Bookkeepers Try to Figure out if State Is Sitting on Billions of Dollars

Monday, July 30, 2012

After finding $54 million in its Department of Parks and Recreation pants pocket, the state is checking billion-dollar bulges in 560 other pockets scattered throughout its wardrobe.

The San Jose Mercury News followed up on its report that the parks department had millions squirreled away unbeknownst to the Department of Finance, with a calculation that $2.3 billion might be sitting unaccounted for in 17 other departmental special funds throughout the government.

The government collects about $37 billion a year from user fees and assessments for special funds that typically have dedicated purposes related to how the money was collected. That pot of cash is about 40% the size of the state’s General Fund, which is mostly generated by property and income taxes.

While the General Fund is scrutinized via a formal accounting system, special funds are not. Using a method characterized as “the honor system,” agencies report how much money they have collected and the Office of the State Controller runs its own numbers on what should be in the funds. Both submit their figures to the Department of Finance.

Up until now, apparently, no one bothered to match the numbers up.

The Department of Finance is expected to announce the results this week of a quick audit but is already warning that the Mercury News’ simple comparison of Controller and agency numbers probably didn’t yield an accurate accounting of funds. Finance department spokesman H.D. Palmer said to expect a number much lower than $2.3 billion.

So state court watchers probably shouldn’t start making immediate plans to spend the $27 million spotted by the newspaper in a building fund; problem gamblers might not bet on getting $7.9 million of assistance from a pool of money dedicated for them; and prison guard training might not get a $6.4 million boost.

–Ken Broder


To Learn More:

Up to $2.3 Billion in California Public Funds Hiding in Plain Sight (by Mike Rosenberg, San Jose Mercury News)

California Finance Department Preparing to Release Audit Data (by Kevin Yamamura, Sacramento Bee)

State’s $37 Billion in Special Funds Is So Special It Isn't Tracked (by Ken Broder, AllGov)

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