State parks director resigns amid surplus scandal Director quits, deputy fired after discovery of unreported cache

FILE -- In this May 13, 2011 file photo Ruth Coleman, director of California State Parks, discusses the possible closure of 70 of California's state parks due to budget cuts, during a news conference in Sacramento, Calif. Coleman resigned as head of the park system, Friday, after officials learned the department sat on nearly $54 million in surplus money for years while parks were threatened with closure over budget cuts.(AP Photo/Rich Pedroncelli, file) less FILE -- In this May 13, 2011 file photo Ruth Coleman, director of California State Parks, discusses the possible closure of 70 of California's state parks due to budget cuts, during a news conference in ... more Photo: Rich Pedroncelli, Associated Press Photo: Rich Pedroncelli, Associated Press Image 1 of / 1 Caption Close State parks director resigns amid surplus scandal 1 / 1 Back to Gallery

California Parks Director Ruth Coleman abruptly resigned and her deputy was fired Friday after state officials learned that her cash-strapped department had squirreled away $54 million in funds unreported to the state for a dozen years.

Gov. Jerry Brown asked the attorney general's office to investigate whether anyone in the Parks Department broke the law.

The state will also audit the department, which oversees 278 parks on a $384 million budget that has been reduced by a third in recent years.

Parks officials had repeatedly warned that the latest cut to their department - $22 million - would force the closure of 70 state parks this year. But private donors contributed hundreds of thousands of dollars to prevent closures, and all but two of the parks remain open. Many, however, are on reduced hours, with fewer employees.

"This is deeply disappointing because we went to many partners around the state to get them to cover the shortfall," said John Laird, secretary of the California Natural Resources Agency. "I'm truly sorry about that.

"We will ascertain exactly who knew, and how broad this was in this inquiry."

Hidden accounts

The realization that the state had been blind to the extra revenue for 12 years raised immediate questions over whether there are other departments with hidden accounts.

State officials said they are changing how the state Department of Finance and controller's office communicate with each other regarding dozens of "special funds" of the kind that shielded the parks money, said Michael Cohen, chief deputy director of the finance department.

"We are conducting a review of all state special funds to see if there is anything like this," Cohen said.

For at least one state senator, however, that isn't enough.

"If one department can hoard $54 million for 12 years, who else is playing the same tricks of deceit and thievery?" asked Sen. Noreen Evans, D-Santa Rosa, who called on Brown to audit every department and division in the administration.

The cash cow at the Parks Department consists of two funds: $20.4 million from the state Parks and Recreation Fund, collected mainly from gate fees and rentals; and $33.5 million from the Off Highway Vehicle Fund, mainly from off-highway vehicle registration fees.

No cross-checks

The Parks Department underreported revenue from those sources to the controller and Department of Finance, which never cross-checked them as they do with money for the state's general fund.

In an interview, Coleman said she learned of the unreported money only a few weeks ago, when the department's new deputy director of administration, Aaron Robertson, discovered it.

Coleman said the problem was with Robertson's predecessor.

"We had an individual who was not bringing the information up through the chain of command," she said.

She was referring to Manuel Thomas Lopez, who resigned in May. As reported by the Sacramento Bee, Lopez had been conducting a "secret vacation buyout program" in which he and other employees sold their unused vacation time back to the state. The unauthorized buybacks cost the state more than $271,000.

Coleman called the current problem an accounting error that started in 1999, four years before Lopez arrived.

"But it was never corrected, and that's what the investigation will dig into," Coleman said. "I was never aware that that was happening until just recently."

Asked why she resigned, Coleman said, "it's important that I take one for the team, and we move on. You have to take responsibility for errors by your staff, and I'm stepping up."

Coleman has been parks director since 2003. In her resignation letter to Gov. Brown, Coleman said she was "personally appalled to learn that our documents were not accurate."

Brown accepted Coleman's resignation and appointed as interim director Janelle Beland, who was undersecretary of the natural resources agency.

Laird, the secretary of that agency, which oversees the Parks Department, held a press conference about the revelations. He would not say why the Parks Department's chief deputy, Michael Harris, had been fired, calling it a personnel matter.

Quick ripple effect

Already the scandal has had a ripple effect, as park advocates in Sonoma County abruptly halted plans to request a quarter-cent sales tax increase for parks.

"I don't think you can ask taxpayers to vote on a tax for parks under these circumstances. It doesn't take a brain surgeon to figure that out," said Caryl Hart, parks director for Sonoma County, which on July 1 took over Annadel State Park to save it from closure. "Now, in addition to a financial crisis, we have a crisis of confidence."

Jerry Emory, spokesman for the State Parks Foundation, which raised more than $830,000 last year to bolster 29 of the needy parks, said he was "dismayed and shocked" at learning that so much money had been hidden from view.

"But does that mean the Department of Parks and Recreation has plenty of cash? That couldn't be farther from the truth," he said.

The news particularly stunned people who have stepped forward to keep cherished parks open.

They include Alden Olmsted, who has distributed 60 donation buckets in Northern California counties on behalf of particular parks, which so far have raised about $25,000, he said.

"I'm shocked and I'm disgusted," Olmsted said - but he also said he wasn't surprised, because of frustrating encounters with Coleman and other department executives.

For instance, Olmsted in March sent a $9,500 check to the state on behalf of Jug Handle State Natural Reserve in Mendocino County. But he said the state never cashed the check that pooled donations for Jug Handle. Nor did it cash a check for $3,000 on behalf of Greenwood State Beach, another Mendocino attraction that was threatened with closure but remains open.

Feeling duped

One person who has helped raise money with Olmsted's donation buckets is Michelle Beare of San Anselmo. On Friday, she collected $10 from the bucket she had placed at the San Anselmo Coffee Roastery, put it in the bank and then learned of the scandal.

"I felt duped - I'm kind of incredulous," said Beare, adding that she still feels the parks need public support. "It makes no sense to me why all that money has been sitting there."

Meanwhile, state lawmakers criticized the hoarding of the parks money and promised to hold hearings.

Evans called for those hearings next week. But legislative leaders said they will occur in August. State Senate President pro tem Darrell Steinberg, D-Sacramento, Assembly Speaker John Pérez, D-Los Angeles, and Assembly Budget Committee Chairman Bob Blumenfield, D-San Fernando Valley, all condemned the scandal.

"We must get to the bottom of what has occurred, and what changes are needed," Pérez and Blumenfield said in a joint statement. "The people of California are entitled to know exactly how this situation has been allowed to fester."