California's special fund accounts could include more than $2 billion unaccounted for by the state Department of Finance, according to a review by the San Jose Mercury News, the AP/Sacramento Bee reports.
The Mercury News review of more than 500 special fund accounts found a $2.3 billion "discrepancy" between state controller and Department of Finance figures, including a $30 million disparity in a low-cost children's health insurance fund (AP/Sacramento Bee, 7/27).
Background on Special Funds
The state currently spends about $40 billion on special fund programs for various services, including mental health services and hospital construction.
Special fund spending has increased by 180% since 2000, from $14 billion to $39.4 billion (Rosenberg, San Jose Mercury News, 7/28).
Details of Discrepancies
The Mercury News review found that at least 17 accounts seem to have more reserve cash than what was reported to the Department of Finance.
According to the AP/Sacramento Bee, the controller's figures were never checked, and oversight groups did not notice the discrepancies, even though both sets of numbers are available on state websites.
Brown and the Legislature used the lower figures from the Finance Department when they approved the fiscal year 2012-2013 budget plan (AP/Sacramento Bee, 7/28).
Reaction to Findings
Assembly member Jerry Hill (D-San Mateo) said, "[I]t should not be the role of government to stockpile (special fund money) to balance the general fund budget." He added, "It seems we may have abused the system by accumulating more funds than necessary to meet the needs of [various] departments, and if that's the case maybe we're charging too much money."
Republican strategist Mark Standriff said, "It just completely erodes any kind of trust or faith that the public should inherently be able to have in their governments," adding, "The public looks at this and says, 'Who's minding the store?'"
Implications of Findings
According to the Mercury News, the findings could be problematic for Brown as he attempts to convince voters to pass a compromise tax hike initiative to avoid cuts to schools and social services programs (San Jose Mercury News, 7/28).
Meanwhile, the Sacramento Bee reports that it is unclear how much of the extra funds can be used to bolster the state's general fund budget.
According to the Bee, special fund accounts are dedicated for specific purposes based on who pays the fees that generate the funding.
Mike Genest -- a former Department of Finance director under former Gov. Arnold Schwarzenegger (R) -- said that extra money found in special fund accounts "likely won't be available to the general fund" (Yamamura, Sacramento Bee, 7/28).