So much for Earmark Reform…

Are you kidding me? A colleague sent me this from the The Post and Courier. This really makes me wonder about the vetoes we are taking up tomorrow.

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 Reports online), I thought we had stopped all this.

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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 universities 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 direct 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 newspaper’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 looks 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 how 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 through 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 through 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, which 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 program, 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. State 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 the 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 role 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.

Matthews 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 community 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 focus 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.

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 salaries.

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 poverty.

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, executive 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 request 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 Hydrogen 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, especially 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 legislators 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 to 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 connection 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 Humane 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 worked.”

–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. Skardon 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 communities 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.