- Associated Press - Monday, June 23, 2014

COLUMBIA, S.C. (AP) - The director who took charge of South Carolina’s Department of Revenue following a massive hacking is retiring, and this time he says it’s for real.

Bill Blume, 66, told The Associated Press on Monday he leaves the agency significantly more secure than he found it. His resignation, submitted Friday, takes effect July 18.

Gov. Nikki Haley’s office confirmed she will nominate Blume’s chief of staff, Rick Reames, to replace him.

“During a very trying time, his strong leadership and professional experience set the department in a new direction,” Haley said, adding that the reforms he implemented made the state stronger.

Blume has led the Cabinet agency since January 2013. He replaced Jim Etter, who left amid investigations into the nation’s largest hacking of a state agency. Haley stood by Etter for weeks, saying no one was to blame and nothing could have been done differently to prevent the fall 2012 hacking. But she later announced his resignation and acknowledged state officials could have done a better job.

Blume faulted the agency’s organizational structure, as well as decisions made a decade earlier that the agency should develop its own operating system, rather than buy one with built-in security.

What the agency needed was a cultural shift, he said.

Last year, Blume told a Senate panel investigating the theft of millions of taxpayers’ personal data that securing confidential information had become a nonnegotiable requirement - a cost of doing business rather than a discretionary budget item. He also changed the chain of command, so that the top information-security officer reported directly to him.

The agency’s former IT security officer had testified that his recommendations, which could have prevented the theft, were dismissed as unnecessary and never reached senior management.

“We’ve baked in security in the way the culture of the organization works,” Blume said Monday. “We’ve got managers and deputies who believe in what we’re doing. … This is not your grandmother’s DOR.” He said the changes include required employee training.

About a dozen employees who didn’t adhere to the changes were laid off, and another 50 left on their own, for whatever reason, he said.

When he took over, Blume said, the agency’s operating system - which had been under development since 2002 - was still not complete. He scrapped the program, which he said would have cost $100 million more to finish.

The agency is in the process of buying a customized tax operating system at a much lower cost, but that will take several years to fully implement, he said, and he never intended to stay that long.

Reames came aboard after Blume told Haley in January he wanted to retire over the summer and needed to find someone who could carry on the work, Blume said. Reames had been a tax attorney at Nexsen Pruet since 2000 and a partner since 2007. He was chairman of the South Carolina Bar Association’s tax section.

“It is time after 3 ½ years to return home to Charleston and begin my real retirement,” Blume wrote in his resignation letter.

Blume, formerly a senior tax partner at Ernst & Young, came out of retirement in 2011 to lead the South Carolina Retirement Systems. After lawmakers reformed the pension system in 2012, they appointed Blume as the first director of the Public Employee Benefits Authority. That new, larger agency added the responsibility of managing public employees’ health care plans.

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