By Joseph Bustos
The State
(TNS)
South Carolina Treasurer Curtis Loftis vowed to complete his term despite two other state financial officers involved in the yearslong state accounting issues having left their jobs.
The accounting issues include a $1.8 billion accounting error in the state books.
Loftis, who last year said he would not seek reelection in 2026, said he will continue in the job. He said the ongoing controversy has become a “false narrative” and a “political witch hunt” on his office.
“We can’t allow a treasurer to be pushed out because of other people’s failures and also because the next guy coming in. What’s he gonna do?” Loftis said. “I’ve been elected by the people four times and I’m going to finish my term because they haven’t said anything to me other than ’go get ‘em boys.’”
State Auditor George Kennedy, who reports to a group of officials which includes the comptroller-general and treasurer, resigned because he believed it was in the best interest of auditors office.
Previous Comptroller-General Richard Eckstrom resigned in 2023 after he disclosed he inflated the state’s cash balances by $3.5 billion over the course of 10 years. His replacement, Brian Gaines, was the first to alert lawmakers to the $1.8 billion listing in the state’s books that was not assigned to any agency.
Ultimately, an outside auditor determined that most of the money did not exist.
AlixParnters determined each of the three offices were aware of the $1.8 billion accounting error for years, but no one disclosed it until Comptroller General Brian Gaines told lawmakers.
State Rep. Micah Caskey, R- Lexington, placed blame on the accounting error on treasurer, auditor and comptroller general’s offices, which is costing the state more money now than if it had been brought to lawmakers attention years ago.
“The problem is that this issue was not raised to the General Assembly to further investigate,” Caskey said. “And so, rather than be in a position where we could have spent thousands of dollars in inquiries as to where this $1.8 billion had come from, we now have been forced to spend millions of taxpayer dollars.”
Like his hearing in front of a Senate Finance subcommittee last year, Loftis’ testimony in front of a House Ways and Means panel overseeing his budget members became heated at times during the roughly hour and a half he stood at the lectern.
“Was the $1.6 billion actual money? Yes or no,” asked state Rep. Chris Murphy, R- Dorchester.
Loftis argued the answer to that question was not simple.
“It’s more complicated,” Loftis said.
Loftis said when the $1.8 billion is not counted in state books, it does not effect the state’s cash balances. He also said when he testified that the money was real, he was relying statements from the comptroller general’s office.
The state’s finances are under investigation by the Securities and Exchange Commission because of the recent restatements in the state’s annual comprehensive financial reports.
Loftis said the discussion of the accounting error has put the state’s financial system at risk, and “destroying the state’s financial reputation.”
“We have placed in peril the financial systems and reputation of this state, we have excluded ourselves from the normal avenues of municipal finance because we’re discussing accounting entries on the front page of the paper instead of finding out exactly what happened and when happened,” Loftis said.
Loftis said the attention the accounting error has garnered has affected the state’s ability to issue debt to move forward with projects.
“We now have hospitals that being built with one-year money,” Loftis said. “We can’t even (get) permanent financing. But you think about this, that is not because of the entry, that is because of the resulting display of bad governance.”
Ways and Means Chairman Bruce Bannister, who sits on the State Fiscal Accountability Authority with Loftis, said after the Wednesday’s hearing the treasurer decided to hold up issuing general obligation bonds, which are backed with state income tax revenue, until there was clarification on the $1.8 billion issue.
However, projects such as hospitals and college dorms use general revenue bonds, according to the Ways and Means Committee.
A general revenue bond is state debt backed by specific money, such as student fees to build a new college dorm, or hospital fundraising to pay for a new medical facility, or motor fuel tax dollars being promised to pay back department of transportation bonds.
Every project is moving as normal and those bonds are usually issued one year at a time.
“The hospitals, dorms, all those that are revenue bonds are being issued. They’re underway. And I’m aware of no project that’s been delayed as a result of the restatement of the (annual comprehensive financial report) or the $1.8 billion accounting error,” Bannister said.
In a statement from Loftis’ office later on Wednesday, the treasurers office said it has opted to avoid issuing general obligation bonds until the matter over the $1.8 billion is resolved.
“Consequently, a form of short-term financing called bond anticipation notes are being used by the state to finance certain projects,” the treasurer’s office said in a statement. “In an attempt to reference affected projects, the treasurer referred to ‘hospitals and dorms.’ However, those types of construction projects are generally financed in a different manner.”
The office pointed to the use of bond anticipation notes used for projects at Clemson University and the Medical University of South Carolina.
Photo credit: South Carolina State Treasurer Curtis Loftis asks questions about the bid process for a building during a meeting of the State Fiscal Accountability Authority on March 26, 2024. (Joshua Boucher/TNS)
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©2025 The State. Visit thestate.com. Distributed by Tribune Content Agency LLC.
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Bryce Franklin Eckert February 2 2025 at 8:43 pm
There was no accounting error. Eckstorm intentionally inflated the cash - that is fraud. Did this reporter and the managing staff ever ask Eckstorm why this was done and who benefitted from the misrepresentation?