On Friday, state finance officials said that an audit of special fund accounts has shown that human error and differences in accounting procedures are responsible for a discrepancy in funding calculations, the San Jose Mercury News reports (Rosenberg, San Jose Mercury News, 8/4).
The state currently spends about $40 billion on special fund programs for various services, including mental health services and hospital construction.
A review by the Mercury News published last month found a discrepancy between state controller and Finance Department calculations for California's special fund accounts, including a disparity in a low-cost children's health insurance fund.
According to the review, at least 17 accounts seem to have more reserve cash than what was reported to the Department of Finance.
The review found that 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 (California Healthline, 7/30).
Last week, the Finance Department released the findings of an audit of the state's 560 special fund accounts.
The audit found that the controller's office listed $12.5 billion remaining in the special fund accounts as of the end of June 2011, while the Finance Department listed $8.8 billion remaining in the accounts.
Finance officials factored out major accounting differences between the two agencies and found that the net difference between the two totals is $415 million, which is less than the discrepancy reported by the Mercury News last month.
Officials attributed a difference of $196.7 million to human errors, which they say have been corrected (San Jose Mercury News, 8/4).
State Response to Audit
Finance Department officials said that they plan to adopt new procedures to coordinate information with the state controller's office.
They said they will work to reconcile special fund accounts with the controller's office beginning with the FY 2013-2014 January budget plan (Chance, "Capitol Alert," Sacramento Bee, 8/3).
Reactions to Audit
Republicans said that the accounting disparities show that the state cannot manage its funds properly and that voters should reject Gov. Jerry Brown's (D) compromise tax hike initiative.
State Sen. Bob Huff (R-Diamond Bar) said that the administration's auditing efforts have been "slapdash." He called for more financial assessments "before we even consider going back and asking struggling families for yet another tax increase."
Assembly Budget Committee Chair Bob Blumenfield (D-Woodland Hills) said, "Clearly, we need a better system to track the money going in and out of our special funds."
Ana Matosantos, Brown's finance director, said that the errors found by the audit would not have changed how the state developed its budget for the coming year (Mergerian/St. John, Los Angeles Times, 8/4).
On Friday, Capital Public Radio's "KXJZ News" reported on the audit (Quinton, "KXJZ News," Capital Public Radio, 8/3).