South Carolina Grapples With Mystery of $1.8 Billion State Fund

In Columbia, South Carolina, a perplexing financial conundrum has surfaced as the state discovers approximately $1.8 billion in a bank account across a decade. An enormous cryptographic puzzle for state and private accountants is to determine the source of the money and its intended allocation.

“It’s like going into your bank, and the bank’s president informs you that there’s a substantial amount of money in the vault but doesn’t know who it belongs to,” remarked Republican Sen. Larry Grooms, leading a Senate panel investigation into the matter.

History of Financial Anomalies

This issue compounds difficulties already ongoing with the state’s books and the two supervisory agencies. Their duties revolve around maintaining government accounts balanced and squarely managed, typically under the purview of elected officials. Just last year, a major $3.5 billion error was discovered, a paperwork error involving double-posting funds in higher education accounts. This notable mistake led to the resignation of the state’s top accountant, the elected Republican Comptroller General.

Government Accounting Woes

Seemingly, the underlying roots of these issues can be traced back to the transition to new computer systems in the 2010s. The latest problem, involving the revelation of the mystery fund, is more concerning as it involves actual money. Elected Republican Treasurer Curtis Loftis, who holds the responsibility of writing checks for the state, is held with scrutiny.

Critics claim that each time the state’s books were imbalanced, funds would be shifted into a balancing account, adding to the confusion. Record-keeping regarding the origins of the $1.8 billion is unclear, leading to further doubts among state leaders.

The Controversy Continues

While expressing concern about the situation, Republican Gov. Henry McMaster was optimistic, emphasizing, “No money was lost.” On the other hand, Loftis insisted that his office had invested the money in the mystery account, generating nearly $200 million in interest for the state. This assertion raised more questions than answers, especially concerning why the General Assembly was not informed of the unallocated funds.

Loftis maintained that his office was not responsible for this, blaming the Comptroller General for shirking their responsibility. He emphasized that his staff devoted thousands of hours researching the mystery account, claiming the Comptroller General’s Office refused to collaborate or share pertinent information. The tension between these key figures was elevated when a recent audit found communication gaps between the offices.

Tumultuous History and Future Directions

Financial discrepancies are not new to South Carolina. Historical records from the 1800s illustrate numerous instances of financial malversations. Amid this history, many are aware of the unspent $1.8 billion, which exists unallocated while $3 billion in requests from state agencies went unfulfilled in the next year’s budget approved by the South Carolina House.

State legislative leaders and the governor have urged patience, encouraging waiting for a more definitive report before using the funds. As McMaster summed up, “That’s a lot of money, and there is no need to hurry up and try to spend it.”