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A Review of the South Carolina Special Schools Program
February 2000

REPORT (PDF)     SUMMARY (PDF)

Members of the General Assembly requested that we audit the Special Schools program. Special Schools, a program of the State Board for Technical and Comprehensive Education (SBTCE), provides training for employees of new and expanding businesses. The training is 100% state funded; the main obligation of the business is that new jobs be created and the project meet certain Special Schools standards. We reviewed the Special Schools program in order to determine its compliance with state laws and regulations; how training is approved and monitored; whether appropriate safeguards are in place to ensure that tax dollars are prudently spent; and whether the outcomes of the program are evaluated. Another issue of importance to the audit request was how state funds were expended for training for the BMW Manufacturing Corporation.

Our findings include:

  • Applicable statutes and policies set only broad limitations on Specials Schools and allow Special Schools officials considerable latitude in deciding how state-funded training will be provided to businesses. A unique appropriations act proviso gives Special Schools additional funding when needed. Although statutory requirements are few, they appear to be sufficient to ensure that legislative intent is carried out; however, this makes the need for internal controls more critical.
  • The Department of Commerce routinely plays only a limited role in negotiating the level of training to be provided to a new or expanding business. However, the Department of Commerce was involved in determining the amount of funds committed for training to be provided to BMW.
  • Special Schools provides the same kinds of basic and specialized training to many companies. Training in "soft skills" such as communications and teamwork is also provided by Special Schools. According to a 1998 survey of the state's businesses and industries, this kind of training is in demand by South Carolina employers.
  • Special Schools has not developed specific goals for measuring its performance, and there is no assessment of the impact of its training programs on the economic development of the state. For example, Special Schools does not track program costs on a project or individual trainee basis. However, Special Schools does collect data that could be used for evaluation purposes.
  • While Special Schools complies with applicable laws and regulations, we found several areas where it could improve internal controls over the use of training resources. For example, commitment letters are not always issued to companies which receive training, and the final placement rate for trainees is not completely documented. Special Schools records available at the time showed that for 43 projects sampled, 72% of 1,129 trainees were hired. Special Schools also does not maintain documentation in order to determine if companies meet standards, such as paying competitive wages, to qualify for state-funded training.
  • At a cost of $12,120 per production associate, training for BMW Manufacturing Corporation was the most expensive ever conducted by Special Schools. However, according to the Department of Commerce, BMW has had a significant economic impact on the state. A cost-benefit analysis conducted by the S.C. Economic Coordinating Council found that the benefits generated by BMW outweigh the county and state costs by a ratio of 25 to 1.
  • There are several factors which contributed to BMW's training cost, including the large number of applications for jobs, extensive travel between Germany and South Carolina, special training for management and supervisory staff, and the need for two buildings plus equipment. While Special Schools staff tried to control costs, they lacked clear guidelines for limiting the state's training commitment, which made it difficult to establish cost controls.