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- For many of us surrounding Easter weekend activities usually mean heading to the summer months.

I'm Chris William, and welcome again to the most widely watched and longest running program on Carolina business policy and public affairs.

What will happen with tourism this year?

Will it bounce back?

And what about summer school?

Will we see widespread summer school sessions?

We start our dialogue now.

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On this edition of Carolina Business Review, Cecilia Holden from My Future NC, Swati Patel from the South Carolina Chamber and special guest Curtis LoftIs, South Carolina treasurer.

- Welcome again to our program Cecilia, Swati good to see you both.

Cecilia you get, you get the first pitch, whether it's fair or not, and, and welcome, you'll look healthy but let's start with this idea of a talent gap.

We talked 12 months pre COVID, a lot of businesses, a lot of administrators, a lot of public policy said we don't have the people to fill the jobs.

And now that seems exacerbated.

Is that, is that a fair representation that it's even harder?

- That is correct.

We have seen significant impact on our education systems and our workforce during the pandemic.

And I think it's changed what the workforce is gonna look like when we come out of this pandemic.

So absolutely.

- Swati, same question.

- Without question, yes, we have had companies actually here come to us saying we've got 80 positions to fill.

We need the, fill them in the next two weeks.

Can you help us do that?

And so we do have a lot of situations where businesses are actually saying we have a workforce shortage and, and again that's in certain industries, it's certainly not what spread, but it is something we hear a good bit about just like we did pre pandemic.

- Cecilia I wanna come back to you and specifically as your day job in, in My Future NC, when when you use that point of the talent gap getting wider as leverage, when you talk to those who make public policy or just in public statements and, and and does it give the wind at your back or, or is it more and I'm not gonna say this, right, but is it more about the immediate need now trying to fill a gap or can you go back to policy and say, see this is why we need this.

- Absolutely.

So the work of My Future NC is not unlike what's going on across the nation.

And there's a, there's a talent crisis across the nation.

North Carolina took action around this.

So in 2017, there was a commission that was stood up and it was specifically to focus on the talent crisis of North Carolina.

I know that South Carolina has a similar initiative underway.

I think they've got an educational attainment goal of 60% having some sort of high quality credential or post-secondary degree, but North Carolina took action and we established a goal to have 2 million North Carolinians with a high quality credential or a post-secondary degree by the year 2030.

Policymakers took action and in June of 2019, it was one of the few things that was agreed upon in the general assembly and with the governor and with bipartisan support and a signature of the governor they codified this educational attainment goal into state law to ensure that North Carolina is economically competitive now and remain so moving forward.

- Swati, hit back to this idea of lost educational attainment.

Does that, does that make how Cecilia just described being held to a higher standard when it comes to credentialing kids if I can, coming out of education?

Does this lost education educational attainment year make it harder or does it shine a spotlight even more so?

- Well, first Cecilia is absolutely correct.

In terms of our goals needing to be higher that is something that our legislature has made a priority.

Unfortunately, we were not able to get our legislation passed in 2019, primarily because COVID hit and the legislation that we were working on was very comprehensive and included lots of different aspects of improving our educational system but one of them was especially important to the business communities, how can we increase the amount of credentials that we can give to students sooner rather than later so they can, if they choose go directly into the workforce?

Because again, we have this skills gap, we have this workforce shortage that is still present and what is an easy way for students to immediately get into the workforce.

And one of them, of course is credentialing getting our kids into technical colleges.

And so we are looking at a number of different initiatives this year to, to reach those goals.

But again, we're not able to do it in that comprehensive way that North Carolina was able to, but we are chipping away at it slowly.

- Cecilia, the idea in North Carolina, and this happened in South Carolina in Abbyville the state of South Carolina, when the Supreme court ruled that the state needed to provide basic and sound education in North Carolina, same issue.

Sound and basic education, was it constitutional, was it being constitutionally compelled?

will that not lose momentum?

Will that in fact be the case?

And do you feel like not just policy leaders and not just political leaders, but do you feel like the state in, in your state in North Carolina will come together to make that a reality?

- I do think that the pandemic has certainly elevated and shown a light on several of the things that are not necessarily equal across our state.

Our rural communities don't always have access to the same level of resources as our urban areas.

There's a talent pipeline crisis with our educator community, for example.

And so I know that there's a new state superintendent Katherine Truet, who is now in office and her priority is around early literacy and making sure every third grade student is able to read.

And I know that that's also a priority with the state board of education.

So I would say that, coming out of the pandemic there's going to be a need for even more significant focus around our K-12 Community which has certainly suffered a lot.

It's also opened up a lot of opportunities for how can we do things a little differently.

So I see it both as a, this is a disruptor, there is no doubt about it.

There were things that I worked on prior to my current role, I actually worked for the state board of education.

And one of our projects was around the homework gap for example, and that was making sure that every student had access to the internet when they got home, in addition to being in the school building.

So you can imagine things like that have certainly risen to become a even bigger priority coming out of this pandemic in order to be able to provide a sound basic education.

And what that looks like in each community is to make sure that every student has an opportunity to be successful and having a path to economic prosperity, whether that is a high quality credential or whether that is a two year or four year degree.

Whatever it looks like for each individual, it does go back to our K-12 system and a foundation and a basic sound education for every student.

- Let me springboard off of that.

You talked about Catherine Truet, the new superintendent of education in North Carolina.

Swati in South Carolina, Molly Spearman superintendent of education was very clear recently along with the governor to say that we want kids back in school.

And in fact, both governors, both superintendents of education are now behind this idea of in-person learning.

Do you, would you expect that to pick up momentum?

And would you expect that to exacerbate pretty dramatically between now and whatever a summer session would look like?

- Yes.

I'm happy to take that question first.

So you're absolutely right.

The governor and superintendent Spearman for actually several weeks now have strongly encouraged school districts to reopen full-time five days a week.

That is not yet happened in South Carolina and we've been slow to get there.

But what I will say is, as a next week our governor announced that vaccinations will now be available to teachers.

And so I think that will now prompt school districts to finally say, we're gonna open up.

In fact, I can tell you from personal experience my own kid's school district finally announced that by the end of this month there is a plan in place for them to fully reopen.

So I do think we're gonna see that happen over the next few weeks and hopefully get almost all of our school districts back to some normal operations.

- Cecilia, is North Carolina is just about there as Swati just described?

- What she just described is what I'm seeing in North Carolina as well.

I think it's also fair to say that we've had some districts who have been in person all along.

And so it's, it's varying levels.

It depends on in of course density and a lot of other factors that play in.

But I think that you're gonna see the momentum continue.

- Joining us now is somebody that sits at the top of the Palmetto State's financial structure, he knows a little bit about finance.

And a good thing he is the state treasurer for the South Carolina.

We welcome the honorable Curtis Loftus.

Mr treasurer, welcome to the program.

Nice to see you again, you look healthy.

- Well, thank you.

Nice to see you.

- So how is South Carolina doing after 12 months of what could be fairly financially brutal?

- Well, I think we're doing much better than we could be.

I'm happy to say that things could be a lot worse.

The South Carolina is a fiscally conservative state.

So we tend not to have those big swings a lot of States do.

And that's really depend on my nationwide calls with treasurers or the white house we get all the treasury on the phones, things like that.

And you hear some States for the treasures sound like they're just ready to climb under the bridge and other States are just moving right along.

And South Carolina has been fortunate, our tax collections are up a little bit.

This year our revenues are gonna be a bit better than we thought, we're gonna have about a billion dollars.

Additionally, in this year's revenue in the state's budget and then the overall big budget, but the other budgets and federal budget is gonna be up about $2.2 billion.

So we think we'll, we'll have a a significant budget that reach our goals.

And that is not including the $1.9 trillion COVID bill.

- Your honor, when, when you look at the overall state as you just described it, we talk about the financial health of it that's one thing when you drill down to the next level to municipalities and when you have cities and communities that were stretched financially before COVID and before the public health crisis, how do they fare, is the, is the number of and I hate to use the term insolvencies, but maybe illiquid communities that can't meet obligations has that number gone up?

Are there more of those?

Is that an alarming number to you?

- It is, our unemployment number is within about a point of where we were before COVID.

Unless you add in the hospitality leisure business and that's what was really hurting.

They about 15 16 points down in unemployment.

So that's a real problem for us.

You get around the cause, certain stages in different ways.

Hilton Head is almost fully recovered but then Charleston has not.

So it's, it's one of those, some of these things are inexplicable but it does affect on a regional basis.

We have, have a problem in this state anyway, with some of these very small towns, it really ought not be a town.

And there's been some talk about how to handle those.

My office is involved with some of those discussions but it's a hangup from the old days of longer ago.

- Okay.

All right.

Cecilia, question.

- Certainly, so I wanna focus on educational attainment and how that applies to the work that we're doing with My Future NC.

In North Carolina, our treasurer, Dale Falwell sits on the board of education, but I don't believe that that is necessarily true in South Carolina.

It, it pressure a lot.

And Loftis, what role do you see the treasurer playing in educational attainment overall?

I know that you've been heavily involved in like financial literacy.

Do you see the curriculum including things around the importance of higher levels of education, completing the FASFA which leads to Pell grants.

To share with me, what, what role do you see the treasurer play in educational attainment?

- Well, my statutory role is to write the checks and make sure this checks get out on time.

We discussed that South Carolina has an extremely complicated funding source.

Pew Charitable Trust says that we have the most complicated funding arrangement in the country.

So it's difficult and we manage that money.

We have accounts that start off with $500 million the first of the month.

And after 20 days, it goes down to a hundred million that back up to 500.

So it's difficult to invest, it's difficult to distribute the money properly.

So that itself is a bit of a problem but I don't have a statutory a role in education but I see the problems constantly and we work hard on it.

South Carolina has over $500 million a year spent on 501(C)3. they're not properly.

You're very engaged in that.

And I spent some time on your website and congratulations on the good work you do.

But most of those 501C3 aren't properly audited.

They are either programmatically or financial they're audited in such a way that the state knows it's getting its results.

And that we did several that we turned over to the inspector general and he's backed this up.

So we're trying, we wanna tighten all that up.

We said, you're going to get that money from the students even though it's not my statutory responsibility as treasurer we're following the checks out the door and we say, you've got to give us what you promise us.

You promise us a hundred teachers each year, we want a hundred teachers.

We don't want 40.

And so that's what place I found myself now that does not make me a lot of friends but it's important to do.

- Thank you.

- Hey, treasurer Loftis, it's good to see you again.

I wanted to focus on issues that obviously the business community really cares about pre COVID and currently.

One thing that we've been focused on here at the chamber is tax reform, lots of different flaws in our tax system we're actually competing with North Carolina constantly in that regard.

And so two areas in particular our income tax is marginally the highest in the Southeast at 7%.

And then in terms of our property tax system is it can be one of extreme we've got.

We've got our businesses paying significantly more than primary homeowners.

I just wanted to get your thoughts on what you see for the future in terms of tax reform in South Carolina.

- I think it's way overdue.

A couple of years ago I volunteered to take a lead role in that because you, you stay in office for a certain amount of time, you get a little longer than to, if you think, well, if I get thrown out of office for doing something that really matters, which is what happens.

This is why people don't want tax reforms.

And you think it was worth doing.

It's funny Swati cause I got a call yesterday because Roge has been out there.

The Republican attorney generals have been out in salt Lake city or someplace Sonoma someplace.

And I got an IRA call about our tax structure.

"Why is it that Tennessee, Florida and Texas are taking business from us?"

And it's the same conversation that you, you brought up.

We have got to reform our tax code and I hope the chamber which y'all have in the past exercise leadership, but I hope that stepped up and we can make some real progress.

- Another, another business slash economic question for the structural part of South Carolina is this idea of global trade.

Of course, Jim Newsome and Trent and the ports authority has done an excellent job building that up over the last decade or so those exports dropped fairly significantly not unsurprisingly, but it does, it does highlight the idea that South Carolina has been excellent in developing aerospace and automotive and the global trade.

But it also is the darker side of that in putting two stakes in the ground around those industries is not very, is not very diverse portfolio.

So treasurer Loftis, what would you do?

What would you suggest about expanding that portfolio of businesses?

- Well, the, the ports is a key access for us.

I think Jim Newson has caught in the general assembly because he's asking for a $550 million general obligation bond to increase the port's ability to handle the post Panama max ships and other containers that come in from round the world.

He wants to really make sure that we're fast.

We are a prime port for city of Charlotte.

So these things are important to the region, not just to South Carolina, but I know Bobby Hitt and the governor have worked on a theory that we need to have new business in every County.

Nikki Haley started that, and that's important because what it really says is, you're not gonna get a Boeing in a poor County, but you're going to get something that's more appropriate for the workforce.

And I think the last couple of years, I would be surprised if we didn't have some type of announcement in every County that was of importance.

So I do think we've made that, we've reached the same conclusion that you've, is we've got to diversify.

- Cecilia.

- You've got two fund buckets in South Carolina, we have in North Carolina, I'd love to pick your brain and hear from you how we might be innovative and using these funds and not at the risk of putting the state in any kind of financial jeopardy.

One of those is your a sheet fund.

And I know that your goal and our state treasurer's goal is to get the money back to the citizens that it belongs to.

There's also this unclaimed property.

Is there a innovative way that we might be able to use that to further individual citizens education without putting the state at risk?

And then also your lottery, what percentage is going to education in South Carolina and any ideas there on better use of those funds?

- Well, in South Carolina, we have, I'm pretty aggressive with our unclaimed property because we're not a wealthy state.

So, I thoroughly enjoy going to New York, Boston, LA and other places in and retrieving large sums of money.

We've done that and had a great success.

We have, we turn in South Carolina, except for our refund liability, we turned that money over to the state and they use it at present.

So we give them anywhere between 15 and $45 million a year.

So they'll take that and use that in the state's operations.

We do have a claim on that so we can always get it back.

I have suggested in the past that that money be used for certain education purposes but my suggestion did not go far.

(Loftis laughs) So we'd like to do that.

I think you have to ear mark certain funds like that because if you don't, they end up just in this big pot, there's $31 billion budget.

So what's $45 million?

It's a small amount of money that they look at.

But if you're talking about funding technical schools or certain counties that have technical schools that are under utilized, it's a tremendous opportunity.

What was the second fund, I forgot?

- You got the lottery, I don't know that, that falls under you but we'd love to hear from you what percentage you use towards education.

- We are very fortunate.

We use a lot of lottery funds.

We all have lottery funds go for educational scholarships or other aspects of education.

That's been ring-fenced pretty well.

It's about almost half a billion dollars a year now.

We asked for some detailed information and made several officers work a whole lot to prove that to others just recently.

And they have, it does include money for school buses and things like that.

Not just scholarships, but it is being spent on education.

So that's a, that's a pleasant surprise.

- Swati, question.

- Yeah.

So treasurer Loftis, I'm curious, you've mentioned this a little bit about the economic outlook and our revenues at the beginning, but can you drill down a little bit more?

We are anxiously awaiting what those revenues are gonna be looking like.

I know the board of economic advisors we'll be meeting soon here in South Carolina.

Everyone seems to be waiting to see what those tax collections will ultimately be in April so that we know really what we're working with in terms of a budget.

Can you drill down a little bit more into what you foresee in your crystal ball?

- Well, I, you've mentioned the two big things.

One of everything we do now is, are just missing the figures I used a few minutes ago I should've mentioned those were from the house budget.

I left out two important dollar amounts.

One is the $525 million legal settlement from the Savannah River Plant.

They haven't decided how they spend that.

And that's where those decisions is made on high and they'll roll it out and I'll know about it when everyone else does, but that's a lot of money.

And also this is a 1.2, the $2 billion that we'll receive from the COVID virus.

So one of the problems we have is not gonna be, that we don't have enough funds, it's just that we're, if we're able to calculate the amount of funds that will reoccur next year like lottery funds are up because people have had a lot of money has been spent out there these COVID jerks.

So people have to pick up an extra $5 at the pantry store and play the lottery.

So those, those numbers are up and sales tax numbers were up.

So far is about $440 million above the anticipated amount of income tax has been involved.

So that's up.

So again, you have to be careful, but all things considered, we're doing as well as we can be expected I think.

And a lot of that goes back to the same people I get mad with on a regular basis.

They're very conservative in, in their financial dealings.

And that's what we have here.

We have put the numbers they've been before that funds both of our reserve accounts.

One's at 2% of the budget and those at 3%, that's roughly 450 million for one and about 250 for the other.

Yeah.

That with the 500 million in COVID funds, they've set aside already plus the others.

I think we're prepared unless things really go off the cliff.

- We have less, literally less than a minute left after all this, I'm just gonna call it stimulus dollars or help from the federal government, when that is all spent and applied and deployed, will will there be a bit of a hangover?

- A lot of that will depend, of course, on two things.

One does retail and leisure, hospital and leisure take off?

If we're lucky that will be this summer when we move into our big season and that, that'll be a big thing for us.

But the other of course is what happens nationally.

- Yeah.

- And we leave that out of our state forecast but we always have to think about that.

And I'm, I'm less happy about the national forecast than I am about hours.

- That's gonna have to be the last word, your honor.

Thank you for joining us again.

- Thank you.

- Thank you for your steady hand on the tiller for South Carolina best of luck going forward.

Swati our congratulations and this is understating it, but being the gatekeeper at the South Carolina chamber all every time we turn around we always hear good things about your leadership but thank you for that and Cecilia as well at My Future NC, thank you all for joining us.

Be safe, be happy until next week.

I'm Chris Williams, good time.

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