DC consultant tapped in search for origins of SC’s $1.8B in mystery money

S.C. Treasurer Curtis Loftis asks for help from his staff on Tuesday, April 2, 2024, during a Senate Finance subcommittee meeting concerning $1.8 billion that has been discovered in an account. (Travis Bell/Statehouse Carolina/Special to the SC Daily Gazette)

COLUMBIA — South Carolina selected a Washington, D.C., consulting firm best known for restructuring companies in bankruptcy to search for the origins of $1.8 billion in taxpayer funding that sat unidentified and untouched in a bank account for more than five years.

The state’s administrative agency selected AlixPartners for the forensic audit contract worth up to $3 million, according to a “notice of award” posted Thursday on the state’s procurement website.

The contract runs from July 18 through June 30, 2025, according to the notice.

The official contract has not yet been publicly posted and the state Department of Administration did not immediately respond Friday to questions from the SC Daily Gazette.

AlixPartners will be required to provide an interim report on its findings at the end of September.

The final report is due to the governor and legislative leaders by the end of the year, according to pre-award postings on the procurement website.

AlixPartners will work alongside a working group formed by Gov. Henry McMaster to investigate the mystery money and identify how it was supposed to be spent.

That group includes representatives in the State Treasurer’s Office, Comptroller General’s Office, State Auditor’s Office, Department of Administration, Attorney General’s Office and the Governor’s Office.

The $1.8 billion came to light in the fallout from a $3.5 billion accounting error by the state’s former top accountant.

That blunder, discovered in 2022, came from a computer coding glitch in which public colleges’ revenue was mistakenly double-counted for more than a decade in the state’s annual financial report it provides to Wall Street investors.

SC has $1.8B sitting in a bank account. State leaders don’t know why or how it happened.

State financial officials have said the $1.8 billion was overlooked in the wake of a chaotic, decade-long transition from the state’s old accounting system to a new one. At some point in the switch over, officials lost track of what agency or entity the money had been meant for. And no one alerted lawmakers to the issue.

The governor’s working group has spent the last few months laying the groundwork for the forensic audit. It has gathered documentation, opened a portal for sifting through thousands of data entries that took place during the accounting system switch, re-ran past checks on financial records to make sure they’re accurate and made a platform to run tests on potential future changes to the accounting system.

For its part, the state has asked AlixPartners to analyze and balance all of the State Treasury’s cash and investments. The company will report to the governor and lawmakers on the accuracy of the state ledger and make recommendations for avoiding future unassigned dollars in the state’s accounts.

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