South Carolina is facing a financial controversy after a $1.8 billion accounting error was uncovered in the state’s financial records.

This issue has sparked intense debates among lawmakers, with some calling for State Treasurer Curtis Loftis to resign. However, Loftis has defended himself, claiming the issue is not his responsibility and that he is being unfairly targeted.

The $1.8 Billion Mistake: What Went Wrong?

The accounting error dates back to 2016 when South Carolina transitioned to a new financial reporting system. During this process, funds were misallocated, creating an illusion of extra money that did not actually exist.

An independent forensic audit by AlixPartners, a firm hired to investigate the matter, confirmed that the mistake was not due to missing or stolen funds but rather an accounting misclassification. However, what has raised concerns is that state officials knew about this error for years but failed to report it.

The issue only came to light after Brian Gaines, who replaced former Comptroller General Richard Eckstrom, alerted lawmakers. Eckstrom resigned in 2023 after another accounting scandal in which he incorrectly reported $3.5 billion in cash balances.

Curtis Loftis’ Response to the Controversy

State Treasurer Curtis Loftis has denied any wrongdoing, arguing that his office is responsible for managing and investing state funds—not handling accounting.

“The state’s money was never lost or stolen. This was purely an accounting error,” Loftis said. “The Treasurer’s Office followed the law, and our investments have been strong.”

Loftis further stated that if he believed resigning would fix the problem, he would step down. However, he insists that his departure would not address the deeper financial mismanagement within the state government.

Lawmakers Divided: Calls for Resignation and Impeachment

Despite Loftis’ defense, some lawmakers are demanding his resignation. The South Carolina Senate Finance Committee and other legislators argue that Loftis should have been more transparent about the error.

State Rep. Heather Bauer (D-Richland) has filed articles of impeachment against Loftis, stating that his failure to report the issue earlier amounts to willful neglect of duty. However, no House Republicans have signed onto the resolution, making impeachment unlikely.

House Republicans, who hold a supermajority, say they are still reviewing the situation before making any decisions. Some members, like State Rep. Chris Murphy (R-Dorchester), expressed frustration with Loftis’ testimony, stating that he avoided answering simple yes-or-no questions.

The Impact on South Carolina’s Financial Reputation

The $1.8 billion error has put South Carolina’s financial management under the spotlight. The Securities and Exchange Commission (SEC) has launched an investigation into the state’s finances, raising concerns about South Carolina’s credit rating.

In response, the state legislature has proposed hiring an independent compliance officer to ensure greater oversight and transparency in financial operations. This officer would monitor the offices of the Treasurer, Comptroller, and State Auditor, making sure that reforms are implemented.

State Sen. Larry Grooms (R-Berkeley), who has led investigations into the state’s financial books, stated that “accountability measures must be put in place to prevent future errors of this scale.”

What Happens Next?

With all of South Carolina’s constitutional offices up for election in 2026, this controversy could play a significant role in the political landscape. Loftis has vowed to finish his fourth term despite pressure to step down.

Meanwhile, lawmakers continue to evaluate the recommendations from AlixPartners to ensure the state’s financial records are accurate moving forward.

The focus now is on restoring public confidence and making sure such errors do not happen again. However, the debate over who should take responsibility is far from over.