CA CAFR $600 billion ‘case study’ final status with state reps, local media, law enforcement

This is the final status I see with a case study to communicate California’s $600 billion in surplus assets as documented in the state’s Comprehensive Annual Financial Report (CAFR) to my two state representatives, local media, law enforcement, and local community groups (school district and board, school financial support, Republican/Democratic clubs, city officials). The e-mail I sent to these local groups is the status:

LCF school funding and CA CAFR $600 billion surplus final status

Dear friends and community members,

I alerted you to information important to LCF’s volunteerism and donations to what should be basic education funding. The funding isn’t delivered from state-level claims of “budget deficits” that the financial information clearly refutes.

After five weeks of work with our two state representatives to have them affirm $600 billion in surplus taxpayer assets as revealed in California’s CAFR (Comprehensive Annual Financial Report), here’re the outcomes:

  1. I worked with Senator Liu’s consultant, Robert Oakes, and Assemblymember Portantino’s Chief of Staff, Trent Hager, to make sure both legislators were fully aware of the documented $600 billion (remember, the state claims austerity from a $16 billion budget deficit). Both chose “no comment” after five weeks of evasive acts.
  2. The local papers: The Outlook printed two letters, and The Valley Sun printed one. I met with The Valley Sun’s editors Carol Cormaci and Bill Kisiluk at their request so they were confident the letter reported objective data. Both publications chose to not print a concluding letter reporting that their two LCF-resident state representatives had no comment in light of these colossal funds and LCF heroic volunteerism and fundraising to support our schools. My argument that our reps’ “no comment” couldn’t stand public scrutiny with their reporting didn’t win their support to print such a letter.
  3. The Los Angeles Times was one of many major publications reporting on CA Parks and Recreation Department’s Director resigning and their #2 being fired over $54 million discovered in exactly the same kind of account the CA CAFR documents. In this case, their department also claimed austerity from a $22 million budget deficit. I’m following-up with several reporters of this story to alert them to the larger $600 billion story.
  4. Law enforcement reported to me that verbal fraud about need for austerity is not a crime unless I can prove funds were stolen. This seems to be a specious excuse for not taking on powerful political forces, but I chose to not pursue this avenue.

While what you do is only and always up to you, I invite your contact with our state reps and/or leverage with our local press to support exactly the disclosure of surplus assets from the CA Parks Dept. This can, and should, lead to abundant funding for our schools and infrastructure.

As I’ve stated, as an LCF native, I’m happy to help you understand the objective data. My meeting with Carol and Bill at The Valley Sun required just 20 minutes and three pages of the CAFR. This has been a local “case study” I’ve documented, with resulting reposts going to over ten million US readers (as best I can estimate from the data).

If it helps, colleagues and I have only received professional agreement that the figures we point to on official financial documents are indeed there, we’ve received no refutations to our claims of surplus assets, and this seems as an “emperor has no clothes” obvious situation to all I know who’ve looked into this issue.

Let me know if I can be of service.

Carl

Carl_Herman@post.harvard.edu

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  • Kolokol

    No LA Times report on the 600 Billion in assets?

    • Carl Herman

      Nope. The two reporters haven’t contacted me after two e-mails.

  • jo6pac

    Here’s the reply I received and I think this part says it all. Glad you liked the story, is almost like nothing to see here please move along.

    Thanks for the email, we’re glad you enjoyed the story!

    Sent: Sunday, July 22, 2012 12:06 PM
    To: Megerian, Christopher
    Cc: McGreevy, Patrick
    Subject: Thank You

    Thank You Both, Great Job.
    http://www.latimes.com/news/local/la-me-state-parks-20120721,0,2383546,full.story
    I found the story here and now maybe people will start looking for the rest of Calif. taxpayers money.
    http://www.washingtonsblog.com/2012/07/la-times-reports-ca-parks-54-million-cafr-surplus-director-resigns-2-fired.html

    I think your comment last time is correct we won’t here any more about this. I sent this to Stockton Record and never recieved anything back.

    • Carl Herman

      Wow. What an empty feeling of “gladness” I get from them :)

      Thank you for sharing it with us, jo6pac. They didn’t bother to respond to me.

      • jo6pac

        Your welcome, I thought you would enjoy the message;)

  • Will Gregory-

    Mr. Herman,

    Here is more evidence of either incompetence or corruption. Remembering of course, that, this is just one CAFR out of 14 thousand more to be scrutinized!!

    Please see in addition to the article posted below.
    S.F. Chronicle editorial titled: Incompetence or corruption.”
    July 23, 2012.

    FYI:
    Mr. Thomas Peele, teaches Investigative Journalism at U.C. Berkeley and is one of my favorite reporters at the Contra Costa Times (Walnut Creek) . He might be a good source or teammate on a unfolding story like this. Just a suggestion.

    California investigates up to $2.3 billion in public funds hiding in plain sight
    By Mike Rosenberg mrosenberg@mercurynews.com © Copyright 2012, Bay Area News Group
    Posted: 07/26/2012 06:02:30 PM PDT
    Updated: 07/27/2012 09:48:38 AM PDT

    Related:

    Donors who bailed out state parks want their money back
    State parks scandal: Honor system used to keep track of $37 billion in public funds
    Ruth Coleman, California parks director, resigns amid budget irregularities

    SACRAMENTO — A week after uncovering a hidden-funds scandal at the state parks department, finance officials are now trying to piece together why the balance sheets for similar “special funds” are off by $2.3 billion — money that appeared to be right under their noses amid California’s financial meltdown.

    An analysis by this newspaper of California’s little-known 500-plus special funds — like the ones that included $54 million in parks money shielded from the Department of Finance — shows tens of millions of dollars in discrepancies in numerous accounts.

    The fund that gives restitution to violent crime victims was off by $29 million. The one that provides kids low-cost health insurance was $30 million out of balance. The fund that rewards people for recycling bottles and cans was $113 million off.

    “Where are these dollars?” asked state Senate budget chair Mark Leno, D-San Francisco, saying it was a “big problem” that the special funds “clearly have not been getting enough attention.”

    The newspaper’s review found at least 17 accounts that appeared to have significantly more reserve cash than what individual departments reported to the finance department, though it’s unclear why.

    An account that helps build state courts had $27 million more on the controller’s ledger than the figure reported to the finance department. A pool of money that helps problem gamblers was off by $7.9 million. Another fund that assists in prison
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    guard training was off by $6.4 million.

    The problem could date back decades and is only now coming to light after discrepancies were discovered in the parks funds, costing longtime parks director Ruth Coleman and deputy director Michael Harris their jobs.

    The potential error is especially remarkable considering how easy it would have been to catch.

    Earlier this year, dozens of state departments told Gov. Jerry Brown’s budget aides that they had a combined $8.8 billion left in “rainy day” reserves for their special fund accounts as of a year ago. At the same time, the controller’s office tabulated a total of $11.1 billion in cash reserves for the accounts.

    But finance officials, operating under a long-time honor system, never checked the controller’s total — and no oversight groups caught the discrepancy, even though the numbers are publicly available on two state websites. As a result, Brown and the Legislature used the smaller $8.8 billion figure when they approved the state’s annual spending plan last month.

    “That does not necessarily translate into hidden funds,” said Department of Finance spokesman H.D. Palmer. “In many cases, there will very likely be legitimate accounting reasons for the difference in those funds.”

    For instance, a chunk of funding promised in December but delivered in July would be counted in separate years by the controller’s office and finance department.

    Finance officials are now going through each fund, line-by-line, to determine how much of the money is truly hidden.

    “That ($2.3 billion) number will be inaccurate by the time we are done,” Palmer said, adding that the department quickly launched a “thorough and expeditious” statewide review following the parks scandal.

    On Wednesday, before the full scope of the balance sheet discrepancy came to light, Brown said the park fund discovery was “good.”

    “When somebody comes and says, ‘Hey, guess what, we have some money over here,’ well, that’s a lot better than saying, ‘Whoops, we don’t have any money,’ “said Brown, who is campaigning for tax increases this November as the centerpiece of his plan to balance the budget.

    The funds in question wouldn’t help the general fund budget crisis in most cases because they are earmarked for specific programs.

    Still, even the perception of more hidden money won’t do any favors for a state government that routinely gets spanked in public opinion polls.

    “It’s hard to ask people to increase their taxes when they hear about things like this,” said state Sen. Mark DeSaulnier, D-Concord, a member of the Senate budget committee. “I don’t know (how this happened), but it’s completely unacceptable.”

    Anna Carr, deputy director of the Gambling Control Commission, which manages one of the funds with a huge discrepancy, echoed the finance department’s warning not to jump to conclusions that the state is about to see an incredible windfall.

    “Just because (there is a discrepancy) doesn’t mean there is a problem on its face,” Carr said. “The (accounting) basis may not be the same.”

    Still, there were no accounting differences to explain the parks discrepancies, and other funds have managed to perfectly sync the two figures. For instance, accounts that help pay for pesticide regulation, improving trial courts, inland fisheries, and tobacco research all show the same balances on both the finance and controller spreadsheets.

    Others are different by only $1,000 or so. Those accounts include funds for children’s medical services rebates, air quality improvement and hospital construction.

    In a few cases, the opposite is true: The controller shows that the funds have less reserve cash than what the finance department lists in its budget, sometimes by a wide margin.

    Most departments in charge of the specific funds didn’t return calls requesting comment, or referred questions to the finance department, where Palmer declined to discuss specific fund discrepancies until after the department’s investigation is finished.

    Whose job is it to check for differences in the two funding sheets?

    “There is someone: the Department of Finance,” said Jacob Roper, spokesman for Controller John Chiang.

    Palmer conceded that his department should have been doing that and has vowed to do so going forward. He said Finance Director Ana Matosantos was unavailable for an interview Thursday.

    But it’s also the individual departments in charge of the special accounts that provide the fund balance figures to finance officials and could easily determine whether their numbers matched the totals posted by the controller.

    Assembly members and senators will hold hearings on the issue after they return from their summer recess on Aug. 6 to determine why and how this happened.

    Sen. Joe Simitian, D-Palo Alto, a budget committee member, said the state needs to ensure “our books are accurate, and restore some semblance of public trust and confidence.”

    Staff writers Thomas Peele and Steven Harmon contributed to this report.

    Contact Mike Rosenberg at 408-920-5705. Follow him at twitter.com/rosenberg17

    • Carl Herman

      Yup. I saw that, but will use the phone number you provided to call him :)

      Thank you, Will.

  • Craig

    Mr. Herman,

    Thank you for your work on this. It is truly an eye opener. My suggestion is that since the main-stream media are all bought and paid for by the ruling elites, you may want to try another direction, such as liberty type blogs that really get the word out and are becoming very effective and growing each day. Forget the “lame-stream”. With your help, maybe we can survive this crisis.

    Thanks again,
    Craig

    • Carl Herman

      You’re welcome, Craig. Feel free to share with any sites you wish per our requests for attribution explained on the right-side column.

  • Craig

    Mr. Herman,

    Can you direct me to the most notable pages of the CAFR document that I can share with others?

    Thanks,
    Craig

  • Jon Valliere

    Mr. Herman, my name is Jon Valliere and I am a resident of Long Beach and a Union member. I am interested in looking into this subject further. Are there any contacts in the Long Beach/Los Angeles area that would be available to brief me on the most current information available?

    • Carl Herman

      Hi Jon. You have my latest here. I suggest getting teamwork by sharing the available documentation with all interested, getting the union behind full disclosure of our taxpayer assets, and then outreach to polarize this issue between the criminals hiding our assets (embezzlement) and those for the public good.

      Go for it :)

 

 

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