Nothing for Certain with Administration Agency

April 1, 2011

Investigative Reports

Print Friendly, PDF & Email

The NerveA skeptic might say to supporters of a proposed Department of Administration that it would not necessarily lead to savings and efficiencies in state government – and in fact could end up costing taxpayers more money.

A cynic might tell the advocates to be careful what you wish for – you just might get it.

Such an assessment derives not so much from the concept of a Department of Administration, but from how the would-be agency is shaping up under a bill advancing through the S.C. General Assembly. Rep. Garry Smith, R-Greenville, is lead sponsor of the bill, H. 3066.

Two key points are in order here, based on the legislation:

Number one: Even if a Department of Administration comes to pass, it would not replace the state Budget and Control Board, as some proponents would like.

Yes, the BCB would still exist.

Number two: A Department of Administration would create hundreds of thousands of dollars in new, annually recurring costs while generating an undetermined amount of yearly savings.

Yes, that means that such an agency could end up consuming more tax dollars than it saves.

If these things are true, though, then what’s the rationale for a Department of Administration?

To its advocates, the agency is necessary to help undo an imbalance of power in state government weighted heavily toward the Legislature, and they point to the Budget and Control Board (BCB) as a prime example of that lopsidedness.

Unique to South Carolina, the Budget and Control Board is a hybrid of the executive and legislative branches of government that operates as both a board and an agency.

The board wields vast authority over state spending, construction projects and state and local government employee benefits. The panel consists of five members: the governor, the treasurer, the comptroller general and the chairmen of the House Ways and Means and Senate Finance committees.

The BCB agency, meanwhile, performs all manner of administrative functions, from maintaining state buildings and vehicles to administering the state retirement system to forecasting state revenues and conducting revenue and fiscal impact analyses of state legislation.

As it follows, the supporters of a Department of Administration also hold that it is needed to bolster the governor’s capacity to do what the governor does – run the executive branch of government.

“We need to give the governor the power to be governor,” state Sen. Chip Campsen, R-Charleston and sponsor of another bill to create a Department of Administration (S. 134), told The Nerve for an earlier story.

Former Gov. Mark Sanford wrestled this issue to the fore of South Carolina politics, championing abolition of the BCB and creation of a Department of Administration to replace it.

In 2007, Sanford’s office issued a news release expressing support for a lawsuit seeking to dissolve the Budget and Control Board.

“The suit challenges the board’s existence on constitutional grounds, saying that its structure violates the constitutionally required separation of legislative and executive branch powers,” the statement said. “The board handles administrative functions of government that are handled by governors in 49 other states, where there exist clearer lines of responsibility back to the chief executives of those states.”

Along those lines, Sanford and other observers widely have asserted that no other state has a Budget and Control Board.

Nevertheless, the S.C. Supreme Court summarily bounced the lawsuit.

Since then, however, the impetus behind it has only gained strength, as evidenced by recent developments in the Legislature as well as like-minded support from Sanford’s successor, Gov. Nikki Haley, for creating a Department of Administration.

Rep. Smith’s bill appears to be the vehicle by which it might get done.

The measure undoubtedly would give the governor more control over the daily operations of the executive branch. It also would downsize the Budget and Control Board.

Indeed, the legislation offers the most significant potential state government restructuring in years.

But at the same time, the bill would not do away with the BCB – neither its board nor the agency – and it could result in a net cost to taxpayers.

The projected yearly recurring costs stemming from the legislation range from about $1.8 million to nearly $2.3 million, plus $100,000 in one-time expenses, according to a Feb. 22 fiscal impact assessment of the bill.

Some of those costs, which relate mostly to new employees and their tasks, might be lower under changes made to the bill since the statement was released.

In addition, it says the legislation would yield “an indeterminate amount” of savings, contingent upon where certain administrative support services for a Department of Administration are housed.

On March 3, the House passed the bill and sent it to the Senate, whereupon that chamber directed it into the committee process.

That is a messy, sausage-making affair, but the legislation has been churning through it thus far.

Last week, a Senate Judiciary subcommittee approved the bill following a briefing on it from Mike Shealy, a senior Senate staffer. “The Budget and Control Board will still exist,” Shealy said in detailing the legislation.

It would create a Department of Administration overseen by a director. The governor would appoint that person with consent of the Senate, and the director would be a member of the governor’s cabinet.

The director represents another way the agency would cost taxpayers. The job would be a new position in state government, and the salaries of cabinet heads tend to range around $100,000, not including benefits.

As for the nuts and bolts of the bill – a super-sized 68 pages in Microsoft Word format – it would move several functions of the Governor’s Office into the Department of Administration along with a smattering of BCB operations.

The Budget and Control Board divisions that would be transferred to the department include General Services, Human Resources, Information Technology and the State Engineer’s Office, according to a summary of the legislation distributed Tuesday to members of the Senate Judiciary Committee.

The committee approved one amendment to the bill but did not vote on it, opting instead to carry it over to the panel’s next scheduled meeting, Tuesday at 3 p.m.

The legislation further devolves the BCB by:

relocating its State Energy Office to the state Office of Regulatory Staff, which is charged with representing the public regarding electricity rates and other utilities issues;

shifting its Office of Local Government and a couple of smaller programs to the Department of Health and Environmental Control; and

reassigning employees who conduct revenue and fiscal impact reviews of bills to a Legislative Fiscal Office.

Still, some of the BCB’s most important components would stay with it. Those include the revenue-forecasting Board of Economic Advisors; the Insurance Reserve Fund, which provides property and liability coverage to more than 1,000 state and local agencies in South Carolina; and retirement system administration.

In addition, the bill would split some BCB services.

For example, while Human Resources would go to the Department of Administration, the state health insurance program would remain part of the Budget and Control Board.

Previously the legislation called for the Department of Administration to handle the claims management side of the health insurance program, but any policy changes in benefits would continue to rest with the BCB board.

The amendment the Senate Judiciary Committee passed nixed that separation, keeping the entire program at the Budget and Control Board.

A roomful of state retirees watching the proceedings in the committee’s meeting room on the State House grounds jeered when senators spoke against the amendment and cheered when they talked in favor of it.

In an interview with The Nerve before the panel took up the bill, retired College of Charleston professor and librarian Sheila Seaman said the retirees worry about a lack of checks and balances if the executive branch handles their health insurance claims. “It could leave me without an advocate,” Seaman said. “I’d like to keep it the way it is.”

Given the complex reshuffling in the legislation and its division of some BCB components, it is unclear whether the bill would foster greater efficiency in state government.

Moreover, it comes with a definitive, seven-figure projected price tag but no quantified, guaranteed savings.

“This thing’s going to cost us $2 million,” Sen. John Scott, D-Richland, said during the committee meeting, citing the fiscal impact statement.

But although the bill would not eliminate the Budget and Control Board, it could be a big step toward that end. And some lawmakers do want to go all the way and deep six the BCB.

“I have lost all confidence in the Budget and Control Board’s ability to govern anything,” Sen. Shane Massey, R-Edgefield, said at the Judiciary hearing.

Massey was decrying a $225 million deficit the S.C. Department of Health and Human Services is running. He said the BCB failed to stave off the deficit and then authorized it.

The senator went on to say he favors dismantling the Budget and Control Board “and completely eliminating that body.”

In that sense, supporters of a Department of Administration might find the House-passed bill to be less than perfect. But it’s true in life that wholesale change often occurs in steps, rather than one fell swoop.