The pair have pleaded not guilty to charges of kidnapping and rape.
The girl had been snatched outside her home in the California town of South Lake Tahoe in 1991, and found in August at Garrido's home near Antioch.
He had been released from prison in 1988 after serving 11 years of a 50-year sentence for rape.
The report lists numerous lapses by the California Department of Corrections and Rehabilitation, including:
Failure to investigate an unknown 12-year-old girl during a home visit
Failure to refer Garrido for a mental health assessment
Lack of discussion with neighbours and local agencies
Failure to investigate information showing Garrido had violated the terms of his parole
California Inspector General David Shaw and Department of Corrections Secretary Matthew Cate reflect on failings in the case
The report spoke of "systemic problems" in the parole system, and called for better use of GPS monitoring for parolees.
Garrido had been under parole supervision because of a 1977 conviction for raping a 25-year-old woman.
He was released from prison in 1988 and placed under federal supervision until 1999, when California took over, the Associated Press reported.
California corrections officials said they were working to improve the monitoring of released sex offenders.
"We obviously deeply regret any error that could have possibly resulted in the victims living under these conditions for even one additional day," Department of Corrections and Rehabilitation Secretary Matthew Cate said.
Layout of the back garden where Jaycee Lee Dugard is said to have lived
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