BCB Approves $44 Million-Plus for Hacking Costs, Building Projects

December 13, 2012

Investigative Reports

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HackerThe S.C. Budget and Control Board on Wednesday approved the distribution of more than $44 million to cover college and university building projects, and growing costs related to the massive security breach at the state Department of Revenue.

The five-member board agreed to loan the Revenue Department $20,170,000 out of the state’s Insurance Reserve Fund, which provides property and liability coverage to state and local government agencies. The loan is to be repaid by Oct. 31, 2013 – supposedly with funds to be appropriated next year by the S.C. General Assembly.

The Department of Revenue contends it doesn’t have enough money in its budget to repay the loan.

The bulk of the loaned funds will go toward implementing tighter security measures at Revenue and notifying those taxpayers whose financial information was recently stolen by hackers. More than 6 million adult taxpayers, their dependents and businesses reportedly were exposed by the breach, which was revealed publicly on Oct 26.

Global credit-monitoring service Experian will receive $12 million, while $5.6 million will go toward mainly encrypting stored data at the Revenue Department.

Sen. Hugh Leatherman, R-Florence and a member of the Budget and Control Board, expressed concerns that the Legislature might not approve repaying the loan.

“This thing could get bogged down over there,” he said. “What happens if that happens?”

Gov. Nikki Haley, who chairs the BCB, replied that she has “full faith” in the Senate.

“We’re going to have a lot to discuss in terms of cyber planning,” Haley said. “That requires both bodies to come together as well as our executive office to decide exactly in phases what we do to protect people going forward, not just in the Department of Revenue, but across all functions of government.”

S.C. Inspector General Patrick Maley blamed the security breach – described as the largest of its kind in the country in recent memory – on decentralized safety measures, and recommended a uniform security model for the state to follow.

The board appeared to agree, approving the eventual hiring of a consultant to assist with the initial stages of developing a uniform model. Specifics on the hiring costs were not provided.

In other matters, state Comptroller General Richard Eckstrom, a BCB member, advised the board to “proceed cautiously with capital improvement projects,” noting that any project that “addresses a health and safety concern, obviously we ought to approve.”

Six building projects were carried over by the board, including proposed campus renovations at Clemson University, which would total $1,790,000; and the construction of an additional hall at Midlands Technical College’s Airport campus at a projected cost of $1.1 million.

Projects that were adopted included a $9 million interior-renovation project at the Medical University of South Carolina’s College of Nursing, $8,315,656 for a new training center at Central Carolina Technical College, and $6,700,000 to upfit shell space in the Greenville One Building for Clemson University.

The total projected cost of the items adopted by the board amounts to $29,699,637.

Reach Weston at (803) 254-4411 or kelli@thenerve.org