Capitol Alert: California Finance Department preparing to release audit data

After $54 million in surplus parks funds were discovered last week, the Department of Finance said it will release findings next week on whether similar pockets of special fund money are hiding elsewhere in state coffers.

The parks money was found in part because state controller's data showed tens of millions more dollars than the Department of Finance reported in its own figures. Finance, which is responsible for building Gov. Jerry Brown's budgets, is now examining all 560 special fund accounts to determine if similar differences exist.

But finance officials have cautioned against a straight comparison between data provided by the Controller's Office and those issued by the Finance Department on their websites.

In many cases, the controller's numbers differ from finance's for legitimate reasons, Finance Chief Deputy Director Michael Cohen said last week. Finance uses budget accounting, which counts money received and spent at different times of the year than the controller does. In a basic example, if a department buys supplies in May but does not pay its bill until August, Finance and the controller may account for the same purchase in different fiscal years.

Finance spokesman H.D. Palmer said his department has determined that two transportation accounts have a legitimate accounting difference worth $460 million, for instance. He said finance officials are trying to figure out whether there is money in state coffers that his department does not know about, and for which there is no reasonable accounting explanation.

Palmer said that total would be "well below" the $2.3 billion difference calculated yesterday by the Mercury News based on a pure comparison between Finance Department and Controller's Office data. The Mercury News acknowledged that figure did not account for legitimate methodology differences between the two offices.

However much the Department of Finance turns up, it's not clear how much can be used to shore up the state's general fund budget, which pays for education, health care and prisons. Special fund accounts are dedicated for specific purposes based on who pays the fees that fund them, though governors and lawmakers have tried to tap them for years to help balance the general fund budget by borrowing or taking money.

"If they find money, a good portion of it likely won't be available to the general fund," said Mike Genest, a fiscal consultant who served as Department of Finance director under Gov. Arnold Schwarzenegger.