EXECUTIVE SUMMARY:
This final audit report points out that California used pension fund reserves to reduce California's budget deficit. In doing so the State passed legislation that effectively excluded the Federal Government (includes participating programs of all Federal agencies) from receiving its fair share of about $816 million in pension fund reserves which was allocated to State agencies for operating expenditures. Since the Federal Government participated in the contributions to the pension plan, then Federal programs should receive their fair share of the cost reductions resulting from the use of reverted pension funds. The Office of Inspector General estimates that the Federal Government's share is about $111 million and recommends financial adjustments to Federal programs for this amount.