Secret meetings of governor's task force end run around state law?

Secret meetings of governor's task force end run around state law?

Editor’s note: This is the second investigative story in a two-part package on massive state financial accounts. The other story can be found here.


A task force created last month by Gov. Henry McMaster to investigate a reportedly unclaimed $1.8 billion in a state account has met secretly at least three times, though an attorney for the state press association says those meetings should be open to the public.

Written notes provided on May 3 to The Nerve by the S.C. Department of Administration, which is part of the governor’s Cabinet, show that the closed-door meetings on April 16, 23 and 30 of the “working group” included S.C. Comptroller General Brian Gaines, state Auditor George Kennedy and Department of Administration Executive Director Marcia Adams, with the last two meetings attended in person or remotely by state Treasurer Curtis Loftis.

The S.C. Freedom of Information Act (FOIA) generally requires that meetings of public bodies be open to the public, with advance notice and posting of meeting agendas. In a written response on May 3, Department of Administration spokeswoman Brooke Bailey said sections of the open-records law cited by The Nerve were “not applicable.”

“On April 11, Governor McMaster brought employees of certain state agencies together and asked that they devote their time to determining the existence, purpose and intended destination of the $1.8B in question,” Bailey said. “Different employees of those agencies have at various times worked independently and/or in a group in response to the Governor’s request.”

“The employees’ efforts in this regard have been and will continue to be within the scope of their normal employment with their respective agencies,” Bailey added.

The “Working Group Meeting Notes” show that each of the first three meetings were held from 10 a.m. to noon. Records from the first meeting on April 16 indicated that the recurring meetings were to be held in a fourth-floor room in the Edgar Brown Building on the State House grounds.

The state’s open-records law requires public bodies to create minutes of meetings and make them publicly available.

Department of Administration records also show that the April meetings included staffers of the Governor’s Office and S.C. Attorney General’s Office, in addition to employees of the Department of Administration and state treasurer’s, comptroller general’s and auditor’s offices.

No specific findings about the $1.8 billion were listed in the documents, which included various bullet points under headings such as “Agency Progress Report,” “Discussion” or “Action Items.”

The Nerve on May 6 asked Taylor Smith, who operates the Meriwether law firm in Columbia and is an attorney for the South Carolina Press Association, to review the task force meeting notes and offer his opinion about whether the private meetings violated the FOIA. The Nerve, through its parent organization, the South Carolina Policy Council, is an associate member of the press association.

“Even if these ‘meetings’ don’t violate SCFOIA because this ‘working group’ is not somehow considered a public body for the Act’s required compliance, it certainly violates the spirit of the Act and the general notions of transparency that preserve the state citizenry’s trust in the performance of their elected officials,” Smith said in a prepared response to The Nerve.

“It’s important to remember,” Smith continued, “that SCFOIA sets out the legal floor for transparency of the state’s governing bodies,” adding that the task force "could always be more  transparent and hold public meetings,” going behind closed doors to discuss only the “most sensitive topics relative to this investigation into this matter of significant public interest.”

The Nerve last week submitted Freedom of Information Act requests to the Department of Administration for a list of upcoming “Working Group” meetings and notes of any meetings held since April 30.

Official finger-pointing

A critical 116-page interim report released last month after 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 $1.8 billion fund to the Legislature and “to the people of South Carolina over the last seven years despite his explicit statutory duty to do so.”

The April 16 Constitutional Budget Subcommittee report also claimed that Loftis’ “reckless plan to release on the internet highly sensitive financial information on the State,” which, according to the report, occurred after a contentious April 2 subcommittee hearing at which Loftis testified, “calls into questions his current judgement (sic) and temperament.”

In a recent column in the (Charleston) Post & Courier newspaper, Grooms, who chairs the Senate Transportation Committee and has been in office since 1997, said Loftis should resign. Grooms contended in the piece that he “increasingly” believes that “this supposed money does not exist.”

In a lengthy response posted on the Treasurer’s Office website, which was released the day after the six-member, bipartisan subcommittee’s report, Loftis denied the allegations, contending that the $1.8 billion is “not missing or recently discovered,” and that his office has been “fully transparent” about the matter, noting there has “never been an audit finding or recommendation regarding this fund.”

“As the elected Treasurer of the State of South Carolina, I remain committed to ensuring the funds that I (have)custody(of) are properly managed and investigated,” Loftis, a Republican who was first elected in 2010, said on the website.

After Gaines, the state comptroller general, in an October 2023 letter 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.

That 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 and occurred during the tenure of ex-Comptroller General Richard Eckstrom, a Republican who resigned in April 2023 after 20 years in office.

The South Carolina Policy Council in April recommended rebating the disputed $1.8 billion to taxpayers – noting it could be as much as $1,440 per taxpayer, based on a formula similar to the one used for state taxpayer rebates in 2022 – 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.

$1.8B in ‘other’ funds?

In a written response in March to The Nerve, the Treasurer’s Office said the $1.8 billion is classified as  “‘other’ state funds in the General Ledger,” though the comptroller general classified it as general funds in that office’s Annual Comprehensive Financial Report.

“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.

For the fiscal year that ends June 30, lawmakers approved a total of nearly $14 billion in other fund spending. That represents more than a third of the total $41billion state budget, which includes state, federal and other funds.

A footnote in the April 16 Senate Finance subcommittee report said because the $1.8 billion has “not been identified as to agency ownership and fund,” it “may consist” of federal, general and other funds, “each of which have specific requirements for disposition of earnings.”

Asked whether the $1.8 billion was included in other-fund-surplus amounts recently provided to The Nerve by the Department of Administration, the Treasurer’s Office in a May 1 written reply said, “We can’t comment on a report that we didn’t generate.” Department of Administration records show that as of April 18, the Treasurer’s Office had a total of $3.27 billion in other fund reserves.

The Nerve today has a separate investigative story on state agency other-fund surpluses.

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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