CalRecycle, the state's quarter-century-old beverage container recycling program, is in big trouble.

While the number of bottles and cans diverted from landfills in California is up dramatically, rampant fraud and mismanagement is depleting the state's recycling fund.

In recent years the state has paid out $80 million to $100 million more to consumers and others who turn in used bottles and cans than it has taken in from beverage distributors. If something is not done soon to restructure the program, the fund could run out of money within two years.

Fraud explains part of the problem. Attracted by the nickel and dime per container paid by the state, cheaters are collecting truckloads of cans and bottles out of state and redeeming them in California.

In a three-month period this past summer, agents from the state Department of Food and Agriculture stationed at border checkpoints counted 3,500 vehicles entering California that were carrying used beverage containers, the Los Angeles Times reported recently. More than 500 were rental trucks filled to the brim with bottles and cans.

Because it's not illegal to bring containers into the state, only to redeem them here, agents are not able to stop the suspect vehicles.

While some of those used containers may have gone to legitimate destinations – to California ports for export or to manufacturers – undoubtedly a portion of them were turned in at recycling centers for cash.

The California Justice Department pegs the amount paid for out-of-state bottles and cans at $40 million annually. An industry expert quoted by the Times estimates the amount is closer to $200 million.

Beyond the out-of-state container issue, CalRecycle has failed to collect millions of dollars that beverage distributors owe.

In 2010, an audit estimated the state was owed $10 million from distributors. That has been reduced to $3 million in recent months, but because the agency delayed collection efforts beyond a two-year statute of limitations, some payments owed will never be recovered.

The agency has made efforts in recent months to correct problems and stave off the looming funding crisis. For example, to discourage illegal redemption, the governor signed a bill that will require border agents to record names, car license numbers and the destination of those bringing out-of-state containers into California. Those who fail to report will be subject to fines.

Also, CalRecycle is issuing new regulations that will reduce how much recycling centers can accept from individual consumers per day.

Audits and enforcement have been stepped up as well.

Finally, CalRecycle officials are meeting with stakeholders – including local curbside recycling programs, environmentalist groups, recycling centers and others – to consider ways to restructure the program to make it more sustainable.

Beverage container recycling has reached record levels in California, exceeding the expectations of those who originally conceived the program.

Last year 20.4 billion beverage containers were sold in California and 16.8 billion were recycled. That's a recycling rate of 82 percent, impressive by any standard. No other state recycles as many of its beverage containers as California and only one, Michigan, which offers 10-cent redemptions for both soda and beer, has a higher rate.

But future success depends on the state's ability to keep its recycling fund solvent. That will require more energetic efforts to prevent fraud and much better state management.

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