Kathleen Hayes assured House budget-writers the agency will pursue recovering every penny possible of the missing money, which she called a betrayal to the entire state.
"If you're like me, you're as angry as you can be," said Ms. Hayes, who took the agency's helm in 2007. "We've spent a year and a half scouring every budget for every dollar, then to turn around and find out someone is stealing is very hard. To come before you today and ask you to consider funding for the agency under this shadow is difficult."
The agency's former finance director, Paul Moore, was charged earlier this month with embezzling $5.5 million, writing 761 checks of around $7,000 each over four years.
Mr. Moore, the brother of former Aiken County legislator Tommy Moore, has acknowledged to writing about 200 checks worth about $1.3 million, according to federal officials.
Mr. Moore used his expertise involving the agency's computer system and auditing to circumvent detection through four years of external audits. Under his sole authority to approve "one-time payments," he created fictitious vendors and approved "refunds" to them - checks he was given for delivery, Ms. Hayes said.
She stressed no one else in the agency is accused in the scam.
The agency is seeking another external audit of the agency, by a different firm. The internal auditor now reports directly to Ms. Hayes, and the agency has asked state law enforcement to train its employees in fraud detection, the director said.
The new financial director will have no direct access to the computer system to allow manipulation, and any vendor changes must be approved by more than one person, Ms. Hayes said.
"The lesson here is vigilance has to occur at all times now matter how much you may trust that person," she said. "There'd be no way for a person in that position to do it again."
Ms. Hayes said the Secret Service told her about the investigation in November but barred her from doing or saying anything as it continued.
The embezzlement arrest comes as the agency is already reeling from state budget cuts, which have topped $22 million since July.
The agency has left 54 positions vacant, even as the recession brings social workers an ever-increasing case load. Any further cuts could force the agency to cut a program aimed at preventing teenage pregnancy and lay off workers, Ms. Hayes said.
As of November, 640,000 South Carolinians were using food stamps to eat, up from about 545,000 in January 2007, according to the agency.
"That's one in every 6 1/2 citizens in the state," Ms. Hayes said. "That is a dramatic statistic."
She said she fears families' economic stresses could increase the cases of child abuse and neglect, in a state where workers investigate about 26,000 reports yearly.
Ms. Hayes' $17 million request in additional funding included $2 million to cover subsidies for families adopting foster children and $12.3 million to cover development of a computerized enforcement system for child support payments and the federal fine for not already having it in place.
North Myrtle Beach GOP Rep. Tracy Edge, who heads the subcommittee, said after the hearing it appears the agency has a handle on what allowed the scheme to happen and fixing the system.
He said the arrest won't affect how budget-writers handle the agency, because the children and adults the agency helps should not be punished. The problem will be finding any money in a year when the state has lost $1 billion in revenue since July, he said.