$2 billion accounting gap in California special funds

SACRAMENTO — The state controller and the Department of Finance are $2.3 billion apart in their calculations of how much money is in hundreds of special funds kept by various state agencies, officials acknowledged Friday.

By the state controller's accounting, the special funds held $11.1 billion during a financial tally a year ago. The state Department of Finance says the funds held $8.8 billion.

The accounting gap came to light after finance officials last week discovered nearly $54 million in two Department of Parks and Recreation special funds that had been deliberately hidden from the governor's budget office but showed up on the controller's books. The finding forced the resignation of the parks department's director and prompted an investigation by the state attorney general.

Finance Department spokesman H.D. Palmer said auditors won't know if there is additional surplus money in any more of the 560 accounts until next week, when they finish matching the controller's figures with their own.

Much of the difference is because the controller's and finance offices often use different accounting methods, said Palmer and Hallye Jordan, a spokeswoman for Controller John Chiang. For instance, a $460 million discrepancy in two transportation special funds is because the controller's office accounted for the money in one fiscal year, while the Finance Department counted it toward the next fiscal year.

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