The Palmetto State’s $2.4 Billion Hidden Piggy Bank

February 19, 2014

Investigative Reports

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Piggy BankWhen state agency officials complain about not having enough money, they typically don’t talk about their budget surpluses.

In September, The Nerve reported that for the fiscal year that started last July 1, state agencies and a state fund used to pay off taxpayer-funded bonds collectively had $381.1 million in general fund reserves.

What wasn’t known at the time was how much state agencies had in “other” fund surpluses. The Nerve asked the Office of State Budget then for that information but was informed those records wouldn’t be available publicly until Gov. Nikki Haley submitted her proposed state budget for fiscal 2015, which starts July 1 of this year.

“Other” funds include such things as fees and fines, college tuition, lottery proceeds, state gasoline taxes and a portion of the state sales tax earmarked for K-12 education. Those funds make up $8.4 billion, or about 35 percent, of this fiscal year’s $24.2 billion total ratified state budget, which includes general, federal and “other” funds.

Late last month, the Office of State Budget provided The Nerve with other-fund cash balances as of last July 1 for state agencies, including colleges and universities, and major state funds.

The Nerve’s review of those records found that nearly $2.4 billion in other funds was carried over into this fiscal year. That represents about 10 percent of this year’s total ratified state budget and works out to be about $510 for every man, woman and child in the state’s population of approximately 4.7 million.

The state’s three research universities – University of South Carolina, Clemson University and the Medical University of South Carolina – had among the largest other-fund surpluses at the start of this fiscal year. Other state agencies, such as the Department of Commerce, which doles out millions annually in taxpayer-funded incentives to companies seeking to locate or expand in South Carolina, also made that group.

Excluding the state Treasurer’s Office, which receives and disburses funds from all sources, following are the 10 agencies with the largest other-fund surpluses as of last July 1:

  • Clemson University – $250.8 million;
  • Department of Health and Human Services – $230.2 million;
  • University of South Carolina (eight campuses) – $162.7 million;
  • Department of Transportation – $155.6 million;
  • Department of Commerce – $110.1 million;
  • Medical University of South Carolina – $106 million;
  • Department of Revenue – $67.8 million;
  • Department of Health and Environmental Control – $60.2 million;
  • Department of Mental Health – $56.7 million; and
  • Coastal Carolina University – $51.8 million.

The Nerve also compared the size of the other fund reserves to the size of each agency’s total ratified state budget for this fiscal year. Below are the 10 agencies, excluding the Treasurer’s Office, with the largest percentage of other fund surpluses as of last July 1:

Agency FY 14 Budget Surplus Pct.
Rural Infrastructure Authority $21.8 million $39.4 million 181%
Public Service Commission $4.6 million $4.9 million 107%
Commerce $106.1 million $110.1 million 104%
Transportation Infrastructure Bank $50.4 million $50.7 million 101%
Attorney General’s Office $23.4 million $19.1 million 82%
Insurance $18.5 million $13.4 million 72%
Board of Financial Institutions $4 million $2.9 million 72%
Labor, Licensing & Regulation $41.5 million $29.1 million 70%
Revenue $101.1 million $67.8 million 67%
Aeronautics Commission $7.7 million $4.8 million 63%

The Nerve this week left written questions with Haley spokesman Doug Mayer about the state’s other-fund reserves, including whether the governor factored those reserves in her proposed state budget for next fiscal year, and if any of those surplus funds should be returned to taxpayers. No response was received by publication of this story.

Senate Finance Committee Chairman Hugh Leatherman, R-Florence, and House Ways and Means Committee Chairman Brian White, R-Anderson, didn’t respond to phone messages this week seeking comment.

The Nerve also left written messages Tuesday with spokespersons at a number of state agencies seeking comment on their respective agency surpluses, but received only one response by publication of this story.

Jocelyn Boyd, the Public Service Commission’s chief clerk and administrator, said her agency receives no general funds and relies on other funds, which she described as assessments paid by public utilities to the Department of Revenue. She said because her agency receives assessment proceeds from Revenue in “increments” during the fiscal year, the surplus other funds are needed to cover the agency’s operating expenses pending those payments.

She also said the reserves are used to cover any increases in annual operating expenses, noting the agency’s base budget hasn’t changed in 10 years. When asked, she said any increase in assessments paid by utilities likely would be passed on to customers.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.