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State special funds review finds no further deception

SACRAMENTO — A detailed review of more than 500 state special funds released Friday found hundreds of millions of dollars in accounting discrepancies but no instances beyond the state parks department in which government officials purposely underreported the amount of money.

The review by the governor's finance department found discrepancies, sometimes in the hundreds of millions of dollars, in the amount reported to it and the state controller's office by different government departments but attributed those to differences in accounting methods, timing and human error.

Gov. Jerry Brown called for the review after it was revealed that state parks officials had deceived lawmakers and gubernatorial administration for more than a decade by underreporting nearly $54 million in two special funds.

"The bottom line of this review is that there are no such other circumstances in state government based on what we found," Finance Director Ana Matosantos said during a news conference.

The review is important because the finance department's numbers are used to develop the state's general fund budget each year and because lawmakers take millions of dollars in loans from the special funds to close budget deficits.

California's overall budget includes more than $39 billion from 560 special funds, which are generated from taxes and fees for things such as recycling and vehicle registration. Beginning next year, the two agencies will reconcile their figures before the budget process starts, Matasantos said.

The finance department's review found a difference of $3.7 billion in the amount of special fund money reported to the controller's office and the finance department as of June 30, 2011, the end of the 2010-11 fiscal year. After adjusting for bookkeeping differences and a legislative budget gimmick that deferred state payroll by one day, the net difference was $415 million, or less than 5 percent of all money in state special funds.

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