Man central to California parks department scandal says he told superiors about surplus funds

07/26/2012 12:00 AM

02/26/2013 8:13 PM

The man at the center of a financial scandal at the state Department of Parks and Recreation told The Bee this week that he repeatedly advised his superiors that the department was sitting on millions of dollars in surplus money.

John Laird, secretary of the California Natural Resources Agency, which oversees the state parks department, revealed last week that the department had been sitting on $54 million in "hidden assets" for at least 12 years. Some of that money could have been used to avoid the park closures and steep service reductions that have played out over the past two years amid deep state budget cuts.

State parks Director Ruth Coleman, the longest-serving director in the 150-year history of the parks department, resigned last week in the wake of the discovery. In her resignation letter, Coleman said she had been unaware of the surplus, but was resigning because she bore ultimate responsibility for the department.

In comments to The Bee, Coleman blamed her deputy director of administrative services, Manuel Thomas Lopez, for failing to inform her about the surplus.

According to sources, Lopez also was central to another department scandal: A Bee investigation published earlier this month revealed that 56 employees at parks headquarters took part in an unauthorized vacation buyout program 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. Numerous sources told The Bee that the program was carried out by Lopez. According to payroll records obtained by The Bee, he received one of the largest single payouts in the buyout program, amounting to at least $20,600.

The Natural Resources Agency has not confirmed Lopez was involved in the buyout program, citing personnel confidentiality laws. But state officials said he was demoted in October and resigned in May.

In a telephone interview Tuesday, Lopez, 45, made his first public comments about the allegations. He declined to answer some questions, saying he is in the process of hiring an attorney and has been advised by the attorneys he has interviewed not to discuss any of the events that occurred at the parks department.

"I'm trying to find the best solution for my family and myself, and prepare for the future," he said.

Nevertheless, Lopez said he wanted to "make sure an accurate depiction of events were being represented."

Lopez took responsibility for the vacation buyout program. "That was my decision," he said. "I was not aware that I was violating any law or policy at that point in time."

But when it came to the surplus funds, he said he was not to blame for concealing the money. He said he repeatedly told his superiors, including Coleman, about a $20 million surplus in the Parks and Recreation Fund.

"I noticed her about them at least five times over approximately a five-year span," Lopez said. "I did not have the kind of authority to keep those funds hidden within the department."

On Wednesday, Coleman denied those claims.

"I do not ever recall being briefed, either orally or in writing, about a surplus of park funds," she said. "If I was aware of that money, I would have sought to deploy it to keep parks open."

According to Laird, the surplus money was held in two funds at the parks department: $20 million in the Parks and Recreation Fund, which collects revenue produced at the parks; and $34 million in the Off Highway Vehicle Trust Fund, which collects money from license fees and fuel taxes on off-road vehicles.

The latter funds are reserved for the construction of new off-roading parks, although there is disagreement about whether the money is legally restricted to that purpose.

The money in both funds remained hidden, Laird said, because parks department officials did not accurately report the fund balances to the Department of Finance, which is responsible for compiling the overarching state budget.

The state controller's office produces its own year-end cash reports, which repeatedly showed that the parks department had tens of millions of dollars more than parks officials were reporting to the Department of Finance. But according to finance Chief Deputy Director Michael Cohen, his department did not routinely compare its data against the controller's numbers when it came to the 500-plus special funds that generate revenue from dedicated sources, including the parks funds.

Lopez said that when he became budget officer at the department, he learned about the surplus funds from the prior budget officer. This would have been in April or May of 2005, he said.

He said it was department practice to treat the $20 million surplus in the Parks and Recreation Fund as an emergency resource.

He explained that, due to repeated legislative cuts in state funding for parks, the department has become more dependent on its own revenue sources, including park entrance fees and souvenir sales.

As a result, he said, department leaders considered the parks system vulnerable to a natural disaster. If a major storm or earthquake required a number of parks to close, the system might not be able to generate enough money to pay salaries and keep the rest of the parks operating. So the surplus was intended to fill this gap if necessary, he said.

"That was the rationale that was given to me by a number of people on the executive staff," Lopez said. "There had to be some level of a safety net."

Richard Stapler, spokesman for the Natural Resources Agency, declined to comment on Lopez's statements. "We can't speculate about these allegations pending the attorney general's investigation," he said.

Both the attorney general's office and the Department of Finance have launched investigations into the circumstances surrounding the surplus. The Department of Finance also is probing whether the other special funds in state government have been correctly reported.

At a news conference on California water issues Wednesday, Gov. Jerry Brown was asked about the parks scandal. He downplayed its significance and jokingly noted it was the first problem he has seen in which government staffers actually saved money.

"Hallelujah! More money is better than less money," Brown said. "How it happened, we're still trying to figure out, and we will figure it out."

Besides the financial scandal, Lopez faces other personal and professional challenges. He is a defendant, along with the parks department, in a discrimination lawsuit filed by a personnel official he fired last year.

And last week, he and his wife filed for Chapter 13 personal bankruptcy protection.

In the filing, they indicated they owe about $230,000 more on their Granite Bay home than it is worth, and have $86,000 in credit card debt. In total, they have about $708,000 in debts and $649,000 in assets.

In the bankruptcy filing, Lopez listed himself as unemployed. His wife is a public school teacher. They have three children.

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