State Finance audit finds no more 'hidden' pots of money in special funds

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State Parks director Ruth Coleman speaks at the grand opening of the Annenberg Community Beach House at Santa Monica State Beach on April 25, 2009 in Santa Monica, California.

A California Department of Finance audit of more than 500 special state government funds has found no major errors or accounting discrepancies and no further unexpected windfalls like the $54 million in parks money discovered earlier.

Gov. Jerry Brown ordered the probe last month after it was discovered that the Department of Parks and Recreation had hidden $54 million in assets for more than a decade, even as parks were closed for budget reasons.

Parks department employees had reported larger fund balances to the controller’s office, which manages the state’s cash — but smaller fund balances to the Finance Department, which budgets for the state. The revelation led to the resignation of Parks Director Ruth Coleman and the firing of her top deputy.

The discovery raised questions about whether similar accounting discrepancies existed for the state’s 567 special funds.

But Finance Director Ana Matasantos called what happened at the Parks Department “an anomaly.” She told a Sacramento news conference that Finance’s auditors scrutinized each special fund “line by line” and found “no other hidden pots of money.”

Matasantos said nearly all of the $4 billion discrepancy between her department's accounting of special fund balances and the controller’s total resulted from differences in the way they count money that the state has already committed to spending.

The audit identified a much smaller $400 million discrepancy from different accounting methods, timing and, in a handful of instances, “human error.”

Matasantos said the one-time accounting mistakes unveiled in the audit bore no resemblance to the 12-year pattern of deliberately under-reporting assets that was carried out by Parks Department employees.

Despite the millions of dollars separating the finance department from the controller's office, Matosantos said the budget figures the Legislature has been relying on were "essentially accurate." Besides the state parks money, there likely would not have been additional choices available for spending or cutting, she said.

Plans for the $54 million

Governor Brown plans to use $20 million of $54 million in surplus parks funds to pay for critical maintenance at some parks and to set up a fund to match private donations to keep state parks open.

Various investigations into Parks and Recreation fund continue.

California's overall budget includes more than $39 billion from special funds, which are generated from taxes and fees for things such as recycling and vehicle registration.

After the review was public, the governor issued a news release saying he is requiring all state departments to follow new procedures to ensure that the amount of money in state special funds reported to the controller's office and finance department match.

The Department of Finance report didn’t satisfy the Senate’s Republican leader. In a statement, Diamond Bar Senator Bob Huff called it a “slap-dash review” that was no substitute for a “thorough top-to-bottom” audit of state government finances.

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