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PD Editorial: A disturbing lack of money management

What happens when people discover that a state agency hoarded millions while pleading poverty and begging for handouts?

They demand their money back. Wouldn't you?

The state Department of Parks and Recreation stashed away $54 million from two special funds, failing to report the balances to budget officers for three successive governors. Much of the money is earmarked for special purposes, but there still may have been enough to operate 70 parks that instead were marked for closure due to budget cuts.

Some groups that donated to keep parks open are seeking refunds or a guarantee that the hidden money will be spent on parks.

If only it ended there.

What may be even worse is a systemic failure by state finance officials to account for billions of public dollars that has been exposed by the scandal at the parks department.

State agencies control 500 special-purpose funds separate from the budget's general fund. The special funds, many fueled by user fees, hold $37 billion and account for about a quarter of state spending.

It stands to reason that the state would have accounting controls in place to keep track of those accounts and how the money is spent. Any competent business would. Most families do. And it's the state's practice with the general fund.

But, according to a report in the San Jose Mercury News, the state's budget office essentially uses the honor system for the special funds.

"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 the newspaper.


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