South Carolina Treasurer Curtis Loftis expressed his frustration on Wednesday regarding the calls for his resignation due to a significant accounting error that has left the state grappling with the whereabouts of a $1.8 billion fund. Loftis characterized the demands for his departure as a “witch hunt.” A House budget subcommittee questioned Loftis about the complex situation that his office, along with two other agencies, had been aware of for nearly six years before bringing it to the attention of the General Assembly. Subsequently, the heads of the two other departments left their positions, while the issue was only revealed by one of their successors.
The majority of the $1.8 billion discrepancy was related to misallocations of funds rather than actual missing cash. Resolving this issue required millions and a private forensic audit to clarify the situation. Loftis insisted that the potential risk to South Carolina’s creditworthiness and an ongoing federal investigation into the state’s accounting practices should not be attributed to his office. Instead, he highlighted that the backlash stems from aggressive targeting by Republican senators and others who have taken a public stance against him regarding the blunder.
Loftis claimed, “Nobody can comprehend it. It’s a political witch hunt,” continuing to blame former staff members and the offices of the Comptroller General and Auditor for contributing to the errors in oversight. However, skepticism remains among lawmakers, especially within the Senate. Republican Senator Larry Grooms has called for Loftis’s resignation, and the Senate Finance Committee has moved forward with plans to enlist a private accounting firm to oversee the Treasurer’s Office until confidence is restored in the state’s financial records.
The difficulties began when the state transitioned to new computer systems in the 2010s. After the upgrade was complete, officials discovered a shocking discrepancy of over $1 billion in the financial records. A contingency fund was established to account for the error, which saw additional allocations over the years to maintain the integrity of the state’s financial reports. The issue was finally exposed when Comptroller General Richard Eckstrom resigned in March 2023 due to a separate accounting blunder, prompting his successor to reveal the previously undisclosed account.
Last week, State Auditor George Kennedy also resigned following a private audit conducted by AlixPartners, which uncovered his failure to review audits that overlooked the $1.8 billion discrepancy. During the House questioning, members appeared less confrontational than in the Senate but expressed concern over why Loftis delayed reporting the problem, particularly when timely action could have minimized costs to taxpayers. Republican Representative Micah Caskey emphasized the frustration of being unable to explain to constituents why a solution that could have cost thousands instead resulted in millions spent by the state.
Loftis reiterated that the errors originated from outside his agency, asserting that his team was working diligently to resolve them. He acknowledged that while decisions were made, they were not optimal ones. Furthermore, Loftis raised concerns that the damage inflicted on the state’s creditworthiness had already occurred, stating that South Carolina can now only secure loans on an annual basis under unfavorable conditions, blaming the hostile Senate climate for scapegoating him for the financial mismanagement.
In a later exchange, Senator Grooms shared a memo from Senate Finance staff indicating that the state remains capable of borrowing and undertaking debt, assuring that no projects have been stalled. During a portion of Loftis’s presentation, Grooms sat in the back of the meeting room but left before Loftis concluded. After the meeting, Grooms mentioned that Loftis approached him in the hallway, questioning him about whether Grooms was satisfied with being the reason why schools and hospitals in South Carolina faced construction delays.
When asked by reporters how he replied, Grooms retorted, “I know catfish that are more slippery than you are.” Loftis’s office did not provide a response regarding the details of the encounter.
