Executive Summary
After years of accusations, investigations and resignations regarding the accuracy of SC’s financial accountability reporting, a professional analysis was commissioned outlining specific actions by various state agencies to eliminate similar problems in the future. The date to complete these process improvements is March 7, 2026
The Investigation: What Happened with the 2022 Financial Report?
In South Carolina, state law requires an Annual Comprehensive Financial Report (ACFR). This detailed financial document covers all state government entities and is prepared by the Comptroller General’s Office (CGO) according to the standards of the Governmental Accounting Standards Board (GASB). In fiscal year 2022, the State’s ACFR, page 147, documented an accounting error as stated here:
“Until being discovered in 2022, this mapping error impacted the ACFRs for fiscal years 2012 through 2021, overstating General Fund cash and fund equity … by a cumulative amount of $3.53 billion, which necessitated the restatements … This mapping error impacted the ACFRs only.”
This finding initiated a series of events in late 2022 that led to State Comptroller General Richard Eckstrom’s resignation in March 2023. Following public hearings conducted by the Senate regarding the accounting error, Eckstrom ultimately chose to step down. Governor McMaster then appointed Brian J. Gaines as Comptroller general, with the expectation that the General Assembly would elect a permanent successor. Two and one-half years later, this election has not taken place, and Gaines continues to hold the position.
Following these events, the Senate Finance Committee’s Constitutional Subcommittee initiated an investigation into State Treasurer Curtis Loftis in connection with the same financial report issues. Questions have been raised about whether this investigation followed proper statutory procedures and whether appropriate due process protections were provided. Loftis claims the investigation was not lawfully initiated, and the process of the investigation violated numerous statutory rules for how these investigations are to be conducted. Loftis also claims that the Senate appeared to have employed non-public, back-channel communications with executive branch officials (most notably from the CGO) which were never put forward for public scrutiny or cross-examination by other agency officials.
What Really Happened with the $1.8 Billion?
One of the central questions in this matter concerns the nature of the $1.8 billion figure that has been widely reported about. At a recent panel with the Greenville Republican Women’s Club, State Treasurer Curtis Loftis addressed this issue directly, stating that there was never actually $1.8 billion in physical currency missing. This confusion about the issue continued when, in a prior statement, he asserted the classification or status of these funds did exist were based upon written affirmation in letters from the Comptroller General dated December, 12, 2023 and from the State Auditor dated February 24, 2024.
Ultimately, the independent forensic accountants, AlixPartners, determined approximately $1.56 billion of the $1.8 billion represented budgetary figures for General Fund appropriations, which are exclusively controlled by the Comptroller’s office.1 Simply put, the issue involved how budget allocations were recorded in financial reports rather than missing physical currency.
This distinction raises an important question: has the nature of this accounting issue been clearly communicated to the public? Headlines suggesting someone “lost $1.8 billion” may have created confusion about what really occurred, potentially affecting public perception of the officials involved in managing state finances.
Was a there a pattern of Senate Investigations that undermined the public’s elections?
According to State Treasurer Loftis, the investigation that ensued represented the twelfth time the Senate had initiated investigatory proceedings involving his office. This claim raises questions about the frequency and nature of legislative oversight of statewide elected officials.
Loftis has drawn connections between his situation and that of former Comptroller General Eckstrom, noting that both cases stem from issues related to the same 2022 ACFR. He has expressed concerns that if the Senate’s current approach to removal proceedings is upheld, it could create a precedent where statewide elected officials can be replaced by Senate appointees, potentially shifting power away from voters. This process of conducting investigations that lack transparency, due process, and an adherence to statutory law, combined with a questionable and nebulous “removal on address” process, (to be discussed later in this article) can undermine the separation of powers between the executive and legislative branches.
These concerns extend beyond the immediate cases to broader questions about the separation of powers. If the Legislature can remove executive branch officials and appoint their replacements, what implications might this have for the balance of governmental authority in South Carolina?
Were Proper Procedures Followed in the Investigation?
In 2025, the State Senate conducted removal proceedings against State Treasurer Loftis. Beyond the substantive allegations, questions have been raised about whether the investigation followed proper statutory procedures. South Carolina statutes require the Senate President or a chairman of a standing committee appoint an investigative committee, and a formal motion stating the purpose and scope of investigation, and this motion must be voted upon.2 This formal process did not occur in his case, instead, the Senate subcommittee proceeded on an ad hoc basis without clearly defined parameters established through a recorded vote. When formally challenged on this deficiency by the Treasurer’s legal counsel, the President of the Senate merely produced a letter, dated many months after the start of the investigation, indicating that the investigation was done with their authorization and direction3
If an investigation is properly initiated, certain statutory protections are triggered for the person being investigated. These protections include the right to have legal counsel present during testimony, the right to receive notices detailing the specific scope of examination, and other privileges typically found in civil proceedings. Loftis maintains that these protections were not provided during the proceeding.4
Agency Reports and Documentation
State law authorizes investigative committees to require state agencies to submit formal written reports, which must include an attestation from the agency head confirming there are no material misstatements of fact or law. Treasurer Loftis voluntarily directed his agency to produce such a report in response to the Senate Subcommittee’s investigation and the AlixPartners Report, the other agencies involved in the financial reporting process apparently did not produce similar reports for public review.5
This raises questions about whether all relevant agencies were held to the same documentation standard during the investigation process.
Communications Between Investigators and Agencies
Another procedural question involves communication between the Senate Subcommittee and executive branch agencies, particularly the Comptroller General’s Office. Freedom of Information Act (FOIA) requests have been submitted by the SCPIF and others to obtain communication between the Senate Subcommittee and the various agencies. While members of the Legislature are not required under FOIA to produce their personal papers related to legislative duties, executive branch agencies typically do not have the same exceptions. However, the CGO has reportedly declined to produce these documents, citing “legislative privilege.”
This raises a legal question: can executive branch agencies claim legislative privilege to withhold documents? This appears to be an issue that may need judicial clarification, as there seems to be limited appellate precedent extending such privilege to executive branch entities.
What is “Removal on Address” and Does it Apply Here?
Beyond the procedural questions surrounding the investigation itself, there are significant constitutional questions about whether the “Removal on Address” provision can be properly applied in this situation. “Removal on Address” is a constitutional mechanism that allows the Legislature to remove certain officials from office.
Questions have been raised about whether this mechanism can be applied to statewide elected officials like the State Treasurer for the type of conduct alleged in this case.
After the Senate Finance Committee’s Constitutional Subcommittee submitted a report about its investigation to the full Senate body, the Senate invoked a resolution to initiate a “removal on address” procedure found in Article 15, Section 3 of South Carolina’s Constitution. This procedure had been attempted only once against a statewide elected official (unsuccessfully at that) in the state’s 250-year-plus history, with the only instance in this context being in 1875.
The Treasurer argued that only the formal impeachment process found in Article 15, Section 1 of the Constitution could be used against statewide elected officials. There are very substantial differences between Removal on Address and Formal Impeachment. The standard of conduct eligible for Removal on Address is “any willful neglect of duty, or other reasonable cause.” S.C. Const. Art. XV, § 3. The process afforded to the party sought to be removed is minimal, with only a general right to respond to charges in a “hearing.” S.C. Const. Art. XV, § 3
What is Formal Impeachment and What Procedures Does It Require?
On the other hand, formal impeachment can only be initiated by the House of Representatives and can only be invoked in cases of serious crimes or serious misconduct. Impeachment also requires an actual trial (which involves discovery and sworn witnesses testifying under oath and subject to cross examination) not merely hearing. The Treasurer formally requested that the Senate grant him the ability to call witnesses to be examined under oath, to have a formal exchange of relevant documents, and to provide responses to requests to admit certain facts and legal conclusions. These are all common practices in both civil and criminal matters in a court, even if a person being sued for breach of contract would be entitled to such rights. The Senate declined these requests.
Additionally, the Senate did not require the presenters of the case against the State Treasurer to be under oath, which means there would be no legal consequences for inaccuracies in testimony.
What Happened Next?
The South Carolina State Senate voted 33-8 to remove Curtis Loftis as state treasurer on April 21, 2025, following an eight-hour hearing on the allegations of the Senate’s investigative report. This vote met the required two-thirds threshold (31 votes) under the Article 15 “removal on address” provision for an elected official’s removal due to “willful neglect of duty”. The resolution now advances to the House of representatives, where another two-thirds vote (80 of 124 members) would be needed to finalize his ouster; as of late 2025, no such House vote has occurred, leaving Loftis in office pending further action.
The House of Representatives has not issued any official statements as a body on the Removal on Address petition sent over by the Senate. The Speaker of the House has made statements indicating in essence that he does not believe the state’s time and resources are well-spent on pursuing this any further. The temperature amongst elected House and Senate members seems to have shifted away from continuing this effort. The State Treasurer is seeking reelection and may have gained public support after the public learned how the financial reporting issue evolved. Similar observations have also been made regarding the Removal on Address hearing, with some officials expressing the personal belief that a statewide elected official probably could not be removed by Removal on Address under the current version of the State Constitution.
The silver lining is the General Assembly engaged The AlixPartners, an internationally recognized financial accounting firm, to review all aspects of the state’s financial reporting procedures and to provide a report with recommendations. Their report, released on January 15, 2025, identified twenty-five recommendations: twenty of which specific to the Comptroller General’s Office, one recommendation specific to the State Treasurer’s Office, and three combined specific to the State Auditor, Treasurer and Comptroller General. The General Assembly then directed the Governor, the agencies to form the Governor’s Task force to implement all 25 recommendations. The legislative bill that outlines the implementation of the recommendations (S.253) indicates that all recommendations not requiring statutory changes should be fully implemented no later than March 7, 2026.
Specifically, AlixPartners Report Recommendation 21, assigns the Comptroller General’s Office “to assess all topside entries or other adjustments and disclosures” that could be relevant to these accounting issues. These “topside entries” are a means by which the CGO exports the financial data out of the state’s legally mandated enterprise management system into an excel spreadsheet that has in the past allowed the CGO’s office to manually adjust accounting information (including the appropriations/budget dollars that were the origin of $1.56B of the accounting problems) at its discretion to various agencies and has been identified in the AlixPartners Report as the key factor resulting in the ACFR mapping error. It appears that, given the fact that the CGO has not been reported to have fulfilled the requirements of Recommendation 21, it is continuing to use the same flawed processes to generate the FY2025 ACFR report.
What are the Implications for Public Policy?
Even if the Removal on Address matter does not proceed in the House, there are serious matters of public policy that have been highlighted by this process. While the General Assembly certainly has an important constitutional role to play in legislative oversight and conducting investigations when warranted, there are also equally important principles of separation of powers and upholding the will of the State’s citizens through elections.
Investigations conducted by the General Assembly should follow the laws that the legislature itself has established for these matters, with proper adherence to established procedures. Such investigations should be conducted with maximum transparency and should allow those called before them, particularly statewide elected officials, the ability to examine and challenge the information placed before them.
Statewide elected officials should be prepared to challenge the actions of an investigative committee if it fails to follow established law and to pursue the matter through the courts if necessary. Legislative committees should conduct critical fact-finding with transparency and proper communication channels with executive branch agencies. Such practices help maintain the Governor’s leadership and priorities within the executive branch, as well as respect the roles of other statewide elected officials.
The public should demand the Governor to instruct his Task Force and the agencies to fulfil the recommendations within the time parameters that have been placed into law, and not allow the agencies to stall or alter the AlixPartners Report recommendations. The Treasurer’s office has provided its response to the Task Force. The CGO, currently an unelected individual, is directly responsible for Twenty of the Twenty-Five Recommendations.
With the 2025 ACFR scheduled to be released any day, will the same budget processes and reporting inaccuracies continue?
The AlixPartners Report set forth recommendations for multiple agencies aimed at clearing up problems in budgeting procedures. Recommendations 20 and 21 were given to the Comptroller General’s Office and related specifically to Comptroller General’s power to make changes to the budget. These recommendations were made to ensure the issues of the “missing” money discussed in this article do not happen again, and so that the work of the CGO in preparing the ACFR can be properly subjected to peer review if necessary.
After reviewing all of the Public Meeting Minutes (S.253) of the Governor’s Task Force from May through December 2025, Rec 20 is addressed only once in the December 4th report. “AP-20, Cash and Cash Equivalents Reporting Policy. Work on these policies is ongoing.” Recommendation 21, specific to correcting the process related to the ACFR “missing money – mapping error,” is not mentioned in the minutes at all.
With the problems experienced over the past year, wouldn’t you think this issue would be item number one to resolve? The release of the 2025 ACFR is coming soon.
Will we hear “missing money” again from the 2025 ACFR since the critical AlixPartners Report Recommendations remain unaddressed or “ongoing”?
Will the Senate, an appointed Comptroller General, the State Treasurer, the Governor and the State Auditor implement all 25 AlixPartners Report Recommendations by the March 7, 2026 deadline? The public expects all our state-wide elected and appointed government officials to cease the blame game. These officials must simply finish this job no later than March 7, 2026!
- See S.C. Code 11-3-50; S.C. Code 11-3-185; State Treasury Forensic Accounting Review, Final Report, Jan. 15, 2025 at Page 10. ↩︎
- See S.C. Code 2-2-40 ↩︎
- See Letter of Sen. Peeler and Sen. Alexander to Sen. Grooms dated March 19, 2025 ↩︎
- See S.C. Code §2-2-40 through 80 for details regarding legal protections and requirements ↩︎
- See State Treasurer’s Office Overview of Issues Surrounding SCEIS Fund 30350993 and Other Allegations, dated February 26, 2025. Available at the STO website at www.treasurer.sc.gov/media/pzhpjxvy/final-report-with-letter-22725.pdf ↩︎