State Financial Meeting Closed to the Public, Media

August 12, 2011

Investigative Reports

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By ERIC WARD

closed meetingA wide-ranging meeting Gov. Nikki Haley organized in June to discuss state finances with representatives of the Standard & Poor’s credit rating agency and a bevy of high-ranking state officials was closed to the public and the media.

The meeting took place June 14 in a conference room at the S.C. Department of Commerce headquarters across the street from the State House in Columbia.

Two or three Standard & Poor’s representatives participated in the meeting along with Haley, some of her staff members and numerous top-level state officials, records from the meeting and interviews with some of the attendees show.

The officials present included S.C. Comptroller General Richard Eckstrom, state Board of Economic Advisors Chairman Chad Walldorf and S.C. Department of Health and Human Services director Tony Keck.

Other officials on the agenda for the meeting included Office of State Budget director Les Boles, Commerce Secretary Bobby Hitt, Department of Employment and Workforce director John Finan, and S.C. Retirement Systems director William Blume.

Three leaders in the General Assembly also were on the agenda: the chairmen of the budget-writing Senate Finance and House Ways and Means committees – Sen. Hugh Leatherman, R-Florence, and Rep. Brian White, R-Anderson, respectively – and the chairman of the Senate Labor Commerce and Industry Committee, Sen. Greg Ryberg, R-Aiken.

The topics that were to be discussed at the gathering focused on state finances, such as strategic budgeting, current state revenue projections, highlights of last year’s state budget and the status of state reserve funds, according to the records.

The Nerve obtained the documents from Haley’s office using the S.C. Freedom of Information Act.

Other subjects for discussion at the meeting were assessing the state’s economic outlook, “including key indicators, relevant U.S. Census data, employment trends and recent recruiting successes”; managing the state retirement system; and issuing state debt, the meeting agenda says.

Two copies of the agenda among the records say in part, “press: no” and “public: no”.

“It just kind of blew my mind,” Wayne Bell, president of the South Carolina State Retirees Association, said of the meeting taking place behind closed doors. “We believe very strongly that openness is the best policy.”

Bell mentioned the meeting in an interview with The Nerve for a previous story about the state retirement system.

It is unclear whether the meeting violated public notification and openness requirements of the state’s Freedom of Information law.

Responding to emailed questions from The Nerve, Haley’s press secretary, Rob Godfrey, said it was not necessary for the meeting to comply with the open-government law.

“When we reached out to S&P, they requested the opportunity to have a meeting with state leaders where they were free to have open dialogue about the financial condition of South Carolina, and we were happy to comply,” Godfrey said.

“Additionally,” he continued, “if the briefing by S&P met the definition of a ‘meeting’ under the Freedom of Information Act, we would have obviously complied. Because S&P made the request and the FOIA didn’t require that the meeting be open, it was not.”

Carmen Maye, an attorney for the South Carolina Press Association, says she cannot determine with certainty whether the meeting ran afoul of the Freedom of Information Act without knowing specifically what took place at it.

(The Nerve’s parent organization, the South Carolina Policy Council, is an associate member of the Press Association.)

“But it seems to me that there is a good argument to be made that this (meeting) was in contravention of the open-meetings law,” Maye says, “and it is a clear violation of the spirit of transparency.”

State Treasurer Curtis Loftis also was on the agenda, but he says he did not attend.

Loftis says the meeting was a discussion of public business in a public setting. “So it ought to be an open meeting,” he says, “so I didn’t go for that reason.”

Says Eckstrom, “I don’t know what was behind the decision to open or close it.”

Loftis says credit rating agencies operate under strict guidelines set forth by the Securities and Exchange Commission, and for reasons related to those rules, the Standard & Poor’s representatives did not want the meeting to be open to the public.

“S&P said we’re not going to do it in a public forum,” he says.

Among the records Haley’s office provided were two emails from one of her three deputy chiefs of staff, Ted Pitts, to Richard Marino of Standard & Poor’s. The emails address scheduling and other logistical details regarding the meeting.

Marino did not respond to an email from The Nerve and a phone message left for him Wednesday at his New York City office.

The private meeting occurred five days after the first “state financial summit” that Haley had planned to hold in Columbia on June 9.

The agenda for that meeting, which was to include delegates from the two other major credit rating agencies – Moody’s and Fitch – was similar to the agenda for the June 14 behind-closed-doors meeting.

However, Haley’s office announced the planned Moody’s and Fitch meeting publicly and posted the agenda for it on the office’s website.

But the Moody’s and Fitch people could not make it on June 9, so the event was cancelled and rescheduled for July 27.

Haley’s office posted an agenda online for the rescheduled financial summit, too – referring only to Moody’s attending – and the event received media coverage.

Walldorf, the Board of Economic Advisors chairman, says he participated in both the June 14 and the July 27 meetings. But he says he isn’t sure why the first one was closed and the second one was open.

“It was the exact same meeting just with a different rating agency,” Walldorf says of the latter.

Reach Ward at (803) 254-4411 or eric@thenerve.org.