is normal
Once the investigation began, EDD started cutting the fat: on April 13, 2025, it terminated service for 2,825 mobile devices⧉ and began drafting a policy to cut off any device unused for 90 straight days, formally adopted departmentwide on September 3, 2025. The auditor's office also cautions that its own $4.6 million figure is likely a floor, not a ceiling -- it examined just one of EDD's 22 Verizon accounts, the one with the worst nonusage problem, and covers only monthly service fees, not what EDD spent buying the devices in the first place (most were acquired free or discounted through promotions, and EDD couldn't produce complete purchasing records for the rest).
The EDD finding was one of five separate whistleblower investigations bundled into the same California State Auditor report⧉, which together identified more than $5 million in wasted, misused, or unreported state funds. In a smaller but similarly telling finding, the California Air Resources Board kept paying an employee for nearly 15 months after he had fully used up his leave and stopped working, due to inaccurate leave tracking -- a $171,446 overpayment.
At a December 2025 legislative hearing⧉ on the report, Assemblymember John Harabedian, who chairs the Joint Legislative Audit Committee, didn't mince words: "Whether it's a cent, whether it's a dollar, whether it's $4.6 million, it's inexcusable to waste any of that money." Committee vice chair Senator John Laird offered a partial explanation, noting other state departments had loaned EDD staff during the pandemic: "I know at the time other departments were actually loaning staff members to EDD, but it's possible that phones and things were left over from that."
The takeaway
- The pandemic explains the purchase, not the five years of billing. EDD's decision to buy 7,224 phones in 2020 made sense for a workforce that had quadrupled almost overnight. Continuing to pay for thousands of them years after that workforce shrank back down did not.
- EDD had the data to catch this the whole time. Verizon sent nonusage reports every month starting in 2017, and invoices showed zero-usage lines directly next to their charges. Nobody at the UI Branch was assigned to actually look.
- The real number is probably higher. Auditors checked one of EDD's 22 wireless accounts. The $4.6 million figure covers only the account with the worst known problem -- not the other 21.
This report was issued under California's Whistleblower Protection Act, which requires the State Auditor to investigate substantiated complaints of improper governmental activity -- a category that includes economic waste even without any allegation of fraud or personal enrichment. Nothing in the report alleges that EDD officials personally benefited from the unused devices; the finding is about a management and oversight failure, not theft. The $4.6 million figure reflects only service fees the auditor could trace within the scope of its review, not the full universe of EDD's wireless spending. Correction (2026-08-15): The opening sentence was revised to attribute the $4.6 million figure explicitly to the State Auditor's own estimate, drawn from one of EDD's 22 wireless accounts; no underlying figure changed.
Sources(2) ▾
- California State Auditor, Investigations of Improper Activities by State Agencies and Employees (Report I2025-1) (2025-12-12) — A California State Auditor investigative digest, published under the California Whistleblower Protection Act, covering five substantiated whistleblower complaints across five separate state agencies. The Employment Development Department (EDD) mobile-device finding is the largest single dollar figure in the report. Fetched directly and converted with pdftotext -layout. NOTE (remediation 2026-08-14): this is the SOLE independent primary carrying every load-bearing figure in the article; no second independent issuer-hosted primary re-derives the $4.6M total. auditor.ca.gov · original document
- KPBS Public Media, State audit finds $5 million in wasted taxpayer dollars across California agencies (2025-12-22) — Used for the Joint Legislative Audit Committee hearing reaction -- Assemblymember John Harabedian's 'inexcusable' quote and Senator John Laird's interdepartmental-staff-loan explanation for leftover devices -- for context and fairness beyond the report itself. Corroboration-only; carries no load-bearing figure. kpbs.org · original document
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A California State Auditor investigation found that California's Employment Development Department (EDD) wasted more than $4.6 million⧉ in state funds -- the auditor's own estimate, drawn from 54 months of Verizon invoices for one of EDD's 22 wireless accounts -- paying monthly service fees on mobile devices that sat unused for four or more consecutive months, in some cases for more than four years. The investigation, triggered by a whistleblower complaint, found the department never scaled back a fleet of phones it built up during the pandemic, long after the staff who needed them had gone.