South Carolina Looking for Answers After Finding $1.8 Billion in Mystery Cash

The state, which has had elected comptrollers and treasurers since 1776, has a multi-century history of accounting problems dating back to the first comptroller’s office.

AP/Jeffrey Collins
South Carolina's treasurer, Curtis Loftis, during a meeting of the State Fiscal Accountability Authority on March 26, 2024, at Columbia, South Carolina. AP/Jeffrey Collins

Officials responsible for keeping South Carolina’s books are due to appear at a state senate hearing Tuesday on how to spend $1.8 billion the state lost track of and found, mysteriously, in an account earlier this month.

In early March, an investigation into a $3.5 billion accounting error led to the discovery of $1.8 billion that the state had sitting in what was intended to be a temporary account.

The initial investigation was triggered by a different, larger accounting error in which the state’s former comptroller general, Richard Eckstrom, had double-posted money in higher education accounts, leading to a $3.5 billion accounting error.

Luckily for everyone involved, the error was only on paper. The comptroller had overstated how much the state spent on colleges and universities for more than a decade.

The discovery of $1.8 billion, though, appears to involve actual money, not just an accounting error. The state treasurer, Curtis Loftis, said he had put the money in an account where it accrued some $200 million in interest, though it’s not yet clear how the $1.8 billion went unnoticed for so long. 

For reference, the $1.8 billion would represent more than 13 percent of the state’s proposed $13.2 billion budget.

While accountants are working to piece together how exactly the money was misplaced in the first place, lawmakers have begun floating ideas for how the mystery windfall should be allocated.

Some lawmakers have pointed to requests from state agencies that went unfulfilled in the budgetary process this year. While state agencies requested $4.7 billion in total, lawmakers only allocated an additional $1.7 billion.

One thing both Governor McMaster and state legislative leaders agree on for the time being is that they need to get to the bottom of how the money went missing in the first place before they spend it.

“That’s a lot of money and there is no need to hurry up and try to spend it,” Mr. McMaster told the Associated Press.

As forensic accountants attempt to figure out what went wrong with the money, Mr. Loftis has made clear that he doesn’t think it was his responsibility to let lawmakers know that the state had the money, blaming the former comptroller for the issue.

“The Comptroller General is the State’s accountant. His office sets the accounting rules, opens the funds (accounts), determines the ownership of funds, tracks expenditures and revenues, and reports the financial condition of the State to the public and the General Assembly, including what moneys can be spent and/or are available for appropriation,” Mr. Loftis said in a statement. “The State Treasurer is the State’s banker.”

In his assessment, he fulfilled his role as the state’s banker, saying that “funds have been managed and invested in accordance with State law, and the Legislature has spent the investment earnings of approximately $250 million.”

It’s clear, though, that some lawmakers don’t see eye-to-eye with Mr. Loftis on this point, with a state senator, Larry Grooms, who is leading the investigation into the issue, floating the idea of amending the state constitution to make both the comptroller and treasurer’s offices appointed positions, rather than elected positions.

The state, which has had elected comptrollers and treasurers since 1776, has a multi-century history of accounting problems dating back to the first comptroller’s office.

The state senate has already approved a measure that would make the comptroller general’s office an appointed position. A bill to make the treasurer’s office appointed as well has not yet been introduced.

The New York Sun

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