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Audit: Parks Officials Hid Budget Surplus Due to Fear of Cuts; ‘Useless Reserve’ Went Unspent

| January 4, 2013
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Released today: The Attorney General’s “Report of Investigation into Discrepancies in Financial Reports Submitted by the California Department of Parks and Recreation.”

Hendy Woods in Mendocino, one of the state parks that was set to close. (Molly Samuels/KQED)

Hendy Woods in Mendocino, one of the state parks that were set to close. (Molly Samuels/KQED)

The audit of the California state parks department sheds light on why senior officials covered up an unreported funding surplus of as much as $29 million for a decade or more. The report says department managers hid the surplus first because they were concerned about future budget cuts, then out of fear of “embarrassment” if the cover-up were to be disclosed. The report’s executive summary concludes the extra money seems “to have represented an essentially useless reserve that could not be spent by the Parks Department as there was no legislative appropriation to do so.”

Former State Parks Director Ruth Coleman resigned when the surplus was reported last July. She denied any knowledge of the hidden funds, and the audit found that reports that she was aware of the extra funds are “unreliable.”

The report says charges that the department also hid more than $34 million in the parks Off-Highway Vehicle fund were unfounded.

The revelation of the surplus engendered outrage this summer in light of the scheduled closure of dozens of 70 state parks because of what was thought to be a $22 million budget gap over two fiscal years. But, as The California Report’s Rachael Myrow wrote in July, “Most of those closures did not happen because of near-heroic fundraising from non-profits across the state. (T)he money, [however], could also have prevented cutbacks in hours, staffing and services systemwide.”

Friday’s report says the disparity between reported funds and actual funds “grew unintentionally during a challenging financial budgeting and tracking period from 1995 to 2003.”

But it goes on to implicate a number of department personnel in a deliberate cover-up:

It is clear, however, that by no later than 2003, and perhaps as early as 1999, the failure to accurately report all [State Parks Recreation Fund] monies to the [Dept of Finance] became conscious and deliberate. The facts show that former budget officer Becky Brown noticed the growing disparity as early as 1998.

By late 2002, when the discrepancy in SPRF balance reports had reached $26.8 million, the budget and accounting officers and their supervisor, Tom Domich, then-manager of fiscal
services, were all aware of the discrepancy. Thereafter, from 2002 to 2012, numerous individuals failed to take appropriate action to ensure the monies were revealed to the DOF. The primary reason consistently given for not doing so was fear that the Department would see its already-reduced general funding cut further if the extra monies in the SPRF were revealed. The embarrassment expected to result from revealing the funds was another motivating factor…

Throughout this period of intentional non-disclosure, some Parks employees consistently requested, without success, that their superiors address the issue.

Ultimately, Aaron Robertson arrived as head of the Department’s administrative services division and recognized his duty to report the matter up the chain of command, both within and outside the Department. Until then, no one had been willing to report the matter beyond their supervisors. Instead, people have consistently followed the directions of those above them that the fund balance disparity would not be disclosed to the DOF.

Conclusively identifying everyone who knew of the funds and gave orders that they not be reported to the DOF is difficult. Reports that former director Ruth Coleman knew of the
funds are unreliable.

The report cites other officials, including Michael Harris, Coleman’s chief deputy who was subsequently fired from the department, as having known about the extra funds as well.

Read the report’s executive summary below. The entire report is online here.

Investigation Into Parks Financial Reporting

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Category: Recreation, State Budget

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  • Lowell Landowski

    They spending lots of money for more managers, all sorts of rapid promotions, out of class promotions. State Park Managers getting to work as consultants and directors for 3P, Public Private Parterships, organizations, after a full pension peace officer pension at 55. The big 3P organizations were raking in million in public donations, all while parks was sitting on ten of milllion in hidden funding. I like our new director, but the fear was that this gravy train would end. The only ones who were getting hurt was the grunts who got moved out of parks famiies and all to make way for the privateers to take over the parks, it is call privatization.
    Was it a conspiracy, sort of, it was the wheel and deal corporate culture under Schwarzenegger that lead to this widespread corruption at State Parks, What you do to line your own pockets, is what ever you can get away with, for as long as you can get away with it.
    Dear General our new Director Parks does have standard, you need to renew those pre Schwarzenegger standards at Sate Parks. We are still here for the most part, what I call the secret underground network of nice people at State Parks. Ask youself Director why did not one in any postion of authority ask this simple question, are there creative ways to save money besides closing parks? Have you look at our own budget to see if there is any loose money, so we do not have to move long time loyal grunt workers out of parks families and all. We call ourselves the State Parks Family, time again to make those words mean something, not just a phony saying, a way to placate us.

  • Rob L.

    This is ridiculous and apparently a cleaning of the department is in order. Public access to nature should be more available than it is now in CA. It is one of CA’s greatest resources. I would like to see more state funded campgrounds that are not dumps like on Lake Berryessa. There should be much more access to camping in the Greater Bay Area. Closure of state parks would be a tremendous loss in so many ways. We should be adding more jobs and opening more state campgrounds with this budget surplus.

    • Lowell Landowski

      State Parks has so many good people and wonderful employees who got tared by the corruption of a few dozen State Parks Managers. They skiped the proceedures in handing out promotions right and left to cronies, vacation buyouts too, and improperly authorized overtime. Post retirement the key managers got to go to work for the public private parterships 3Ps they were charged with overseeing..

      Honest employees were not the favored employees at State Parks. 95% of the Managers, who were involved in the culture of corruption at State Parks, are stil in power, only a few of them have been moved out.

      I like our new Director, but his ear is still being bent by the same old corrupt managers at State Parks. Our new director keeps says “We” are going to take some hits by the audits. Who is We? We is not the honst workers at State Parks, who suffered for many years at the hands of a system of petty favortism. Thank God for the audits, it is our best hope that Parks will return to being honestly run. Stop this they were afraid to tell about the budget suplus stuff, because they were not the least bit afraid, of bending and breaking all sorts of rules, and moral norms, to line their own pockets.