Play Live Radio
Next Up:
0:00
0:00
0:00 0:00
Available On Air Stations

SC auditor tangled up in $1.8B accounting error resigns

The South Carolina Statehouse
GAVIN JACKSON
The South Carolina Statehouse

State Auditor George Kennedy's resignation follows the 2023 resignation of former Comptroller General Richard Eckstrom.

The state auditor tangled up in South Carolina's $1.8 billion accounting error has resigned.

Auditor George Kennedy resigned by letter to the State Fiscal Accountability Authority, otherwise known as SFAA, Thursday morning by letter.

"It has been both an honor and a privilege to serve the State of South Carolina during the past nine years," Kennedy wrote in the letter obtained by SC Public Radio. "However, I believe that it is in the best interest of the Office of the State Auditor that I resign from my position as State Auditor effective today."

In closing, Kennedy wrote to SFAA members, which includes Gov. Henry McMaster, that he is willing to help with the transition and added, "I also welcome the opportunity to provide my thoughts on how the Office of the State Auditor can be strengthened for the future."

Then-State Auditor George Kennedy sits in a March, 26, 2024, State Fiscal Accountability Authority meeting. Kennedy resigned Thursday, Jan. 23, 2025, as the Legislature holds hearings over an audit looking into a $1.8 billion accounting error.
RUSS MCKINNEY
Then-State Auditor George Kennedy sits in a March, 26, 2024, State Fiscal Accountability Authority meeting. Kennedy resigned Thursday, Jan. 23, 2025, as the Legislature holds hearings over an audit looking into a $1.8 billion accounting error.

Kennedy is the second resignation connected to the error that started more than two years ago when, in 2023, it was publicly disclosed that the state's books included a $3.5 billion accounting error.

Then-Comptroller General Richard Eckstrom resigned in March 2023 under pressure soon after the error's public disclosure and as hearings were underway in the state Senate.

Unlike Republican Eckstrom, Kennedy was not publicly elected.
As state auditor, Kennedy and his office reported to SFAA.

In a letter to Kennedy Thursday, Gov. Henry McMaster thanked Kennedy for his nine-year service to the state.

"I wish you success in any and all future endeavors," McMaster wrote. "If I may be of any assistance to you in the future, please do not hesitate to contact me."

Soon after the public disclosure of the $3.5 billion error — now under the investigation of the U.S. Securities and Exchange Commission — lawmakers learned of a roughly $1.8 billion account that at the time appeared to have no home.

It was unclear then whether some or all of the money was real.

An outside audit firm, AlixPartners, hired by the Legislature to look into the error released its report this month that showed roughly $1.6 billion of the total was not real.

With the then-comptroller (what is the state's chief accountant) and state auditor out, that leaves one more player in this saga in question: Republican state Treasurer Curtis Loftis.

For over a year, Loftis has been in the crosshairs of a Senate Finance panel led by Republican Berkeley Sen. Larry Grooms, who has repeatedly called on Loftis to resign.

Loftis has resisted those calls and dismissed fault in the error as lawmakers have questioned his previous testimony that he invested the $1.8 billion and earned the state interest.

In an op-ed published by the Post and Courier, Loftis called efforts to make his position a Cabinet-level job rather than elected "misguided," and sought to explain the investment.

He wrote, in part, "At that time, the state auditor, the comptroller general and the state’s outside audit firm had issued professional opinions that those funds represented general fund cash. Considering that information, our office examined how much $1.8 billion would have earned based on the daily available interest rate. As a reminder, the state treasurer’s office pools and invests all available cash in its custody.

Maayan Schechter (My-yahn Schek-ter) is a news reporter with South Carolina Public Radio and ETV. She worked at South Carolina newspapers for a decade, previously working as a reporter and then editor of The State’s S.C. State House and politics team, and as a reporter at the Aiken Standard and the Greenville News. She grew up in Atlanta, Georgia, and graduated from the University of North Carolina-Asheville in 2013.
Russ McKinney has 30 years of experience in radio news and public affairs. He is a former broadcast news reporter in Spartanburg, Columbia and Atlanta. He served as Press Secretary to former S.C. Governor Dick Riley for two terms, and for 20 years was the chief public affairs officer for the University of South Carolina.