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According to the California Department of Social Services, the audit found that the addresses of 49 sex offenders matched those of 46 child care facilities.
"What we found is shocking," said Assemblywoman Fiona Ma (D-San Francisco).
At a news conference in Sacramento Thursday, lawmakers and state officials expressed outrage over the situation.
The recent audit "just provides the most shocking details about how much we don't know about sexual offenders and where they are in the state of California," said Assemblyman Anthony Adams (R-Hesperia).
The Department of Social Services inspected all 46 facilities on Monday.
Three license suspensions are already in effect: two in Los Angeles and one in San Bernardino.
"Parents who go to work, drop off their kids in the morning, pick them up, should not have to worry about the safety of their children while they're working," said Ma.
The Bureau of State Audits asked for the department's database of licensed facilities in November, but the social services agency did not learn of the matches with sex offenders until last week.
According to the "Megan's Law" Web site, for example, 61-year-old Raymond Carrion, who was convicted of lewd acts with a child under 14, lives at a Westchester apartment complex, and has the same address as a daycare facility.
"That is godawful, and I think that they need to govern that a lot more," said Westchester resident Ebony Browne.
"There's sex offenders -- where else? That's like a haven for them," said Westchester resident Rhoda Pruitt. "I just can't imagine that."
Of the 46 address matched with sex offenders, 25 were in Los Angeles. Officials say that most of those facilities named in the audit will likely lose their licenses. And officials say they've eliminated any threat to children at those facilities.