Duck and Cover

October 24, 2013

Inside Insight

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ariail duck and cover

South Carolina’s Secret Government

By Ashley Landess

Last week, Nerve editor Rick Brundrett wrote an article about the substantial bonuses received by staff of the S.C. Research Authority. Out of 102 SCRA employees who earn $50,000 or more, 91 received bonuses ranging from $400 to the executive director’s $108,752 since Jan. 1, 2012.

And that’s not even the biggest shocker of the story. That comes later, when the SCRA’s communications director informs Brundrett in writing that SCRA is “NOT part of the SC State Government,” and also that SCRA employees are “NOT employees of the state of SC.”

That’s quite an “all-caps” attitude from this “non-state” employee, who went on to stress that SCRA is a nonprofit “independent enterprise corporation,” that it “does not receive, nor does it seek, annual appropriations of taxpayer dollars from the SC state government,” and that “There is no line item or proviso in the state budget regarding SCRA.”

And then she threw in that SCRA doesn’t have the ability by law to “encumber the taxation authority of the state of SC. Therefore, there are no bailouts from taxpayers for SCRA if our operations fail.”

Where, oh where, to start with this one? This attitude that some government employees have that they don’t work to provide a public service shouldn’t be a surprise in a state controlled by legislative leaders who aren’t elected statewide and aren’t accountable for essentially running the state. But it speaks to yet another danger inherent in the flawed structure of S.C.’s government – the “public nonprofit,” which views itself as public when it’s convenient and private when it comes to accountability.

The SCRA has gotten away with calling itself a nonprofit corporation largely because no one actually knows what it does. But here’s what we do know: It is absolutely a state entity. The SCRA was created by statute in 1983, and state law directs the agency to, among other things, “advance the general welfare of the people; increase the opportunities for employment of citizens of South Carolina; develop the human, economic, and productive resources of South Carolina; promote and encourage expansion of the research and development sector…..” and so on.

Politicians cannot create a private organization through state law, and no entity created through state law can be a private one. It’s just that simple. More to the point, this agency has openly been declared by legislative leaders as the “central” player in their economic plan for the state. The agency is run by a board appointed (again, according to state law) by government officials, including legislative leaders and the governor. The duties of the agency are outlined in state law. The SCRA is audited by the Legislative Audit Council (which has the authority to audit state entities, not private ones), and is a member of the state Coordinating Council for Economic Development.

SCRA employees participate in the state health plan, and their salaries are public. And the fact that the SCRA doesn’t have taxing authority hardly makes it a private corporation. Only the legislature can tax citizens, not individual state agencies. And any authority to charge a fee comes from the General Assembly (as it should).

The SCRA has the vaguest purpose in all of state government, and its operations are largely secret. It apparently handles some U.S. defense contracts, owns some real estate, and serves as a “middleman” between companies and research entities. How it does those things is unclear, and so too is how the SCRA benefits S.C. citizens, which is part of the stated purpose for creating the agency.

SCRA may not be a private corporation, but it does compete with private sector firms, and therefore is sensitive to sunlight. In fact, the communications director actually issued a veiled threat to us implying legal action if we wrote about the SCRA in a way that interfered with its ability to get contracts!

“Nonetheless, please do not underestimate SCRA’s commitment or resources to recover damages, should the use of this data by you or your organization lead to any cancellation or modification of any SCRA contract, reduction in SCRA’s ability to perform sensitive work for the US government or in any other way inhibit fulfillment of our lawful public mission.”

And now a government agency that was created for “the benefit of the people” is threatening to sue anyone who makes it look bad, or interferes with fulfillment of its “lawful public mission.”

“Public” mission indeed. It is past time for the governor and legislative leaders to explain to the public exactly what the SCRA does, and whether its “public mission” is being fulfilled. In the five years I served on the S.C. Lottery Commission – which also received no state funds — I never encountered a single employee who did not believe he/she was working for the good of the state. If SCRA management doesn’t believe they are providing a service for S.C. citizens, then they can only believe they are working for the good of themselves and their “corporation.” That is a dangerous attitude for a public entity. If SCRA wants to be a private corporation, then it should be re-formed as one independent entirely of the state.