California continues to face a structural deficit that the Newsom administration continues to paper over with “a variety of on- and off-book loans, accounting gimmicks and raids on emergency reserves,” as CalMatters columnist Dan Walters detailed. Although the governor points to a modest $3 billion deficit as we approach the May budget revise, that number is based on economic projections that the Legislative Analyst’s Office sees as unrealistically optimistic.
Democratic officials blame Trump administration cuts to the state, but they fail to wrestle with the absurd levels of waste within the existing budget. An investigative report from this newspaper’s Tony Saavedra puts the spotlight on one infuriating example: a program called the Subsequent Injuries Benefits Trust Fund.
Although it dates to post-World War II as a means to pay veterans with pre-existing medical conditions, the Legislature and the courts have significantly expanded eligibility in 2004, 2014 and 2020. And like all well-intentioned public-benefits programs, it has become a magnet for abuse. As Saavedra explained, the loose eligibility standards have led to a dramatic increase in the workers’ compensation costs paid by California employers — from $17.9 million in 2014 to $859 million last year.
Many of those employers are taxpayer-funded agencies, such as police and fire authorities. So this has a real impact on local and state budgets. Per the report, Gavin Newsom has included a reform in his budget package. He’s getting the usual pushback from public-employee unions, who see the state budget as a giant grab bag for their members. But if the state can’t get control of a relatively small (by overall budget standards) program, what’s the chance it can get control of its structural-deficit mess?
As Saavedra explained, SIBTF “has morphed into a program that pays up to $1,700 weekly to workers claiming disability for such conditions as diabetes, asthma and allergies. Some receiving payments also have claimed erectile dysfunction, toenail fungus, urinary tract infections and acid reflux in their medical evaluations.” These are minor health issues that are common, so it’s absurd that workers can use them to achieve eye-popping payouts from a government fund.
This reminds us of various past scandals related to public benefits. The term Chief’s Disease refers to the large percentage of high-level police officials statewide who discovered disabilities right before their retirement — just in time to boost their retirement pay. That was just one of many costly and infuriating scandals involving California’s disability system.
And who can forget the Employment Development Department scandal, where the state handed out $20 billion to $30 billion — yes, billion with a “b” — in allegedly fraudulent unemployment and other claims during the pandemic?
Some of these scams are exposed and halted, of course. The Register points to the wild 2025 case where a former Orange County judge and prosecutor pleaded guilty to “a multimillion-dollar scheme to defraud” this SIBTF program. The key takeaway is that the entire system is “ripe for abuse.” That’s the problem with all these systems, as they offer lucrative freebies and have too little oversight.
So we’ll see if the governor’s reforms gain steam, but before the state’s leaders blame federal cutbacks for California’s budget problems they need to take some responsibility for their own failure to root serious waste out of our existing programs.