Another Agency to Be ‘Reformed’ by Legislature

September 9, 2016

Inside Insight

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By PHILLIP CEASE

state house

When lawmakers want to give a troubled agency to the governor, look for the strings

In South Carolina, many state agencies that carry out executive functions are nonetheless run by boards appointed by the legislature and the governor. Typically when one of these agencies undergoes major problems, legislative leaders propose making the agency a “cabinet” agency.

Take the Employment Security Commission (ESC). Until 2010 the agency was run by a commission and an executive director. At that time all three commissioners (their salaries were in the six figures) were former legislators. And that’s not surprising, since commissioners were elected by the legislature.

But a January 2010 audit by the Legislative Audit Council found, among many other things, that unemployment claims were paid out to those who were not entitled to them – for instance, a man who went to prison was fired for absenteeism but was still able to collect unemployment. “The agency’s internal auditor,” the report dryly concluded, “could be more effective.”

No one person was accountable for what was happening at ESC – as taxpayers discovered when the agency’s commissioners allowed the unemployment fund to dry up in 2008. The total price tag for this poor management was around $1 billion.

There had been warnings for years, but calls for change went unheeded. When the warnings turned out to have been well founded, legislators began calling for the ESC to be placed in the governor’s cabinet. So in March of 2010 Gov. Mark Sanford signed a bill into law that dissolved the ESC and created the Department of Employment and Workforce, DEW.  While DEW is now technically a cabinet agency, the governor doesn’t get to pick his or her own executive director. Not really. The executive director is “nominated by the State Department of Employment and Workforce Review Committee and appointed by the governor.” That Review Committee is a nine-member board, and six of its nine members are legislators (see 41-27-710). So the governor only gets to “appoint” from among three names offered up by a panel dominated by legislators.

The legislature fixed the problem of the lack of accountability, then, by placing DEW under the governor – but with enough strings attached that legislative leaders wouldn’t have to give up control.

Now consider the current state of the Department of Disabilities and Special Needs (DDSN). This agency “plans, develops, oversees and funds services for South Carolinians with severe, lifelong disabilities of intellectual disability, autism, traumatic brain injury and spinal cord injury and conditions related to each of these four disabilities.”

Senator John Scott (D-Richland) announced recently that he wants DDSN placed in the governor’s cabinet. To Sen. Scott’s credit, this isn’t the first time he’s called for it. It is the first time, however, that his idea has gained traction.

In July, reports surfaced that a company with a $20 million contract with DDSN has “a troubling record of resident deaths, staff arrests, lawsuits and allegations of abuse and neglect.” At a board meeting for DDSN last month, the board voted to discontinue recording its meetings. Other changes included “members changing sitting locations for each meeting, being candid, open and respectful, having one conversation at a time and using a system of color-coded agendas.”

Once again, the state agency giving politicians the biggest headache may soon be handed to the governor. This will likely be done for the purpose of improving transparency and accountability, and on the face of it that’s fair enough: After all, if an agency is run by a board and board members are appointed by a variety of politicians from the executive and legislative branches, who can really be held accountable when things go badly? But if transparency and accountability were really the concern, why wasn’t DDSN made a cabinet agency decades ago?

Watch closely. When lawmakers “give” an agency to the governor, the agency always comes with strings.

Take for example the Department of Transportation (DOT), currently a quasi-cabinet agency tasked with maintaining the state’s roads and bridges. In 2007 lawmakers claimed to have reformed the agency by placing it in the governor’s cabinet – but without actually allowing the state’s chief executive to run the agency, and thus without making him accountable for it. In 2016 the legislature again took credit for “reforming” DOT by giving control to the governor. Gov. Nikki Haley reluctantly signed the bill into law, calling it “incomplete reform” and “far less than what the people of South Carolina both expect and deserve from us.” While the governor would appoint the eight commissioners, her nominees for the board would go before legislators three separate times for approval. Once approved the governor must get legislative approval before removing an appointee.

This seems to be the pattern, then. (1) Severe and longstanding problems are revealed at a state agency controlled by a legislatively appointed board or commission that taxpayers can’t hold accountable. (2) Lawmakers propose a solution by placing the agency under the governor’s control. (3) Lawmakers rearrange the agency such that it appears to be under the governor’s control, but isn’t.

Years later, when severe and longstanding problems make headlines again, revert to (1).

So in 2017, when we hear a lot about restructuring the Department of Disabilities and Special Needs, pay very close attention.

Phillip Cease is director of research at the South Carolina Policy Council