Mystery money earned $194M in interest since 2017 while sitting in an account where it doesn’t belong
By Jessica Holdman
SCDailyGazette.com
COLUMBIA — The South Carolina senator leading a two-year investigation that recently discovered $1.8 billion of taxpayer dollars in a bank account where it didn’t belong wants to lock it down so legislators don’t spend it before they figure out where it came from and why.
Sen. Larry Grooms of Berkeley County told his colleagues Thursday, Feb. 29, his investigative panel still has no information from the state treasurer’s office on where the money should have gone. So, the Bonneau Beach Republican introduced legislation to transfer the funds into a “lockbox” account, where it will remain and accumulate interest until the mystery is solved.
Since the state treasurer’s responses “have been unsatisfactory,” his resolution reads, it’s in the state’s interest to put the money aside “pending resolution and appropriate action detailing the proper ownership and categorization of these funds.”
A spokeswoman for state Treasurer Curtis Loftis told the S.C. Daily Gazette the office has invested the $1.8 billion since 2017, earning $194 million in interest since. His office, which acts as the bank for state government, transferred those earnings to the state’s general account as revenue for the Legislature to spend, Karen Ingram said.
“State funds managed by the state Treasurer’s Office are invested in accordance with state law to preserve capital, maintain liquidity and obtain the best return within the appropriate risk parameters,” she said in a statement that provided no details.
Discovery of the mystery money is tied to the ongoing fallout from a $3.5 billion accounting error by the office of former Comptroller General Richard Eckstrom, who resigned last year amid the scandal. That major blunder was on paper only, as college revenue from tuition and fees was accidentally counted twice. But the Legislature never used Eckstrom’s annual reports for budgeting, so the state never went into a hole.
But the $1.8 billion is actual money on the positive side.
Financial leaders have pointed to a decade-long transition from the state’s old accounting system to a new one — between 2007 and 2017 — as the source of the mishaps.
During that transition, someone at the treasurer’s office parked $1.8 billion in what was supposed to be a flow-through account to move money between state agencies. And that’s where it’s stayed for more than six years. Where it should be is unknown.
Grooms thinks the $1.8 billion was meant to be spread among the thousands of different accounts used by state agencies.
He doesn’t want legislators to spend it until they’re certain it’s not still needed by wherever it was supposed to go. For example, he said, it’s possible the money should have gone to public school districts to pay for a long list of K-12 education needs in the state.
Jessica Holdman writes about the economy, workforce and higher education. Before joining the SC Daily Gazette, she was a business reporter for The Post and Courier.
