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South Carolina State House

South Carolina State House

The battle between S.C. Ways and Means Chairman Danny Cooper (RINO-Anderson) and state Budget and Control Board (B&CB) executive director Eleanor Kitzman is raging on …

According to emails obtained by FITS, the acrimonious sniping between the two prominent Palmetto politicos intensified shortly after we published our explosive report Monday afternoon regarding a caustic letter sent by Cooper to Kitzman.

At issue was a decision by Kitzman and S.C. Gov. Nikki Haley to fire Peggy Boykin – executive director of the state retirement system. Shortly after State Treasurer Curtis Loftis weighed in on the controversy in support of Cooper’s position, Kitzman wrote an email to all five B&CB members offering a “pseudo-apology” for her conduct.

“I think we all realize that there are serious problems with the Retirement System that need to be dealt with as expeditiously as possible and without any unnecessary distractions in order to prevent further deterioration at the expense of taxpayers,” Kitzman wrote. “I apologize for any miscommunication with respect to my handling of the situation.”

This “pseudo-apology” failed to cool Cooper’s anger. In fact, it prompted him to reiterate his contention that Kitzman misled him prior to receiving his endorsement for the $174,000-a-year job.

“It goes bank (sic) to our conversation before I agreed to support you for this position on your attitude about senior staff at BCB,” Cooper wrote. “Since that time you have methodically removed division directors. Only one of which is the retirement system director and The Governor mentioned that change to me not you, but then again I’m just a middle aged white man so I don’t understand how the world works.”

That last reference is to a controversial letter to the editor submitted by Kitzman to The (Columbia, S.C.) State newspaper last week. In the letter, Kitzman derided a critic of the governor as “another middle-aged white man explaining how the real world works to an ethnic woman.”

“You’ve been very busy trying to restructure before we pass legislation Ms Kitzman,” Cooper continued in his email. “Don’t try to patronize me with some political sound bite either.”

Sources tell FITS that the sniping continued past this email exchange, but we were not provided with these subsequent exchanges.

Incidentally, far from dealing with the state’s retirement problem “as expeditiously as possible,” Haley on Tuesday helped block an effort to recognize an actuarial report that highlights the immediate danger facing the program.

South Carolina’s unfunded pension liability currently totals $13 billion – a truly frightening number. This liability could impose a cost of up to $100 million on S.C. taxpayers in the coming fiscal year unless action is taken to reform the system.

As we’ve stated previously, we support Haley in her efforts to reform the pension system. Of course she needs to endorse specific solutions and then direct her appointees to implement that policy. Simply shuffling people into new positions is pointless – particularly when these so-called “new eyes” require several months to become acclimated.

What reforms should Haley endorse?

First, the state must move from a costly, open-ended “defined benefit” system to a defined contribution system.

Under a defined benefit plan, an employee receives a set monthly amount upon retirement – which is guaranteed for their life or the joint lives of the member and his or her spouse. Under a defined contribution plan, an employer promises certain contributions to a participant’s account during employment, but with no guaranteed retirement benefit. The eventual benefit amount is based exclusively upon the contributions to, and investment earnings of the plan – and the benefit ceases when the account balance is depleted, regardless of the retiree’s age or circumstances.

Second, South Carolina must return to a 30-year requirement for new employers – not the current 28-year rule.

Third, our state’s costly Teacher and Employee Retention Incentive (TERI) program – which permits “retired” state employees to double dip in new positions while drawing pensions from their old positions – must be closed to new participants.

Absent these three critical reforms, our state’s pension fund will remain a drain on taxpayers – rendering all this sniping amongst politicians and bureaucrats pretty meaningless.