Lawmakers to study agencies’ use of hidden accounts

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A joint Assembly and the state Senate committee will conduct a hearing to determine the extent that California agencies are using off-budget accounts to hold money outside the state system.

Monday’s announcement follows a Times report that the California Department of Forestry and Fire Protection hid $3.6 million rather than depositing it in the state’s cash-strapped general fund.

Cal Fire, as the department is known, placed the money with the nonprofit California District Attorneys Assn. The money came from legal settlements. Cal Fire’s regulations say the money was supposed to go into the state’s general fund.

“It is outrageous that public entities have apparently long seen fit to play shell games with the public’s money,” Assemblyman Adam Gray (D-Merced), said in a news release. “If a private-sector company treated people’s money the same way, somebody would be behind bars.”

The hearing is expected to be held in two or three weeks.

The state Department of Finance is planning to start an audit into the fund next Monday, said Janet Upton, spokeswoman for Cal Fire.

The district attorneys association received fees as high as 3% of the money coming in and 15% going out when Cal Fire needed the funds for equipment or training.

“If it is not clear how the California District Attorneys Assn. helped Californians, then that money needs to go back into the public treasury,” Gray said.

Ken Pimlott, Cal Fire’s director, froze the fund in August after receiving a briefing about it, Upton said. The department is planning to return the remaining $810,000 to the state treasury.

Earlier, it was revealed that the state Department of Parks and Recreation hid $20 million as parks were being closed because of budget cuts. This led the Department of Finance to look for secret funds elsewhere. It did not find Cal Fire’s account.

Auditors, however, found more than $200 million that agencies had put aside as lawmakers cut the state budget.

-- Jeff Gottlieb