Earmark Shock: Audit finds fraud and waste at the James E. Clyburn University Transportation Center (to nowhere)

Has South Carolina State University taken millions in federally earmarked money and used it to create a slush fund bearing a powerful congressman’s name? If you read between the lines of a shocking report released by the South Carolina legislature’s Legislative Audit Council, that appears to be exactly what is happening.

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The report concerns an entity called the James E. Clyburn University Transportation Center. Set up in 1998 with federal dollars earmarked for it by powerful Rep. James Clyburn (D-SC-6), the center was created ostensibly “to assist federal, state, and local governmental agencies in meeting their goals to develop a highly-skilled workforce to meet future needs in transportation.” But according to the LAC’s audit, in the thirteen years of its existence, the proposed multi-million dollar Center has become a corrupt money pit, and is nowhere near completion.

The LAC’s audit, released today, reads like a case study in government mismanagement gone wild. The LAC responded to a bipartisan call to audit the center after allegations arose that $50 million of its funding had gone missing. The LAC did not find evidence that those funds are missing, but did uncover questionable expenditures and practices, and also found evidence that the Center is far behind schedule on construction. The report turned up evidence of fraud, in the form of double billing, double employment, false expense receipts (pg. 30) and corrupt bidding processes. The audit details how full-time employees were able to double-dip grant money, and how one employee billed for a $426 dollar hotel room while another employee who attended the same conference stayed elsewhere for less than half the cost. The mismanagement touches all levels of the Center and reaches into the university’s board of trustees: On page 20 of the main report, the LAC specifically criticizes the trustees for “not taking an active role in overseeing the center and approving changes to the center’s plans.” This brings up an obvious question: If SCSU’s trustees are not overseeing the center, then who is? And on page 10, the audit notes that the university doesn’t even have a viable plan to raise the funds needed to complete the Clyburn Center at all. And completing the Clyburn Center will take a massive amount of funds, thanks in part to the university losing its Tier 1 status a few years ago due to its overall performance (pg. 25), and thanks to the many delays and excess costs that have held progress up.

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How bad is SCSU’s administrative management? According to page 27 of the LAC’s report, the university president admitted in 2009 that he was not even aware that the university had lost its Tier 1 status before 2006, a change that cost SCSU millions and directly impacted its potential to fund the Clyburn Center.

To date, just two of the Center’s proposed buildings have even been built. Those two, the Transit Research Center and Chiller Plant, and the Emily E. Clyburn Archives Center (bearing the name of Rep. Clyburn’s wife), are intended to form just a small part of the entire Clyburn University Transportation Center. Its palatial entrance, administration building, conference center, guest quarters and three large parking garages are all, at this point, just lines on a diagram (pg. 7). Yet the Clyburn Center has already cost more than $8 million. And all, after 13 years of development.

“This makes the Keystone Cops look like a well-run organization,” said LAC board member Mallory Factor. “It’s all to the detriment of those kids going to school. The university is taking money for education and it’s going to this Center.”

Factor’s allegation is backed up by the LAC report, which among other things found that SCSU is pulling money from its general education fund to pay for the Center despite its commitment to fund the project without using general fund money. The report also found that SCSU attempted to double count property it owned as an in-kind contribution (pg. 9).

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Sources also tell the Tatler that management of the Clyburn Center has been awful from the beginning. The university did not even know which properties it owned for the purpose of building the Center, and at one point bulldozed adjacent, but privately owned, property by mistake. The university only learned of its error when the owner, a farmer, approached the bulldozers at a run to tell the dozer operators that they were destroying his property.

Rep. Clyburn, the powerful Democrat whose earmarks of federal funds established and continue to fund the Center, issued a reaction to the LAC report today.

This report vindicates what I have been saying all along about the Transportation Center funding.  No federal funds are missing.  They are sitting safely at the National Highway Trust Fund waiting to be drawn down after approved expenditures are made by the university as mandated by this cost-reimbursement contract award.

While this project may have challenges, the biggest obstacle comes from those who sought to manufacture this controversy and delay the university’s efforts for their own agenda.  I continue to support this project and will do everything I can to see that it is completed.  This project began as an opportunity for South Carolina State to have a unique mission to help train a diverse workforce for our state and nation’s transportation needs well into the future.  That is still an important goal, and one I am pleased to support.

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SCSU Board Chairman Jonathan Pinson echoes Clyburn’s statement in a YouTube video, focusing on the allegation of missing money while deflecting attention from the university’s mismanagement of the Center that the audit found. It is tough to square Rep. Clyburn’s “vindication” with the facts outlined in the report: While the allegation of missing money was not confirmed, basic oversight of the project does appear to be missing in action at the Representative’s and the university’s level. As noted above, the trustees are specifically singled out for failing to oversee the Center. No one at any level is holding the university accountable for spending on the Center. The Center appears to have become a multi-million dollar blank check that the university (which has been dubbed a “high risk auditee”) has used to award contracts in what appears to be a rigged process. The LAC report states, on pages 16 and 17, that SCSU sets the bid requirements, and uses those requirements to determine that some bidders are “non-responsive” to the bid. In one case, the SCSU received 17 bids for construction of Phase 1B/1C (the chiller plant) and determined that the 15 lowest bidders were “non-responsive.” The 16th bidding firm was awarded the contract, despite the fact that its bid was a full $759,560 above the lowest bid. Futhermore, LAC auditors even question the validity of much of the information that the university has supplied in response to the audit. State Rep. Chip Limehouse is said to be introducing legislation that would make it a crime to supply false material to the LAC, in response to the university’s conduct in the Clyburn Center matter.

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The Legislative Audit Council, which has been part of South Carolina government for decades, posted both the full report and a summary on its web site. Now that its report is public, some expect calls from the legislature, including African-American legislators upset that the university has misspent a vast amount of money that should have been used to educate students at the historically black SCSU, to take aim at the Clyburn Center. But it is plain from the congressman’s statement that he intends to defend his Center and its funding, though it is now estimated to cost $100 million and will not be completed until 2020, at the earliest.

Update: A direct connection from Clyburn to the university.

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