Garden Pests and Diseases: Weird fluffy/frothy/cottony mounds in my new lawn, 1 by acanfield

acanfield wrote:
I just put in sprinklers and St Augustine sod at the end of June. I live in Torrance, CA.

In the mornings, the backyard lawn has "sprouted" several of these for the past couple of weeks. At first, I thought it was my dogs digging. But there actually is no hole, and it's in an area I have blocked off by a 3 foot "fence" to keep the dogs off. There are a lot of small rocks plus chunks of something softer, about the size of the rocks. It's fluffy/frothy/cottony looking. These mounds just seem to emerge from the lawn.

I thought it might be earthworms. I went to my local Armstrong nursery with the photo below. They told me it is a fungus due to the hot weather, a lot of water, and decaying material under the lawn. He said it won't hurt the lawn, but that is hard to believe, because when I pick the stuff up, there doesn't seem to be any grass under it! I don't think it's a gopher - there's no opening. And I think moles tend to create trails, rather than mounds.

Is Armstrong right as to the cause of this? If not, does anyone know what it is, and how to treat it?

Thank you.