State Sen. Bob Wieckowski, D-Fremont, shown in a 2015 file photo, grilled officials from CalRecycle in a hearing Thursday after The Chronicle reported that the state department that runs the bottle recycling program has a $529 million surplus, a dramatically larger windfall than it had previously suggested.

SACRAMENTO — State Sen. Bob Wieckowski grilled state officials during an oversight hearing Thursday about accounting problems involving California’s bottle deposit program after the department underreported the size of its surplus by at least $100 million.

Wieckowski, a Democrat from Fremont who chairs the budget subcommittee on environmental protection, called the hearing after The Chronicle reported that CalRecycle, the state department that runs the bottle program, has a $529 million surplus, a dramatically larger windfall than it had previously suggested.

“I’m irked that there’s so much money in the fund and we didn’t know it or we try to minimize it,” Wieckowski said during the hearing. “The public demands better performance from this program — or get a different program.”

CalRecycle Director Rachel Machi Wagoner told senators that the accounting issue was the result of several factors, including a surge in beverage sales and drop in recycling rates during the pandemic, coupled with an accounting backlog that caused the department to get months behind on its bookkeeping.

“We have made up that time. We are prepared to work with the Legislature on keeping you up to date with these numbers,” Machi Wagoner said during her virtual testimony. “The last two years are unprecedented and historically completely different than what we’ve seen ever before. I would hesitate to call it a mistake and say that our estimates and our projections were wrong.”

Wieckowski, who is carrying a bill to overhaul the program, has been among the Legislature’s most vocal critics of California’s ailing bottle recycling system. The program is responsible for managing the nickel and dime deposits consumers pay every time they buy a can of soda or bottle of beer in the state.

But the program has been in a downward spiral for about five years as recycling centers closed en masse because of factors such as global tumult in the recycling market and soaring real estate prices. Only about 68% of bottles and cans bought in California are recycled today, down from about 85% at the program’s peak in 2013.

To complicate the beverage program’s woes, some recycling advocates say CalRecycle has for many years underreported the size of its surplus to distract from its plunging bottle redemption rate. The surplus grew as recycling centers closed in droves and consumers struggled to find convenient places to return their empties.

“These are deposits that consumers have paid that they haven’t been able to redeem,” Wieckowski said during Thursday’s hearing. “The system is so broken that they have no place to go.”

The size of the program’s reported surplus has fluctuated widely: The budget legislators and Gov. Gavin Newsom approved last summer projected the fund would have a $195 million surplus at the beginning of the current fiscal year, which started July 1. Then, CalRecycle estimated the surplus was about $428 million in a report to the Legislature last fall. CalRecycle later filed a memo with the state Department of Finance stating the surplus was actually over $529 million.

Susan Collins, president of the Container Recycling Institute, an advocacy group, has raised concerns about CalRecycle’s accounting practices for years and brought the issue to The Chronicle’s attention.

Collins said while she’s glad lawmakers are paying attention to the problem, she found CalRecycle provided few clear answers on Thursday. Collins said the department has repeatedly warned legislators that it faced deficits in past years, creating the false impression that it was “in a precarious position” all while its surplus grew year after year.

“Today’s hearing was an opportunity for CalRecycle to pledge to produce accurate and timely financial reports from here on out,” Collins said in an email. “Instead, there was no acknowledgment that financial misreporting had occurred, no pledge to correct the recent erroneous financial report and no pledge to quickly produce a new financial report, which is overdue.”

Machi Wagoner, who took CalRecycle’s helm in December 2020 and has worked to resolve the accounting backlog, told senators that she plans to work closely with them to provide timely updates and improve the recycling rate.

“There is a lot of room for improvement,” she said.

Dustin Gardiner is a San Francisco Chronicle staff writer. Email: dustin.gardiner@sfchronicle.com Twitter: @dustingardiner

Dustin Gardiner is a state Capitol reporter for The San Francisco Chronicle. He joined The Chronicle in 2019, after nearly a decade with The Arizona Republic, where he covered state and city politics. Dustin won several awards for his reporting in Arizona, including the 2019 John Kolbe Politics Reporting award, and the 2017 Story of the Year award from the Arizona Newspapers Association. Outside of work, he enjoys hiking, camping, reading fiction and playing Settlers of Catan. He's a member of NLGJA, the association of LGBTQ journalists.