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A Review of the Budget and Control Board's Energy Operations and the Board's Hiring Practices
May 2002

FOLLOW-UP (PDF)     REPORT (PDF)     SUMMARY (PDF)

Members of the General Assembly requested that the Legislative Audit Council review the operations of the South Carolina Budget and Control Board’s (B&CB) energy office. The requesters were specifically concerned about the administration of energy grants and loans by the South Carolina Energy Office (SCEO). Our review found areas where administration of loans and grants could be improved.

The requesters were also concerned about the hiring of Budget and Control Board employees with high salaries, specifically those with salaries of $50,000 or more. We did not identify significant problems with the board’s hiring practices.

B&CB Energy Issues

  • SCEO officials should not have approved two loans to a private industry because the loans did not meet office guidelines. The first loan was to be repaid upon deposit of funds from a second energy loan. Agency guidelines did not allow for such an arrangement. The second loan was also used to pay off an existing debt to a bank. SCEO guidelines prohibited the use of loan funds for expenses incurred before the energy loan was approved.
  • From FY 98-99 to FY 00-01, the SCEO administered two loan programs, EnerFund and ConserFund. The EnerFund program provided low-interest loans to private, commercial, and industrial businesses for the implementation of energy conservation and efficiency measures. For approximately three years (September 1997 to August 2000), the SCEO did not approve any EnerFund loans. The SCEO required a "letter of credit" from a potential borrower in which a financial institution would guarantee repayment of the loan if the borrower did not repay the loan. This letter was difficult to obtain. In addition, the SCEO did not adequately market the EnerFund loan program to potential borrowers.
  • The SCEO has not included important details about the loan program in its written procedures. The ConserFund program provides loans for energy efficiency projects to the public sector and to non-profit agencies. The loan procedures do not specify the maximum yearly allocation for ConserFund loans.
  • The SCEO has not developed selection criteria or marketed grants funded with Petroleum Violation Escrow (PVE) funds (monies awarded to the states as a result of alleged oil pricing violations from 1973 to 1981). Applicants who asked about the availability of funds have been awarded grants, but information about these grants has not been disseminated to the general public. When grants are not marketed and awarded based on specific criteria, fewer eligible entities may benefit, and the selection process may not be equitable.
  • A part of SCEO’s mission is to increase energy efficiency and to reduce energy costs. We concluded that SCEO has not followed up with grant recipients to ensure that this goal is met. In addition, in FY 00-01, the office did not meet one of four objectives that were established by SCEO staff. These objectives were related to the administration of grants and loans.
  • We attempted to assess the efficiency of the South Carolina Energy Office compared to entities in other states and territories in the Atlanta region of the U.S. Department of Energy. We concluded that operations in these entities differ significantly and are not comparable.


B&CB Personnel Issues

  • As of September 2001, the B&CB employed 1,259 persons. The majority of persons earning annual salaries of $50,000 or more were white males; however, there was a slight increase in the percentage of minorities hired from FY 98-99 to FY 00-01, as compared to the overall number. Also, the median salary of all males earning $50,000 or more hired during that time was approximately $3,000 higher than the salaries for females earning over $50,000.
  • While we did not find material problems with salary justifications for B&CB employees, the board has hired two classified employees without advertising these positions.
  • We were asked to determine if responsibilities and salaries for B&CB positions are comparable to similar positions in other state agencies. We reviewed 201 positions with annual salaries of $50,000 or more at the B&CB and three other state agencies of similar size — the State Department of Education (SDE), Vocational Rehabilitation (VR), and the Employment Security Commission (ESC). We concluded that B&CB positions do not substantially differ in minimum training and experience required, major responsibilities, or average salary from those at the other state agencies.
  • We sampled the personnel files of 59 persons hired by the B&CB from FY 98-99 to FY 00-01. These persons substantially met the minimum training and experience requirements for their positions.
  • From FY 98-99 to FY 00-01, the B&CB created only two new jobs with annual salaries of $50,000 or more. We found nothing improper with the creation of these positions.