LA Times reports CA Parks $54 million CAFR surplus; Director resigns, #2 fired

The Los Angeles Times reported California’s Department of Parks and Recreation tried to hide $54 million in account surpluses while claiming a $22 million budget deficit would “force” 70 park closures.

Director Ruth Coleman resigned; second-in-command Michael Harris was fired.

This story is repeated in California state accounts to the sum of $600 billion in surplus assets; documented in the state’s Comprehensive Annual Financial Report (CAFR).

I e-mailed the two reporters to commend their work and invite reporting of the larger picture that similarly implicates CA Governor Jerry Brown, both parties’ “leadership,” and my very own two state representatives who chose “no comment” upon five weeks of my work to have them simply affirm this data.

My e-mail:

Hi Chris and Patrick,

Thank you for your report. Are you aware of the $600 billion in surplus accounts revealed in California’s state Comprehensive Annual Financial Report? I’m happy to help you see the data; feel free to call me if that’s easiest. Would you like to report on $600 billion in total similar accounts?

It’s all hidden in plain sight. I’m one of several writers documenting this; start here. This article has been widely reposted.

This entry was posted in Uncategorized. Bookmark the permalink.
  • jo6pac

    Sent a Thank You, also thanks for the link.

    Here a little something that just keeps coming back and you know Southern Cal will never see this water.

  • Wooten Berston

    Good on you, Carl. You’re our pitbull for honesty. Keep chewing on them no good bastards!

    • Carl Herman

      Thanks, Wooten. In this case, I’m surprised the L.A. Times approved this story and CA officials reported this as fraud.

      What does that mean? Is this a breakthrough with one case that opens a door for the identical cases in the state totaling $600 billion in surplus taxpayer assets???

      We’ll see. I’ll be interested to see if the reporters respond. It could also be just a small story to pretend our government is honest and then carry on with business/looting as usual.

  • Will Gregory-

    Mr. Herman,

    I thought this information could be helpful to you in your ongoing investigation.

    State parks scandal: Honor system used to keep track of $37 billion in public funds
    By Mike Rosenberg Copyright 2012, Bay Area News Group
    Posted: 07/24/2012

    Ruth Coleman, California parks director, resigns amid budget irregularities

    SACRAMENTO — With state leaders scrambling to find out how state parks officials kept tens of millions of dollars hidden for more than a decade, California’s top finance officials Tuesday acknowledged what could be a far bigger problem: They have no system in place to account for $37 billion in “special funds” scattered throughout state government.

    Instead, finance officials revealed, they rely on an honor system to track money that could be stashed away in untold accounts similar to the funds that turned up last week, sparking a scandal in the state parks department.

    Each year, dozens of state departments report how much money they have in more than 500 special-fund accounts, which are separate from the general-fund budget and mostly tap into user fees to make up more than a quarter of all state spending. But no one checks to ensure that the special-fund figures being reported match the actual cash left in the accounts.

    “Our reliance has historically been on accurate and correct accounting being reported to us by the relevant departments,” Department of Finance spokesman H.D. Palmer told this newspaper Tuesday.

    The little-known practice of trusting — and not verifying — took a remarkable turn last week when Gov. Jerry Brown’s administration discovered that top parks officials had withheld $54 million in two special-fund accounts by not reporting them over the last 12 years. Longtime State Parks Director Ruth Coleman resigned
    and her chief deputy, Michael Har

    ris, was fired Friday.

    The scandal has been a huge embarrassment for the Brown administration, which in campaigning for a November tax initiative had argued that the state was so broke it needed to close dozens of parks.

    Lawmakers are calling for reforms, not necessarily through new laws but by ensuring the proper state finance agencies are working together to ensure that special-fund balances match what the departments are reporting.

    “Obviously, this is a wake-up call,” said Assemblyman Jared Huffman, D-San Rafael, chair of the Committee on Water, Parks and Wildlife, who said neither he nor any of his colleagues was aware of the honor-system practice.

    “I think that the Department of Finance is going to want to make sure that this never happens again,” Huffman said.

    Since the parks scandal broke, no allegations have been made of other departments hiding money, but some lawmakers and others fear this could be the tip of the iceberg.

    Now, as the state weathers its latest financial storm, Brown’s finance department is reviewing all the special funds across state government to figure out whether any other departments took advantage of the honor system to hide funds.

    “It would seem like we need a better system of accounting,” said Derek Cressman, regional director of California Common Cause, a public advocacy nonprofit. “It doesn’t seem like it’s working adequately to have each department self-report.”

    The honor system does not apply to the $96 billion in general-fund revenue. The general-fund budget is the highly publicized and politicized spending plan that uses tax money to keep things like schools and prisons running.

    With the general fund, each department’s actual cash balances are matched with budget figures to make sure they’re right, a financial process called “reconciliation” — similar to matching your checkbook to the money in your checking account.

    But that process isn’t in place for the special funds.

    Unlike tax revenue that flows into the state’s general fund, special funds are accounts that collect fees from a wide variety of state enterprises — fees that campers pay to visit state parks, fees collected from the sale of computers that are used to fund electronics recycling, and fees that off-road motorists pay when they register motorcycles or dune buggies, for instance. In the parks flap, the off-road account had $33.5 million hidden and the remaining $20.4 million was money collected from park entrance fees and concession contracts.

    “When you talk about the budget problem, it’s the general fund that’s always under extreme scrutiny,” said Mike Genest, who was Gov. Arnold Schwarzenegger’s finance director from 2005 to 2009. “This couldn’t happen as easily in the general fund because it’s regularly reconciled. Special funds don’t always get the attention.”

    So who should be checking on the special-fund money?

    The state controller’s office is in charge of figuring out how much cash is in each special-fund account and gives its figures to the Department of Finance, said Jacob Roper, a spokesman for Controller John Chiang. At the same time, finance officials are handed unverified figures from individual departments.

    Palmer could not say why the finance department simply did not match the controller’s cash figures with the parks department’s numbers. Anyone with an Internet connection can check the cash figures against the budget on the state’s website, though there is such a flood of numbers across the accounts that readers would have to know what they’re looking for.

    The financial irregularities were discovered only after newly installed parks finance officials began digging into their books as part of a separate investigation into unauthorized vacation time for parks employees. The parks money was never spent, allowing it to escape the further scrutiny that comes with budget appropriations.

    Finance officials say they acted swiftly to fix the problems at the parks department and launch a sweeping review of all special funds.

    “The fact that we’ve initiated the statewide review of all special funds indicates the seriousness to which we take this issue,” Palmer said. “This is something that is many years in the making, and this administration is the one that uncovered it.”

    Staff writers Steven Harmon and Paul Rogers contributed to this report. Contact Mike Rosenberg at 408-920-5705. Follow him at

    • Carl Herman

      Thanks for this, Will. I’ll contact the writer of the article to check interest on CAFR reporting. The L.A. Times writers have not responded to two e-mails.

  • NoName
    Must read and understand the swindle.