South Carolina’s comptroller made a $3.5 billion accounting error

Republican Comptroller General Richard Eckstrom has attracted mounting scrutiny since he first told lawmakers last month that he had unintentionally exaggerated the state’s cash position by $3.5 billion by overstating the amount the state had sent to colleges and universities.

A $12 million coding error in 2007 got compounded by a shift beginning in 2011 from one accounting system to another, Eckstrom has said. The reporting confusion then led to a double counting of state cash transferred to colleges and universities. By 2017, the sum of overstated funds had grown to $1.3 billion. That number has nearly tripled in the following years as South Carolina sent more and more money to higher education.

In its Wednesday report, the Senate Finance Constitutional Subcommittee concluded Eckstrom failed to do his job properly and should be removed from office. In South Carolina the comptroller — the state’s chief accountant — is elected.

The panel recommended that Eckstrom’s office be dismantled and that its duties be transferred to one or more other agencies.

Eckstrom released a statement Wednesday insisting that his team worked “tirelessly to identify the cause of a complex problem.”

“Once we identified the cause of the problem, we worked with stakeholders to correct it,” Eckstrom said. He said that going forward, he planned advocate making the comptroller’s office an appointed position.

“I will not be distracted by anyone from the work ahead of us, work voters elected me to do during this term,” he said.

Subcommittee members determined that Eckstrom’s actions did not rise to the level of an impeachable offense. But they urged South Carolina’s General Assembly to relieve the comptroller of his position “for willful neglect of duty,” as allowed by the state Constitution. State Treasurer Curtis Loftis, an elected Republican, said his office could absorb the main responsibilities of the comptroller.

The subcommittee report capped a tumultuous five weeks for the 20-year veteran of a state agency that typically flies under the public radar.

The comptroller general oversees the state’s annual financial report. That includes determining which cash expenditures to include or exclude in the year-end report, a process also known as “mapping,” according to Department of Administration Executive Director Marcia Adams. The task got more complicated during a gradual shift to a new statewide information system between 2011 and 2017.

Adams said Eckstrom incorrectly mapped money the state sent to higher education. She said the mistake amounted to “human error” but stopped short of calling it “negligence.”

For 10 years, Eckstrom did not respond to warnings that a “material weakness” existed in the comptroller general’s office, according to state Auditor George Kennedy. He said the internal controls over the annual report’s preparation were insufficient to detect and correct errors in a timely manner. Around 2017, Kennedy said his office told Eckstrom’s team that a full reconciliation would help. That did not happen until last spring.

Eckstrom partially blamed the error on communication problems with the treasurer’s office as the two teams operated on different internal accounting systems. But Loftis, the state treasurer, said no issues had ever been brought to his attention.

Eckstrom appeared multiple times before the Senate Finance Constitutional Subcommittee after he first publicly revealed the news on Feb. 9. His inconsistent testimony the following week alarmed members leading the probe.

On March 7, Eckstrom said that everyone involved knew the numbers did not line up perfectly, Eckstrom said, but nobody believed they amounted to “a material difference.”

“I wasn’t happy with the fact that we did reconciliations year after year that didn’t tie out precisely,” he said, adding he hired personnel to identify the problem.

Senators’ recommendations came as House lawmakers similarly took aim at the embattled comptroller general.

On March 2, Republican Rep. Gil Gatch and Democratic Rep. Heather Bauer called for an impeachment inquiry into whether Eckstrom committed serious misconduct including “dereliction of duty” and “breach of the public trust.”

This week, Bauer sponsored an amendment to cut the comptroller general’s newly increased $151,000 salary down to $1 during the remainder of Eckstrom’s time in office. The amendment passed by a 104-7 vote.

The budgeting process must undergo several more steps to cement the salary change. House Speaker Murrell Smith called it a “tripartisan agreement” since it garnered support from Republicans, Democrats and the hardline conservative Freedom Caucus.

Republican Gov. Henry McMaster has said that elections, not weaponized impeachments, are the proper form of accountability. Eckstrom ran unopposed in this fall’s general election. His name is not set to appear on a ballot until 2026.