Governor's secret task force still mum on mystery $1.8B

Governor's secret task force still mum on mystery $1.8B


A task force created by Gov. Henry McMaster to investigate a mysterious $1.8 billion that reportedly is in a state account has met secretly at least six times in less than two months but hasn’t yet publicly released any specific findings.

As The Nerve revealed last month, the “working group” that met behind closed doors three times in April included the following agency heads who attended most or all of the meetings either in person or virtually: S.C. Treasurer Curtis Loftis, state Comptroller General Brian Gaines, state Auditor George Kennedy and S.C. Department of Administration Executive Director Marcia Adams, according to meeting notes released by the Department of Administration under the state’s open-records law.

The Nerve recently followed up with another Freedom of Information Act request to the department and received meeting notes for the task force's May 3, 14 and 21 meetings. But as with the first batch of records, the latest documents revealed no detailed findings. 

In response, The Nerve sent written questions to the above four agencies, as well as to the Governor’s Office and S.C. Attorney General’s Office, which have sent representatives to every meeting, records show. In South Carolina, the governor, attorney general, treasurer and comptroller general are popularly elected, though Gaines was appointed last year by McMaster after the then-comptroller general resigned.

The Nerve asked each agency the following main questions:

  • Does the $1.8 billion actually exist?
  • Have any state agencies to date claimed any part of the $1.8 billion?
  • Does your agency support issuing rebates to state taxpayers for all unclaimed amounts of the $1.8 billion?

Other than the Department of Administration, none of the agencies responded. In a written response last Thursday, Department of Administration spokeswoman Brooke Bailey said the department was addressing The Nerve’s questions “on behalf of all agencies participating in the working group.”

Bailey didn’t directly answer and didn’t respond to a follow-up request for a direct answer to the question about whether the $1.8 billion actually exists, saying only in her email response last week, “Various employees continue to work to determine the existence, purpose and intended destination of the $1.8 billion in question.”

As for the question about state agency claims to the money, she replied, “We are not aware of state agencies’ claims to the $1.8 billion.”

Bailey didn’t specifically address whether any unclaimed money would be returned to state taxpayers, saying, “If the $1.8 billion is determined to exist, the General Assembly and Governor will make decisions regarding any of these funds.”

Bailey didn’t respond to a follow-up question about whether there are any formal or informal deadlines for the task force, which the Republican McMaster created on April 11, to complete its work. McMaster gave the group a July 1 deadline to find answers, according to earlier media reports.

To put the $1.8 billion into perspective, it represents more than $300 for every man, woman and child in the state, or, according to the South Carolina Policy Council - the parent organization of The Nerve - up to $1,440 per taxpayer, based on a formula similar to the one used for state taxpayer rebates in 2022.

The Policy Council in April recommended rebating the full amount to taxpayers if no state agencies claim the money by June 30 or if agencies can’t provide evidence by then of their share of the funds.

Behind closed doors

The task force’s secret, recurring meetings were to be held in a fourth-floor room in the Edgar Brown Building on the State House grounds, according to records from the first meeting. Bailey in her written response last week said a “calendar place holder has been established” for the meetings every Tuesday morning in the Brown building “through June 25.”

"These meetings are not open to the public,” Bailey said, contending that the involved state agency employees’ “efforts in this regard have been and will continue to be within the scope of their normal employment with their respective agencies.”

Meeting notes for the May 21 meeting show that 30 employees of the six participating agencies attended the closed-door meeting either in person or virtually, including agency heads Loftis, Gaines, Kennedy and Adams.

Taylor Smith, an attorney for the South Carolina Press Association, told The Nerve for last month’s story that even if the private meetings aren’t a technical violation of the state’s open-records law, “it certainly violates the spirit of the (law) and the general notions of transparency that preserve the state citizenry’s trust in the performance of their elected officials.”

The Nerve, through the Policy Council, is an associate member of the press association.

The Freedom of Information Act generally requires that meetings of public bodies be open to the public, with advance notice and posting of meeting agendas. It also requires public bodies to create minutes of meetings and make them publicly available.

The disputed $1.8 billion made headlines after a critical 116-page interim report released in April following several months of investigation by a Senate Finance subcommittee chaired by Sen. Larry Grooms, R-Berkeley, accused state treasurer Loftis of failing to disclose the funds for seven years “despite his explicit statutory duty to do so.” Grooms has said publicly that Loftis, a Republican who was first elected in 2010, should resign.

Loftis in a lengthy response posted on the Treasurer’s Office website denied the allegations, contending the money was “not missing or recently discovered,” and that his office has been “fully transparent about the matter.”

After comptroller general Gaines last October asked Loftis to investigate a cash balance in the disputed fund, the Senate Finance Committee researched the matter and determined the fund had a balance of about $1.8 billion, according to the subcommittee’s report.

The discovery followed a separate subcommittee investigation into a $3.5 billion accounting error, which according to the report, stemmed from an earlier conversion to a different state accounting system. That error occurred during the tenure of ex-Comptroller General Richard Eckstrom, a Republican who resigned in April 2023 after 20 years in office. McMaster appointed Gaines to fill Eckstrom’s seat.

One of the unanswered questions about the disputed $1.8 billion is whether it is made up of state general or “other" funds, federal money, or a combination of the revenue sources. Other funds include such things as college tuition, lottery proceeds, state gasoline taxes, part of the state sales tax earmarked for K-12 education, and court fees and fines.

The Nerve last month revealed that as of mid-April, there was a collective $9.3 billion in other fund reserves among state agencies or major divisions – excluding the Treasurer’s Office – plus two separate state accounts, which overall worked out to be about $1,700 for every man, woman and child in South Carolina.

A six-member, House and Senate conference committee is scheduled to meet Wednesday to resolve differences between the chambers’ respective versions of the $41 billion-plus total state budget for fiscal 2024-25, which includes state, federal and a proposed $14.1 billion in other funds. The new fiscal year starts July 1.

Brundrett is the news editor of The Nerve ( Contact him at 803-394-8273 or [email protected]. Follow The Nerve on Facebook and X (formerlyTwitter) @thenervesc.

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