By Matt Weiser and Kevin Yamamura
Published: Saturday, Jul. 21, 2012 – 12:00 am | Page 1A
Last Modified: Saturday, Jul. 21, 2012 – 12:23 am

California state parks Director Ruth Coleman resigned and her second-in-command was fired Friday after officials discovered the department has been sitting on “hidden assets” totalling nearly $54 million.

The money accumulated over 12 years in two special funds the department uses to collect revenue and pay for operations: $20.4 million in the Parks and Recreation Fund, and $33.5 million in the Off Highway Vehicle Trust Fund.

The money accumulated, state officials said, because the parks department had a pattern of underreporting the actual size of the funds in its regular dealings with the state Department of Finance.

Why and how this occurred remains a mystery and will be the subject of investigations launched Friday by the Department of Finance and the state attorney general’s office, said John Laird, secretary of the California Natural Resources Agency, which oversees the state Department of Parks and Recreation and who announced the discovery of the funds on Friday.

Officials said they don’t yet know whether any laws were broken or if additional employees will be disciplined.

State officials did not directly say there was intention to keep the money secret. But they implied as much, with Laird terming the surplus “hidden assets.”

Coleman, the longest-serving director in the 150-year history of the parks department, said in her resignation letter she did not know about the surplus. Laird said it is not yet clear who is to blame for allowing the money to accumulate.

“It’s an incredibly troubling discovery,” said Laird. “Ruth has stepped up and taken personal responsibility.”

Coleman submitted her resignation late Thursday. Her second in command, acting Chief Deputy Director Michael Harris, was removed from his job and no longer works for the parks department. Friday morning, Gov. Jerry Brown announced that Janelle Beland, an undersecretary at the Natural Resources Agency, would serve as acting parks director.

Laird said, once the surplus was discovered, Brown moved immediately to begin investigating and inform the public.

“We can’t answer every question because we thought it was more important, within 48 hours of finding out about it, to go public,” Laird said.

Advocates for the state parks system reacted with alarm and dismay. The money would have been enough to cover – twice over – the $22 million in state budget cuts imposed on parks in 2011. In response to the cuts, the department moved to close 70 of the state’s 278 parks, an unprecedented act. Virtually every other park has had its hours and services cut to save money.

Ted Jackson, a retired park ranger and former deputy director of operations at the department, said the surplus funds could have served as a safety valve to keep parks open while the state’s economy recovered.

“The department has been going around telling people we had to close parks, and it comes to light we had been sitting on this kind of money,” Jackson said. “It’s devastating for the department and it’s devastating for state government. This is the worst violation of the public trust that one could imagine.”

Most of those park closures were avoided because numerous nonprofits and local governments put up their own money to take over parks or subsidize state operations. This made the revelations of “hidden assets” even harder to stomach, because all the heartache and fundraising might not have been necessary.

“It could not be more damaging to everything that we’re trying to do here – to the public faith and confidence in the work that we put in,” said Caryl Hart, director of Sonoma County Regional Parks, who helped coordinate local groups to rescue state parks targeted for closure in that region.

One swift fallout was that Sonoma County park advocates on Friday canceled a local sales tax ballot measure planned as a long-term funding solution for parks in the region. The news of financial mismanagement at the state level, Hart said, was “just too much” to overcome in a campaign for the measure.

“We were on the brink of doing something transformative in Sonoma County when this happened,” Hart said. “This has so many layers of destruction.”

Vacation buyouts program probed

Friday’s revelation came in the wake of an investigation The Bee published Sunday into an unauthorized vacation buyout program at the parks department last year that cost the state more than $271,000.

The program, in which employees were allowed to sell unused vacation time back to the state, was carried out in secret, according to an internal department audit and subsequent investigation by the state attorney general’s office. To avoid a paper trail, the buyout requests were submitted in some cases only on Post-It notes, not official forms, according to the internal audit obtained by The Bee.

Numerous sources told The Bee that the program was carried out by Manuel Thomas Lopez, 45, of Granite Bay, who was deputy director of administrative services at the parks department. According to payroll records obtained by The Bee, Lopez received one of the largest single payouts in the buyout program, amounting to at least $20,600.

The Natural Resources Agency would not confirm Lopez was involved, citing personnel confidentiality laws. But state officials did say that he was demoted in October – the same month his superiors learned of the buyout – and resigned in May.

Prior to publication of Sunday’s article, The Bee began asking about rumors of a large budget surplus at the department and on Wednesday filed a Public Records Act request to obtain related documents. Forty-eight hours later, the Natural Resources Agency announced the discovery of the “hidden assets.”

Laird said the money was discovered by Aaron Robertson, who replaced Lopez as deputy director of administrative services. Robertson found the money, Laird said, after Coleman directed him to look into the secret buyout program.

In an interview Friday, Coleman said she first learned about the surplus from Robertson last week. Its large size did not become clear until recent days, she said.

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