State lawyers knew earlier of surplus California parks money, lawsuit document says

08/15/2012 12:00 AM

08/21/2012 9:24 PM

Lawyers at the highest levels of state government knew the California Department of Parks and Recreation was sitting on millions in surplus money as early as April, months before it was officially acknowledged, according to testimony submitted Tuesday in a civil lawsuit.

Cheryl Taylor, budget officer at the parks department from 2008 to 2011, submitted the declaration as part of a sexual harassment lawsuit filed by another former parks employee, Adure Renee Velazquez. Velazquez, a former personnel manager, alleges in the pending suit that Manuel Thomas Lopez, the department's former deputy director of administrative services, joked about sexually obscene behavior in a work setting even after she objected.

In the declaration, Taylor, who now works at the state Transportation Department, said she was interviewed in April by a deputy attorney general and a lawyer from the parks department. She was asked whether she knew of any inappropriate use of funds by Lopez, who was being investigated at the time for initiating an unauthorized vacation buyout program in 2011. The buyouts were offered covertly to 56 employees at park headquarters and resulted in payouts of more than $271,000, according to the investigative findings.

"I told them that I was aware of the under reporting of funds but that I was directed by Mr. Lopez not to report this information," Taylor said in the declaration.

She also stated that a subordinate prepared a spending plan for Lopez indicating a $20 million surplus. Lopez "was upset with the budget findings" and asked Taylor to check the accuracy of the report. Taylor said she found it to be accurate.

"Despite the accuracy of the budget," Taylor said in the declaration, Lopez directed her to demote the employee.

Taylor stated in the declaration that even earlier, in January, she had a phone conversation with "an individual" from the Department of Justice, which oversees the attorney general's office. Taylor said she told this person about the surplus but does not name the person or cite the date.

The scandal over the surplus funds involves $54 million in what state officials have called "hidden assets" that the parks department failed to report to the Department of Finance over 12 years. The money was in two funds, one of which held $20.4 million. This could have been used to avoid park closures and cutbacks that unfolded over the past two years due to the state budget crisis.

The Bee first reported the scandal on July 20. Officials in the administration of Gov. Jerry Brown, including Natural Resources Agency Secretary John Laird, said at the time they had learned of the hidden surplus only 48 hours earlier.

Parks director Ruth Coleman, who resigned over the scandal, told The Bee she had learned of the surplus only two weeks earlier.

Taylor's declaration raises questions concerning who in state government knew about the surplus funds and when. Both attorneys in the April interview were presumably reporting to Coleman as part of the investigations she requested into the vacation buyout scandal.

Did the attorneys report to Coleman what they learned about a surplus? If they didn't, why not?

"It's extremely disturbing that both state parks and the attorney general's office were aware of the hidden funds and took no action, and are now in charge of the investigation to find out what happened," said Wendy Musell, a San Francisco attorney representing Velazquez, who sought the declaration as evidence against Lopez in the harassment case.

Richard Stapler, spokesman at the Natural Resources Agency, would not respond directly to the issues raised by the declaration, citing an ongoing investigation into the surplus funds by the attorney general.

"We are very intent on getting to the bottom of the matter," Stapler said. "However, we're not going to be able to comment until the conclusion of the investigation."

The attorney general's office also declined to comment.

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