An “Enterprise Division” for Clemson?



Last week, we posted a brief analysis of S.535, legislation that would create a murky new government entity called an “Enterprise Division” at Clemson University. The bill, in short, is a grossly misguided attempt to give vast powers to a government body in the absence of any real accountability or oversight whatsoever.

Property rights?

Just two years ago, recall, the legislature came close to creating an entity with dangerous powers of property confiscation – the I-95 Corridor Authority, the purpose of which was to encourage job creation in counties along that interstate. That bill would have allowed the authority – quoting the bill’s frightening language – to “acquire by purchase, donation, exchange, or otherwise, hold, improve, mortgage, pledge, or otherwise, encumber, manage, lease, convey, transfer, or dispose of any real or personal property, whether tangible or intangible, together with rights and privileges as may be incidental and appurtenant thereto.”

The proposed Enterprise Division’s authority would go even further. It would be authorized to “purchase, lease as lessee, accept, and otherwise acquire any real and personal property and other assets upon such terms and conditions as it considers appropriate” – without so much as having to run those moves by the Budget and Control Board as required by state law.

Further, the Enterprise Division would be exempted from a state law requiring approval by the Commission on Higher Education for property acquisition when the property in question isn’t contiguous to the institution. In effect, Clemson University could purchase any property in the state for any reason at all, and no one would approve or be held accountable for the decision.

No Governance, No Accountability

Currently, the Budget and Control Board (BCB) has control over procurement decisions. It’s very far from an ideal structure: the board is made up of five ex officio members and none of its decisions, therefore, can be attributed to any one member – meaning the BCB is accountable for nothing it does.

In any case, there are exceptions built into the law. For instance, higher education institutions may use funds obtained from athletics, bookstores, and student organizations however they see fit. That’s hardly an ideal arrangement, either (these public institutions can simply raise prices at athletic events in order to purchase things the BCB might object to), but there is at least some reason behind it, however flawed. Clemson’s Enterprise Division, however, wouldn’t be subject to the state procurement code at all.

True, the Medical University of South Carolina is exempt from the procurement code (on the condition that it maintains its own procurement code largely similar to the state’s). But however improper that exemption may be, there is a substantial difference between procurement autonomy in an institution as prominent as MUSC – the school does receive some level of public and media scrutiny – and the same kind of autonomy in a nebulous “Enterprise Division” that the public, media, and lawmakers themselves will know little or nothing about.

Not only, then, would this new agency be empowered to buy any property it deems desirable; it would be empowered to buy whatever it deems desirable, period.

One of its kind in S.C.

The only quasi-government body to which this Enterprise Division would report is the school’s Board of Trustees – a board, like those of the other state research universities, that exercises practically no real oversight. There’s something more, though: the Board of Trustees wouldn’t have to report to the Budget and Control Board on the Enterprise Division’s endeavors at all.

The programs that constitute the university economic development boondoggle known as Innovista face a degree of oversight that will be unknown to the Enterprise Division. The South Carolina Research Centers of Economic Excellence program, which attempts to create endowed professorships at South Carolina research universities and is funded by the education lottery, is governed by the Research Centers of Excellence Review Board, a board that awards grants from the available funding. This board is not comprised of current administrators of any of the research universities – let alone administrators of only one university; members are appointed by the governor and House and Senate leaders.

This structure is grossly inadequate and provides minimal accountability. Yet it’s strict oversight compared to what S.535 envisions for Clemson’s Enterprise Division.

Even the notoriously shadowy South Carolina Research Authority (SCRA) – the Innovista body with least oversight – has some level of oversight. Its stated reason for being (see the code here) is to promote the research and development sector, and for that purpose is given power to construct, operate, and maintain research parks and issue bonds. SCRA is governed by an executive board consisting of the presidents of all three research universities, the chairman of its Board of Trustees, and appointees from the governor, the chairman of the House Ways and Means Committee, and the chairman of the Senate Finance Committee.

Like the Centers of Economic Excellence, SCRA usurps rightful bonding and spending power from the legislature. Yet not even these entities are totally independent from government oversight – they aren’t given sole discretion in matters of bonding, procurement, and property acquisition.

But it may be, ten or fifteen or twenty years from now, if S.535 is allowed to set precedent. That’s the danger.

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