California parks officials apparently used obscure payroll codes intended for wildfires and disasters such as Hurricane Katrina to turn vacation time into overtime pay for managers, the state controller's office testified Wednesday.

The state payroll system generally blocks managers from receiving overtime, said John Hiber, the state controller's chief operating officer, at a Senate oversight hearing. But override codes exist for rare cases such as Department of Forestry and Fire Protection employees fighting wildfires or emergency workers providing disaster relief.

"It appears that because those codes exist that this wasn't picked up (and) that those codes were manipulated to allow this to occur," Hiber testified.

"Someone knew what he or she was doing," observed Sen. Mark Leno, D-San Francisco, chairman of the Senate Budget and Fiscal Review Committee.

"Correct, correct," Hiber said. "And there appears to be collusion here as well. So we're in the process of evaluating those codes as they were used and changing the procedures to eliminate this practice from occurring at all in the future."

The Bee reported last month that 56 Department of Parks and Recreation employees sold unused vacation time to the state for more than $271,000. Because the practice was unauthorized, employees submitted buyout requests on Post-It notes in 2011, according to a department audit. The money was paid as overtime.

The longtime head of the parks department, Ruth Coleman, resigned in July amid revelations about the vacation buyout and $54 million in parks funds hidden from the Department of Finance and state lawmakers.

The missteps have discouraged private donors from contributing to parks. Sen. Joe Simitian, D-Palo Alto, feared it could take years for the state to recover its credibility.

The state disciplined three parks executives this month because they "manipulated the system" or gave "recklessly flawed advice," according to formal actions.

A fourth official, Manuel Thomas Lopez, former deputy director of administrative services for the parks department, is believed responsible for the buyout plan. The state demoted him in October, and he resigned in May.

The state Department of Justice is investigating whether criminal activity occurred. Marc LeForestier, the department's legislative director, said the inquiry should be complete by mid-October.

Few other revelations emerged Wednesday about the overtime scheme or bookkeeping problems in 560-plus special fund accounts. Sen. Bill Emmerson, R-Hemet, was curious about exactly when Brown officials knew of the hidden funds, given that a key parks official told state attorneys about hidden money months ago, according to testimony submitted Tuesday in a civil lawsuit.

"Who knew what, when, is under investigation," said Department of Finance Director Ana Matosantos, who said her department did not know about it until July.

Leno announced that his Senate committee will pursue legislation that includes a two-year moratorium on park closures through 2013-14, as well as a mandate that the Department of Finance and controller's office use identical accounting methods. The bill also would include Brown's plan to use newfound parks money as an incentive to match private donations.

Emmerson thought the bill was premature. Senate Republicans had asked Democratic leaders to subpoena 14 past and current parks department employees on hidden funds and vacation payouts.

"I was expecting a lot more information than we got today," he said, "and I'm disappointed in that."

Senate President Pro Tem Darrell Steinberg, D-Sacramento, did not want his Senate Rules Committee to use its subpoena power because he didn't want to jeopardize the ongoing Department of Justice investigation, said spokesman Rhys Williams.

""The hearing today was very outcome-focused about what we will do to make sure this doesn't happen again," Williams said.

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