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ISSUE 10.41
Oct. 14, 2011

RECENT ISSUES:
10/17 | 10/10 | 10/03 | 9/26

Index

News :
Senate tackling state retirement ‘shortages’
Legislative Agenda :
Meetings on the table
Radar Screen :
D.O.T. done?
Palmetto Politics :
Treasurer's "lofty" debt
Commentary :
New report highlights South’s Civil War hangover
Feedback :
Blow off some steam
Scorecard :
Down on DOT, Ard, Haley, Spurrier
Stegelin :
The job
Megaphone :
Transparent AND obtuse
Encyclopedia :
Just in time for Halloween

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NUMBER OF THE WEEK

$223,000

That’s how much Gov. Nikki Haley raised for her reelection campaign in the third quarter alone, with most of the money and in-kind total coming from out-of-state donors she’s courted on recent trips. More.

MEGAPHONE

Transparent AND obtuse

“I’m not into giving grades.”

-- Gov. Nikki Haley responding last week to a question at a public forum on what grade she would give herself on improving the state’s education system. Earlier that week, Haley released a massive report card detailing how she graded legislators for they responded to her agenda. More.

* * * * *

Most polite city in America?!

“Suck it, you Rice-A-Roni-eating bastards.”

-- Stephen Colbert, celebrating his hometown Charleston being named top tourist town in America by Conde Nast, over San Francisco. Colbert also thanked Union Gen. William T. Sherman for sparing Charleston, but burning Columbia and Atlanta to the ground. More.

ENCYCLOPEDIA

Just in time for Halloween

'Feejee Mermaid' sparks great public debate in Charleston

Popular culture and pre-Darwinian natural history collided in January 1843 when Phineas T. Barnum's notorious "Feejee Mermaid" made its way to South Carolina after several months of controversy and acclaim in New York City. The three-foot "mermaid" (actually a gruesome forgery cobbled together from a monkey torso and the bottom half of a fish) was exhibited at Charleston's Masonic Hall from January 17 to January 21. A ventriloquist and an orangutan were among the other curiosities.

Shortly after the mermaid's arrival, the city's rival newspapers, the Mercury and the Courier, lined up on opposite sides of a heated and complex debate about the exhibit's authenticity, the authority of expertise, and the relationship between commercial entertainment and scientific knowledge. Beyond its popular appeal, the mermaid touched on disputes among natural historians over the fertility of "hybrid" creatures, the existence of intermediate species in the "great chain of being," and the unity of humankind. The Reverend John Bachman, a Lutheran minister and naturalist, led the anti-mermaid assault in the Mercury, writing under the pseudonym "No Humbug" to denounce the exhibit as a "vice manufacture palmed on our community as a great natural curiosity."

Alanson Taylor, Barnum's uncle and manager of the exhibit, replied with a letter of his own suggesting that "No Humbug" could not possibly be a legitimate scientist or a physician, and that his mermaid was too fragile for dissection anyway. Taylor earned the support of the Courier, whose editors dismissed Bachman and his supporters as unqualified skeptics who discounted the mermaid without having seen it. Bachman continued to ridicule both the exhibit and the gullibility of the Charleston public. The controversy pitched back and forth, and Taylor was forced to spirit the Feejee Mermaid away before it could be destroyed by angry visitors.

--Excerpted from the entry by David Hoogland Noon. To read more about this or 2,000 other entries about South Carolina, check out The South Carolina Encyclopedia by USC Press. (Information used by permission.)

PALMETTO PRIORITIES

Palmetto Priorities Statehouse Report encourages state leaders to develop and implement Palmetto Priorities involving several issues to make the state better a better place. Click the link to learn more about our suggestions for bipartisan policy objectives.

Here is a summary of our Palmetto Priorities:

CORRECTIONS: Reduce the prison population by 25 percent by 2020.

EDUCATION: Cut the state's dropout rate in half by 2020.

ELECTIONS: Increase voter registration to 75 percent by 2015.

ENVIRONMENT: Adopt a state energy policy that requires energy producers to generate 20 percent of energy from renewable sources by 2020.

ETHICS: Overhaul state ethics laws.

HEALTH CARE: Ensure affordable and accessible health care.

JOBS: Develop a Cabinet-level post to add, retain 10,000 small business jobs per year.

POLITICS: Have a vigorous two- or multi-party political system of governance.

ROADS: Strengthen all bridges and upgrade state roads by 2015.

SAFETY: Cut the state's violent crime rate by one-third by 2016.

TAX REFORM: Remove outdated special interest sales tax exemptions as part of an overall reform of the state's tax structure to be completed by 2014.

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News

Senate tackling state retirement ‘shortages’

By Bill Davis, senior editor

OCT. 14, 2011 -- Members of a select Senate Finance subcommittee have been holding public hearings across the state in an attempt to find out what they could do to improve the state’s massive pension system.

Critics in the legislature, mostly Republicans, have contended the current system is burdened with as much as a $17 billion unfunded, or underfunded, mandate.

Supporters in the legislature, mostly Democrats, claim the current system only needs “tweaks,” and that Republicans are playing politics with valued employees retirements.

Background

Earlier this year, Sen. Hugh Leatherman (R-Florence), chairman of the Senate Finance Committee, charged this special subcommittee the “difficult” job of a “top to bottom” review of the entire system. Gov. Nikki Haley made reforming the retirement system a major plank in her political agenda and has called for an overhaul.

Currently, the state’s retirement system is worth about $27 billion and gaining.  But over the past few years, thanks to the national and international recessions, the value of its retirement fund has been on a scary rollercoaster ride.

Three years ago this month, the fund dropped $2 billion in a single day, as first reported in Statehouse Report The fund would crumble from a high of $27 billion valuation, to hit $19 billion that year.

In the intervening three years with the stock market critically wounded and rebounding slowly, the retirement fund, according to its lead manager, has recovered the loss and is once again worth $27 billion.

The issues

There are three major areas of disagreement, most of which date back to when then-Gov. Mark Sanford tilted at the system, especially upset about the funds expected rate of return.

The first issue is whether the fund should be expected to return 8 percent on investment. The state had until recent years held its expected return at 7.5 percent. But following leads by other states, South Carolina jumped its expectation to 8 percent right before the market crashed.

That half-percent, spread out over 30 years, could make an enormous difference  and could reduce the so-called underfunding to relative pennies. In other words, if the state chooses the more liberal 8 percent projected rate of return, the extra half percent likely would cut the so-called underfunding of the fund significantly -- perhaps from billions to millions.

The second issue is how long an employee should have to work before being fully vested in the retirement system. That number was dropped years ago to 28 years from 30 years. Like the half-percent, this subtle shift in actuarial assumptions can have a butterfly effect down the road.

And the third major point of discussion has been, like it was in the Sanford years, whether the retirement system should continue to be a “defined benefits” plan, where enrollees would get a definite pension, or if it should be a “defined contributions” plan, where the amount received could largely depend on the job the enrollee did investing their own retirement funds.

The differences

Sen. Phil Leventis (D-Sumter), a member of the subcommittee, said this week that lawmakers couldn’t ignore the state’s pension issues “because people are living longer and entering the system and receiving benefits earlier than ever before.”

But Leventis harshly criticized the Republican position, saying that the only people who would benefit from major changes to the retirement system would be “rich investment fund managers.” Why? Because they’d potentially make large increased fees and commissions.

None of the three Republican subcommittee members responded for comment for this story, despite several days of phone calls, emails and texting.

Leventis said 70 percent of the benefits doled out in retirement checks come from the interest accrued on the amounts paid in by employees and employers over the years. He said he worried that a defined contributions plan could create big winners and losers among state workers based on their degrees of economic and investing savvy.

Leventis also accused the Haley administration this week of “shopping” for a new actuarial firm to assess the risks and long-term health of the fund. He further claimed the new actuarial firm picked by the governor used the cataclysmic years of 2008-’09 to make its retirement benefit projections, but failed to include better returns realized since then.

“So far, this year in 2011, we are seeing an 18.1-percent return on investment, but that’s not being figured in,” said Leventis. “It’s not just disingenuous. It’s almost unethical.”

Haley does not agree with the senator’s assessment.

"Senator Leventis is wrong,” said Haley spokesman Rob Godfrey told Statehouse Report today in an email reply. “Governor Haley has made it very clear -- by pushing for a new director and actuary -- that she is taking the retirement situation very seriously, and we encourage all legislators to do the same.

 “In terms of time served until vested, our team is still crunching numbers and will work with legislative leaders going forward to make sure we never end up in this position again."

Crystal ball: Earlier this year, we gazed into our crystal ball and said that retirement and state health care would come into the political crosshairs, borrowing from the national attack on “entitlements.” And they have. There’s one area of common ground in the debate: those currently enrolled in the system will have their benefits protected. But going forward may be a different situation, with increased contributions expected from the state and future enrollees. Will that change come next year? Well, 2012 is an election year, and the state’s retirement system directly affects nearly 500,000 South Carolinians, according to Leventis. And that’s a lot of voters.

Bill Davis is editor of Statehouse Report.  He can be reached at:  bill@statehousereport.com.

RECENT NEWS
Legislative Agenda

Meetings on the table

Retirement. Senate subcommittee hearings are being held across the state with a Wednesday hearing at 5 p.m. at the Aiken Tech amphitheater room 701. At 5 p.m. Oct. 26, a subcommittee hearing will be held in the first floor conference center of the Southeastern Institute of Manufacturing and Technology at Florence Darlington Technical College.

eGov. The eGovernment Oversight Committee will meet Tuesday from 2 p.m. to 4 p.m. at the state’s Data Center, 4430 Broad River Road, Columbia. More.

DDSN. The state Department of Disabilities and Special Needs will meet Thursday at 10 a.m. in room 251 of the agency’s main office, 3440 Harden St. Ext., in Columbia, with videoconferencing available throughout the state. A finance and audit committee will meet upon adjournment.

BEA. The next quarterly meeting of the state’s Board of Economic Advisors will be Oct. 26 at 11:30 a.m. in room 335 of the Rembert Dennis Building, Columbia.

Radar Screen

D.O.T. done?

Just when the state’s Department of Transportation got off the front pages for falling tens of millions of dollars behind in payments on contracts, it announced this week that it will once again be as much as $8 million behind in payments through the end of the year. The agency had already said that another spate of late payments could hit again at the end of next summer, when there’s a spike in work done. Apparently, their calendars are as off as their bank accounts.

Palmetto Politics

Treasurer's "lofty" debt

Looks like the state DOT isn't the only office in Columbia running on borrowed money. According to campaign finance disclosure forms, state Treasurer Curtis Loftis is carrying a big campaign debt. It was reported this week that Loftis' campaign relied on borrowing to win and was currently in the hole nearly $650,000.

Loftis may have a hard time making up that amount. As one of the most ardent and aggressive critics of Gov. Nikki Haley, there could fewer donors in the state, or outside the state, willing to support both sides of their ideological spat.

New Web site for Commerce

The state Department of Commerce this week unveiled its newly-remade Web site, which introduces the state to prospective businesses from around the world. There are a couple neat twists to the new site, including information on the agency’s offices in Munich and Shanghai, and a map locator for new building sites, and available manufacturing and office spaces throughout the state.
Commentary

New report highlights South’s Civil War hangover

By Andy Brack, editor and publisher

OCT. 14, 2011 -- The American South has changed a lot in the 40 years since integration. Not only are educational systems better throughout the South, but the economy is more diverse. Millions of more people live here, bringing with them their talents, resources and drive. In fact, many of the larger communities and suburbs here look a lot like most of the rest of America -- with a little Southern charm thrown in on the side.

But a new report with 36 statistical indicators compiled the Center for a Better South highlights how the South continues to suffer big gaps compared to the nation’s other states. Although today’s South is a diverse economic engine, it still has educational, environmental, poverty, health and other challenges brought on, in large part, by a long period of neglect following the Civil War.

Think about it this way. Hold your left hand, palm-side up, at waist level. Then hold your right hand, palm-side up, at chest level. Now, slowly raise both hands at the same speed. Soon, the left hand will get to same level as the right hand, but the right hand will be next to your head.

The example highlights how other states improved as South Carolina and Dixie was doing so too. Just as Southerners worked hard to get on par with the rest of America by investing to get better schools, roads, medical care and more, other states also invested.  As a result, Southerners generally still remain on lists in the spots where they don’t want to be -- at the bottom.  

In other words, we’re still playing catch-up. Some 150 years after the shots fired onto Fort Sumter in Charleston, the states of the American South still have a statistical hangover -- a Civil War hangover -- compared to the rest of the country. Let’s look in just a few areas:

  • Household income. Ten of the nation’s 13 states with the lowest annual median household income are in the South, ranging from the lowest (Mississippi, $37,985) to South Carolina (8th lowest, $41,709) to the 13th lowest (Florida, $44,243). Only Virginia (6th highest, $60,363) is above the national average ($49,445).
  • Growing up. The 2011 KidsCount survey, which amalgamates a bunch of data about children into an index of livability for kids, says seven of the 10 worst places for kids to grow up in are in the South. While many children of the South often fondly recall their early years, the annual survey indicates Southern children often mature without the advantages of kids in other states.
  • Health. Southern states are the most unhealthy in America. South Carolina is among seven Southern states with the nation’s 10 worst rates of diabetes, obesity, hypertension and infant mortality.

Fortunately, the 47 pages of data about Southern states in the 2011 Briefing Book on the South are not all doom and gloom. The report offers some good news. Pick through the data and you’ll see how South Carolina and sister states have relatively low tax burdens, a good business environment, an outstanding teacher climate and a high percentage of high school graduates who go to college.

Legislators should review the report so they can think about how to redouble efforts to leapfrog our region away from our unique Civil War hangover through creative policy efforts to improve education and health care while reducing poverty and unemployment. As the Athens Banner-Herald noted in an editorial when considering the book’s information about Georgia:

“Certainly, the aggregate statistics noted in the report don’t reflect the clear fact that some parts of the state lie well outside the dismal overall percentages. Still, the fact that the statistics show Georgia to be among the nation’s dumber, sicker and poorer states is a clear signal that there’s plenty of room for improvement. ...  Take a look [at the report], and weep softly.”

The American South is one of the world’s greatest places to live. But if our leaders don’t face or understand what is ailing our region, they won’t be able to come up with prescriptions to make us better. And after 150 years, it’s about time to really knuckle down.

Andy Brack is publisher of Statehouse Report and president of the Center for a Better South.  He can be reached at: brack@statehousereport.com

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Feedback

Blow off some steam

Want to vent a little?   Send us a letter.  Letters are published weekly. We reserve the right to edit for length and clarity. We generally publish all comments about South Carolina politics or policy issues, unless they are libelous or unnecessarily inflammatory. One submission is allowed per month. Submission of a comment grants permission to us to reprint. Comments are limited to 250 words or less.
Scorecard

Down on DOT, Ard, Haley, Spurrier

Foreclosures. State foreclosure rates dropped 18 percent in the third quarter. More.

Charleston. The Holy City was awarded the Conde Nast Traveler Readers’ Choice for best city to visit.  More. What’s more, it had the highest “brain gain” of metro areas in the country. And some more.

DOT. A bad fiscal year is getting worse for the state Department of Transportation, which confirmed earlier this week it was going to be as much as $8 million behind on contract payments through the end of the year. This announcement came after a tumultuous summer when the cash-strapped agency was forced to get tens of millions of dollars in advances for completed work from the federal government to pay some of its outstanding bills. More.

Ard. Lt. Gov. Ken Ard, fresh on the heels of paying the second largest ethics fine in state history, missed the first deadline this week to file his campaign finance report. He’s got a few more days before he’s delinquent, but, Ken, c’mon, man! More.

Haley. Give the governor a seat on your plane and maybe she’ll give you a seat on a state board? More.

Spurrier. The Ol’ Ball Coach, one of the state’s highest paid employees, this week kicked a troubled quarterback off the team for the fifth (and final?) time, refused to do a USC football press conference with a columnist from The State present due to a column from six months prior. Spurrier’s end run was so transparent he should have been coaching for Georgia Tech. More.

Stegelin

The job


Also from Stegelin: 10/7 | 9/30 | 9/23 | 9/16 |
See Stegelin talk about cartooning at Pecha Kucha 11 in Charleston

credits

Statehouse Report

Editor and Publisher: Andy Brack
Senior Editor: Bill Davis
Contributing Photographer: Michael Kaynard

Phone: 843.670.3996

© 2002 - 2014 , Statehouse Report LLC. Statehouse Report is published every Friday by Statehouse Report LLC, PO Box 22261, Charleston, SC 29413.
Excerpts from The South Carolina Encyclopedia are published with permission and copyrighted 2006 by the Humanities Council SC. Excerpts were edited by Walter Edgar and published by the University of South Carolina Press. Statehouse Report has partnered with USC Press to provide readers with this interesting weekly historical excerpt about the state. Republication is not allowed. For additional information about Statehouse Report, including information on underwriting, go to http://www.statehousereport.com/.