I found these quite interesting. Just when you think you heard all the ways to sneak money around, along comes another one. I wonder if the governor will sue the legislature for an unconstitutional budget? Someone should, or else what good is a constitution?

BTW, have you looked at the proposals I sent for referendum items? Please do. Another suggested referendum item is a recall provision, which was brought up in the state legislature this year. Should we have that in the city?

Joseph Azar

S.C. State seeks halt to ‘funneling’
Lawmakers have used school to direct funds to f avorite charities

By Diane Knich (Contact)
The Post and Courier
Thursday, June 5, 2008

The Post and Courier

Sen. John Matthews

Rep. David Mack, D-North Charleston

Previous story
Read Sundays story "Schoo ls act as money funnels".

South Carolina State University’s Board of Trustees wants state lawmakers to stop using the school to channel tax dollars to their favorite charities.

Board Chairman Maurice Washington said at a board retreat in C harleston Wednesday that the board will ask its lawyer whether it can legally adopt a policy prohibiting the practice.

The group was responding to a Post and Courier investigation that ran in the newspaper on Sunday. The analysis revealed that So uth Carolina legislators used the state’s public universities to quietly channel nearly $2 million in tax dollars to their favorite charities during the past three years. Some legislators sent the money to nonprofit groups with which they have direct tie s.

That includes Rep. David Mack, D-North Charleston, who sent $700,000 through S.C. State to a nonprofit where he works and receives money. It also includes Sen. John Matthews, D-Bowman, who sent $350,000 to a charity where he is a nonvoting mem ber of the group’s board of directors and his wife is the board’s vice chairwoman.

Matthews also sent another $150,000 through S.C. State for a "historical analysis study on African American wealth creation," although much of that money has not y et been spent.

The lawmakers’ decisions to place money in S.C. State’s budget for other groups "weren’t done in consultation with university officials," Washington said in an interview Tuesday.

When the board first learned during a budget presentation at its retreat in June 2007 that money was being passed through the university, "We thought it was a little weird," Washington said. "It didn’t seem like an appropriate thing for us to be involved with."

Board members asked former Pr esident Andrew Hugine and John Smalls, the university’s senior vice president for finance, "to end the practice," Washington said.

Smalls said Tuesday that he doesn’t have any choice but to pass on money that legislators place in the university’s budget for other organizations. "These are legislators. This was passed by the General Assembly," Smalls said.

The newspaper’s analysis looked at seven of the state’s largest institutions of higher learning and found that lawmakers funneled mone y through five of them: Clemson University, Francis Marion University, South Carolina State University, the University of South Carolina and Winthrop University.

Here’s how it works: State legislators take money from the state budget and tuck it into universities’ state appropriations, sometimes without the schools’ knowledge. The universities then hand over that money to the charities.

Among the universities surveyed, the largest amount of money, $1.2 million, was passed through the bud get at S.C. State.

Smalls said the funds show up as specific items in the university’s budget. "We didn’t request them," Smalls said. "They kind of appeared."

Smalls said when such items appear in the university’s budget, he does nothing u ntil "the appropriate legislator calls."

Then he asks the legislator to send a letter that includes the name and address of the receiving agency, a tax identification number and a budget. After he receives the information, he said, he sends the mo ney.

"If money is put in your budget for a purpose," Smalls said, "I don’t know what to do about it. The ideal is not to put it in there."

When lawmakers funnel money, he said, they "put the agency in a very precarious position. These tend to be legislators who are very supportive to the institution."

Roger Leaks, an alumnus and member of the university’s Board of Visitors, which is different from the Board of Trustees, said some alumni he’s talked to in the past few days have said they wish the university could stop the practice and use the money on campus.

The university has many needs, he said, especially to improve the poor condition of many older buildings on which maintenance has been delayed.

"The way I see it," Leaks said, "if the money comes into the university, it should be used by the university, not diverted somewhere else."

Reach Diane Knich at 937-5491 or dknich@postandcourier.com.

Governor Sanford found what he thought were 69 items we could do without this year. Just think what he DIDN’T find!

I’ve often heard that “people in the know” have ways to hide things that can never be found but with this year being the “Year of Disclosure” (Earmark Reform, Campaign Finance R eports online), I thought we had stopped all this.

***********

Schools act as money funnels

By Diane Knich
The Post and Courier
Sunday, June 1, 2008

South Carolina legislators are using some of the state’s public univers ities as funnels, quietly channeling nearly $2 million in tax dollars to their favorite charities during the past three years, a Post and Courier investigation found.

Some legislators sent this money to nonprofit groups with which they have direc t ties. For instance, state Rep. David Mack, D-North Charleston, has sent $700,000 through South Carolina State University to a Columbia-based nonprofit organization where he works and receives money.

But it was far from an isolated case. The new spaper’s analysis found that legislators funneled money through most of the state’s major public institutions of higher learning.

The practice raises questions about conflicts of interest and how legislators distribute public money.

“It l ooks like a way to camouflage money to do something they can’t do or don’t want to do directly, something that might be politically embarrassing,” said John Crangle, director of the government watchdog group Common Cause South Carolina.

Here’s ho w it works: State legislators take money from the state budget and tuck it into universities’ state appropriations — sometimes without the schools’ prior knowledge. The universities then hand over that money to the charities.

The Post and Courier requested information, under the South Carolina Freedom of Information Act, from seven of the state’s largest public universities about money legislators had them pass through their budgets to charity groups over the past five years. Legislators went th rough all of the schools except the College of Charleston and The Citadel to funnel tax dollars.

State politicians for years have used budget mechanisms to send tax dollars to pet projects. But the amounts tend to be higher for money funneled thr ough universities.

In Mack’s case, he sent $300,000 to S.C. State in the 2006-07 school year and asked the university to send the money to a Columbia-based nonprofit organization called the Palmetto Center for Advocacy. The center conducts health education programs statewide, especially obesity prevention programs.

Mack sent the group another $400,000 through S.C. State in the 2007-08 school year.

Anastasia Shaw, deputy director for Palmetto Center for Advocacy, said the $700,000 from the state is the only money the group has brought in so far. But, she said, the center is “looking to diversify funding.”

According to the group’s Web site, Mack is employed as its “outreach director.” In a telephone interview, Mack said he now does consulting work for the group and previously was the organization’s interim director. He also said he is paid for all of his work with the center but declined to say how much.

By law, nonprofits must allow the public to view tax forms, w hich include salaries of directors. But the center is relatively new, so its tax records are not yet publicly available.

When asked why he chose to send the money through the university instead of going through the state’s competitive grants prog ram, Mack said, “We just chose that way.”

S.C. State benefited from the arrangement, Mack said, because Palmetto Center for Advocacy organized some health education programs on the university’s campus.

Another legislator who used S.C. Stat e as a funnel was Sen. John Matthews, D-Bowman. Matthews sent $150,000 in the 2006-07 school year and $200,000 in the 2007-08 school year through the university to the Lower Orangeburg-Upper Dorchester Community Development Corp.

Matthews said th e program mostly helps low-income people in the high-poverty region prepare for and land jobs.

According to the group’s Web site, Matthews is a non-voting member of the organization’s board of directors. His wife, Geraldine Matthews, is the board ’s vice chairwoman and serves on the board’s personnel, finance and overview and assessment committees.

Matthews said Wednesday that neither he nor his wife are compensated for their work with the organization. He also said that he gave up his ro le as a voting member of the board when he brought state money to the organization.

The program was launched with a private grant, Matthews said, but the money ran out. He’s temporarily helping it stay afloat with state funds, he said.

Ma tthews said he was “just following tradition” by passing money through a state institution to a nonprofit group.

Matthews also passed $150,000 through S.C. State in the 2006-07 school year for a “historical analysis study on African-American comm unity wealth creation.” The project is looking at impediments for blacks in the areas of education and economic development and will provide “a comprehensive analysis of the Interstate 95 corridor,” which basically runs along the state’s poverty belt, he said.

The university sent $50,000 of the $150,000 for that project to DESA, a Columbia-based management consulting firm, to complete a portion of the project, Matthews said.

DESA President Diane Sumpter said her company will conduct focu s groups and gather information that will be used to make videos to help low-income parents become more involved in their children’s education.

Matthews said the other $100,000 will be dispersed at S.C. State to complete the rest of the report. < BR>
Joe Pearman, assistant vice president of business and finance and vice president of financial affairs and management information systems at S.C. State, said so far, none of the $100,000 has been spent, and only $19,000 has been committed for salar ies.

Evelyn Fields, who is chairwoman of the university’s Department of Education and in charge of the project, said the money will be used to gather baseline research data to develop a program for culturally relevant teaching for children in pov erty.

At the University of South Carolina, legislators funneled $225,000 to the Epilepsy Foundation of South Carolina over the past three years, said Russ McKinney, director of communications for the university.

Barbara Comar Brothers, ex ecutive director of the Epilepsy Foundation, said she doesn’t know which legislators are involved in her organization receiving the money. But, she said, representatives from the foundation met with staffers from the House Ways and Means Committee to req uest the funds.

The foundation used the money for a program that trains state employees to better deal with people with epilepsy in emergency situations, Brothers said.

The university also passed $100,000 to EngenuitySC for the National H ydrogen Association Convention, McKinney said. The university, he said, has no record of specific legislators involved in such transactions.

Kyle Michel, a lobbyist for EngenuitySC, said the money will be used to promote South Carolina, especiall y the Columbia region, as “a place for hydrogen fuel cell economic development” during the 2009 convention.

Neil McLean, executive director for the group, said the money came from the Legislature but no specific legislator.

Sen. Nikki G. Setzler, D-West Columbia, and Rep. Joan Brady, R-Columbia, are members of EngenuitySC’s board of trustees, he said.

Legislators also used other schools as funnels, including Clemson, Winthrop and Francis Marion universities. None of the legislato rs involved in those transactions were employed by the organizations to which they passed money, nor were they members of the groups’ boards of directors.

–Sen. Harvey Peeler, R-Gaffney, sent $115,000 in the 2007-08 school year through Winthrop t o the Lake Wylie Chamber of Commerce to expand the Lake Wylie Small Business Center.

Chamber President Susan Bromfield said the money allows the group to provide a place for small-business owners to get a solid start. She said Peeler has no conne ction to the chamber other than being the state senator who represents the area.

Peeler did not return calls seeking comment.

–Sen. John Hawkins, R-Spartanburg, sent $100,000 in the 2007-08 school year through Clemson to the Spartanburg H umane Society. Hawkins has no connection to the group other than being the state senator who represents the area, he said. He also said he would have been willing to use the state’s competitive grant program or any other funding mechanism, “but this work ed.”

–Frances Marion University has funneled $187,294 to the Mount Pleasant-based Palmetto Project over the last three school years, and nearly $300,000 has been passed through the university over the past five years. John Kispert, vice president for business affairs for the university, said he is unaware of the name of the legislator associated with the money.

–Kispert said the university receives correspondence about the money from Palmetto Project Executive Director Steve Skardon. Skar don said the money has been coming from the Legislature for years, but not from a specific lawmaker. He said the money has been used for the Omega Project.

According to the group’s Web site, that project “offers intensive training to those commun ities looking to improve the quality of public dialogue and personal trust among citizens of diverse racial and cultural backgrounds.”

Skardon said the Palmetto Project doesn’t include current public officials on its board or staff because of the potential for conflicts of interest.

Reach Diane Knich at 937-5491 or dknich@postandcourier.com.

Posted by nathansnews

*************************************************************************************************

Governor: Budget Unconstitutional, Could Lead to Legal Challenge
GOVERNOR SAYS A SUIT MAY BE NEEDED OVER
CONSTITUTIONALITY OF BUDGET

Columbia, S.C. - June 5, 2008 - Governor Mark Sanford today said the Genera l
Assembly may have broken the law in passing a budget they knew to be out of
balance - and therefore unconstitutional - and that doing so could open the
state up to a legal challenge.

In budget hearings earlier this year, the Educatio n and Corrections departments
both told the legislature that next year’s budget would force them to run a
deficit, to the tune of $28 million. In fact, when warned repeatedly about
potential deficits at the Department of Corrections, Senator Hugh Leatherman
suggested multiple times in an April 2 meeting that the agency run a deficit.

In the state Cons! titutio n, Article X, Section 7(a) requires the General Assembly "to provide by law for a budget process to insure that annual expenditures of state government do not exceed annual state revenue." Since the
legislature has now passed a budget in which they know and are fully aware this
requirement will not be met, the governor said today that the budget in effect
b reaks the law.

"There’s no way around the fact that if the General Assembly has passed a budget
that they know will require deficits, then it’s not a balanced budget, period,"
Gov. Sanford said. "We have real concerns about the legality of this budget -
and at this point, we’re not convinced that a lawsuit would be a bad thing,
given that it may indeed be the only way to prevent the legislature from
engaging in this kind of recklessness in the future."

Last week, the go vernor vetoed 69 items from the legislature’s spending plan,
for a total of $72 million, saying that m! oney sh ould be put toward the
anticipated deficits at Education and Corrections. Of those 69 vetoes, the
legislature only sustained five that had implications for the state’s general fund, for a total of
$369,000.

-#####-

Joel Sawyer
Communications Director
Office of Gov. Mark Sanford
(803) 734-5254 - work
(803) 446-6713 - cell
(803) 734-6447 - fax
*****************************************************

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