The Palmetto Insider

The blog of the South Carolina Policy Council

Audit Charges Mismanagement at Employment Security Commission

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The Legislative Audit Council, which conducts performance-based reviews for the South Carolina General Assembly, this morning issued a scathing investigation detailing mismanagement by the Employment Security Commission.

The Nerve was the first news organization in the state to release a full report on the Legislative Audit Council’s report. For the complete story, visit The Nerve.

The council report charges the commission with a decade of mismanagement, including a failure to run the unemployment fund according to state and federal laws and regulations. While commissioners were squandering reserve funds, the state continued to pay unemployment benefits to ineligible beneficiaries, the report found. Consider the following examples:

  • “An employee made unauthorized charges on his company’s credit card, which included motel rooms, hardware and Internet dating charges. He was terminated by the company, but ESC still allowed him to collect $3,586 in unemployment benefits.”
  • “An employee was discharged for absenteeism due to his incarceration. The commission allowed him to collect $5,868 in unemployment benefits.”
  • “An employee made a job-related threat and alluded to a weapon in his car. Police found a loaded firearm in the employee’s car. He was terminated for cause, but still collected $2,440 in unemployment benefits.”

Last Thursday, The Nerve reported that South Carolina’s unemployment insurance system has been heading for financial disaster for the past decade. According to the story, the ESC has taken the fund from a surplus of $782.2 million in 2000 to a staggering $723.7 million in debt to the federal government. The report estimates the state could incur costs higher than $2 billion to clean up the mess. If the state fails to reimburse the federal government for the debt, South Carolina businesses will see an automatic tax increase. As estimated by state Board of Economic Advisors chairman John Rainey the annual tax increase per worker could run anywhere from $249 to $567.

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Written by SC Policy Council

January 26, 2010 at 11:41 am

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