Are you kidding me?!

Redevelopment agencies in California illegally shortchanged schools by at least $40 million last year, forcing the state to make up the money, according to findings released Monday morning by State Controller John Chiang.

The review of redevelopment agencies comes as the Legislature is poised to vote on Gov. Jerrry Brown's proposal to eliminate municipal redevelopment agencies as part of his budget plan. One city, Palm Desert, spent public money meant for improving slums and blight on a luxury golf course.

Times' Data Desk: How is your redevelopment agency spending money?

"The lack of accountability and transparency is a breeding ground for waste, abuse, and impropriety," Chiang said in a statement. "In whatever form local redevelopment takes in the future, the level of oversight and openness must be consistent with the amount of public dollars entrusted to their care."

The report comes as many redevelopment advocates fear that the Legislature is leaning toward abolishing the agencies, which run on $5 billion a year in property taxes. Brown wants to send the money to schools and counties instead, and take $1.7 billion this year to balance the budget. Proponents of the redevelopment agencies, including the mayors of many of California cities, are outraged, arguing that the program generates jobs and builds thousands of homes for poor and working people. Critics say the money could be better used for other services, and that it is often misspent.

Jessica Garrison

Chiang dispatched auditors around the state in January, saying he wanted to provide "factual, empirical information about how these agencies perform and what they bring to the communities they serve." In the past, his office has declined to scrutinize redevelopment.

The review also found that the agencies' outside auditors often did a poor job and that the agencies had used affordable housing money in improper ways.

None of the 18 agencies met all filing requirements for financial reports, the review found. Some filed reports in pieces; some did not file at all. Two agencies -- in Pittsburg and Calexico -- also made questionable loans to their cities' general funds. Pittsburg lent $16.6 million last fiscal year without interest. Most of the money was unspent, which allowed the city to earn interest on those funds.