State Treasurer Defends Office, Says $1.8 Billion Was an accounting entry as Panel Probes SKIS Fund

State Treasurer Curtis Loftus told a constitutional subcommittee of the South Carolina Senate on the record that the State Treasurer’s Office’s internal review found cash and investments “properly accounted for” even as lawmakers pressed him over an $1.8 billion SKIS accounting entry and related public statements.

The treasurer opened by presenting a report from his office, saying, “The report issued by my office today is the end product of a comprehensive internal review… Every citation or assertion of fact is supportive of evidence, as provided in 300 pages of exhibits.” He also said, “We passed with flying colors. We’re proud to confirm that there is no mystery bank account. There never was.”

Why it matters: The hearing probed why the $1.8 billion figure was described in public testimony and media accounts as though it were a bank account balance. That description prompted intensive media coverage and concern from municipal and institutional borrowers and credit observers because of the potential perception of a multibillion-dollar bookkeeping error in state financial reporting.

Loftus told senators his office accepted the outside consulting firm Alex Partners’ findings and said the firm’s principal recommendation for the treasurer’s office was to report cash and investments by fund. He said his staff had already produced a manual fund-level report in 2024 and has requested an electronic SKIS report for automation.

Under repeated questioning, Loftus said he had relied on the comptroller-general’s office and outside audits in prior years. “I trusted the comptroller general. That was the biggest mistake I ever made in my life,” he said. He told the committee Alex Partners’ work — a roughly six‑month engagement that the state funded with an appropriation — found that reversing the disputed accounting entries would not change the amount of cash the state holds in banks, only how those amounts are represented in the comptroller’s ledgers.

Senators pressed Loftus about prior testimony in which he had described the $1.8 billion as “real money” and pointed to interest earnings as evidence. Asked directly whether he believed that $1.8 billion was real cash when he testified previously, Loftus repeatedly emphasized the distinction between cash in bank accounts and accounting entries in the comptroller’s general ledger, and said, in sum, that both statements can be true: the reported fund balance represented an accounting entry, while the bank totals for cash and investments matched the treasurer’s records.

The treasurer said his office cooperated with Alex Partners and with outside compliance consultants and acknowledged the complexity of SKIS conversion work that began in 2017. He told the committee his office had not moved to reappropriate or spend the amounts in question when told of the comptroller’s reported balances.

On whether he or his office had done anything illegal or deceptive, Loftus said repeatedly he had not and that his office “did not breach any statutory duty.” He also told senators his office did not spend the $1.2 million proviso money that had been appropriated for audit support, though he later acknowledged state taxpayer dollars were used to retain a communications firm and said he did not have an exact amount at hand.

The committee questioned Loftus about a report that his office circulated that described certain statements by the comptroller general as “inaccurate,” and about an April letter the treasurer sent about publishing more detailed fund-level reports. Loftus said his office later followed up the April letter with a clarifying letter the same day and that his communications were intended to comply with a reinterpretation of reporting statutes; he denied any intent to mislead.

On oversight and coordination, Loftus told senators the SKIS oversight committee provided for in statute had not been meeting regularly and urged that the group convene to work through conversion issues. He also said disclosure counsel and bond counsel advised caution: because of an ongoing SEC inquiry tied to financial reporting, the treasurer’s office had shifted away from issuing long-term general obligation bonds and instead had relied on short-term notes and direct bank financing for immediate needs.

The treasurer also described tensions with the Comptroller General’s office over accounting interpretation. He objected to characterization that his office had withheld cooperation and said he and his staff had participated in working-group sessions with Alex Partners, the comptroller’s office and other agencies.

The hearing included frequent exchanges with senators identified in the transcript by their chamber locations (for example, the senator “from Georgetown”), and committee leaders said staff will prepare a draft committee report after reviewing exhibits and testimony from the treasurer’s office, the comptroller general and the Department of Administration.

Ending: The subcommittee adjourned after directing staff to continue document review and prepare draft findings for future consideration.