Last month, the California Department of Parks and Recreation revealed it hid $54 million in two special funds, even as parks were on the chopping block. That triggered an audit of hundreds of special funds, and the State Department of Finance released its findings on Friday. John Myers, political editor at KXTV in Sacramento, joins us to talk about what the audit revealed.
SCOTT SHAFER: To say voters are unhappy with politicians and government these days is an understatement. And when the state threatens to close dozens of parks, only to reveal they were sitting on tens of millions of dollars in a secret fund, well, that doesn't exactly build trust, does it? That's what happened last month, when the California Parks Department revealed it hid $54 million in two special funds, even as parks were on the chopping block. That triggered an audit of hundreds of special funds, and Friday the State Department of Finance released its findings. John Myers, political editor at KXTV in Sacramento joins us now. And John first of all tell us, did the audit find anything like what was revealed by the California Parks Department a few weeks ago?
JOHN MYERS: It did not, and let’s set the stage here. Special funds are something that really, the public doesn't understand a lot about the California budget, and that’s because those of us in the press corps don't report on them a lot. Special funds are these funds that are dedicated to specific purposes. The money comes from user fees and assessments on particular things, but they are really dedicated, earmarked kind of money. There are 560 special funds in the state budget. They found nothing like the state parks issue, where there was $54 million really in so-called 'hidden money' in the parks accounts. My math, Scott, tells me out of the 560 special funds, there were 291 where there was some difference of opinion about how much was in it. I think that's a fairly high number, but when you actually start to look at the dollar amounts and the differences, you really come down to a much smaller number. In total, it looks like we're somewhere around $84 million of unresolved, human errors in these accounts. Eighty-four million is real money, but $84 million dollars out of a $120 billion state budget or so, that's the difference here. But nonetheless, they're taking it seriously and they're going to make changes in how they look at these funds.
SHAFER: And what kind of changes did the Department of Finance recommend?
MYERS: I think basically what you're going to see is more conversation between the governor's team, which is the California Department of Finance, and the state controller's office that does a cash collection analysis of what's in those funds. Clearly the governor realizes that as much as there's a policy and an accounting issue here, there's a political issue here. You don't want the voters to think you don't know where the money is. And that's a very bad political optic in any year, but it's an especially bad political optic when the governor is asking for a very large tax increase on the November ballot, which is Proposition 30.
SHAFER: Well and after that $54 million pot of funds that the parks agency was uncovered, I think it was the governor who asked the Attorney General Kamala Harris to investigate. So it sounds like this audit from the California Department of Finance is not suggesting any sort of massive wrongdoing anywhere.
MYERS: It is not, but it's also a snapshot audit. I mean, first of all, right, they did not find anything in any other of these funds that was like state parks. What the attorney general's office is doing is specifically looking at what happened at state parks. The legislature is going to start asking its questions. We're expecting a legislative hearing next week in the State Assembly to ask questions about what happens at parks. You can bet that there's going to be a lot more questions, both political and legal, about what happened and why there was $54 million that almost no one in the capitol building seemed to know about.
SHAFER: John, let's look ahead a bit to the next couple of weeks. The Legislature is back in session on Monday for the rest of the month. High on the list is pension reform. Tell us what the governor is hoping to accomplish.
MYERS: I think the real question is, is what is everyone hoping to accomplish? The governor has this 12-point plan that he put out late last year. If you look at the 12 points, there's usually agreement there between the governor and Democrats in the Legislature. But two or three sticking points are really where the fight is. One of them is how long public employees will have to work before they can retire. We're talking about future employees here. And also how generous their pension benefit would be. The governor wants this hybrid pension, 401K plan that Democrats in the Capitol are not going to give him.
SHAFER: And in general, where is organized labor on this? Do they generally want some kind of agreement along the lines of what Democrats in the Legislature want?
MYERS: My sense in talking to people, Scott, is that organized labor knows, as much as they dislike all of these 'reforms' of public employee pensions, they know something is going to have to be done. But the governor has always said that his plan is really the bare minimum that we should do. And that's why I asked that question, is the governor willing to settle for something else? Because he's not going to get something to that effect from Democrats in the Capitol, who of course are supported by organized labor.
SHAFER: And I assume he only needs a majority vote, but is there any Republican support for any of this?
MYERS: Well the Republicans, interestingly enough, have introduced and embraced Governor Brown's pension. They introduced it as legislation. The reality is, the way things are structured now, this is probably going to be a statutory change, not a change to the state constitution. That means you only need Democrats in the Capitol to pass that. The Republicans, you know are going to make a lot of noise about this. And they're going to put a lot of pressure, I think, on this divide between the Democratic governor and the Democratic Legislature.
SHAFER: John Myers is the political editor of KXTV in Sacramento. John, thanks a lot.
MYERS: You're welcome.