The Palmetto Insider

The blog of the South Carolina Policy Council

South Carolina Not the Only State With Major Unemployment Funding Problems

with one comment

Yesterday, the Legislative Audit Council released a report slamming the ESC for mismanaging the state’s unemployment fund – resulting in a massive debt of $736 million.

Unfortunately, this trend is common among many states. Propublica.org released a report earlier this month which tracks the unemployment situation of each state. What did they find?

Already 25 states have run out of unemployment funding and have had to borrow from the federal government, raise taxes, or cut benefits. South Carolina is one of those states that squandered prior surpluses in recent years.

The Nerve was first on the hunt yesterday with an analysis of the LAC report:

Among the most shocking findings detailed in the report:

  • “While agency management knew as early as 2001 that fund reserves were inadequate, management did not aggressively pursue changes to benefits, or the tax structure, in order to prevent the insolvency of the trust fund.”
  • “ESC’s annual assessment reports to the General Assembly did not provide adequate information about the declining trust fund balance. Nor did ESC make recommendations to prevent the trust fund’s decline as required by … the S.C. Code of Laws.”
  • “ESC did not follow (U.S.) Department of Labor (DOL) guidance regarding minimum reserves.” Had the ESC done so, the unemployment fund “would still have a significant surplus.”
  • “Employees who were terminated for misconduct, illegal acts or other offenses have been paid more than $171 million in state unemployment benefits during the last three fiscal years.”
  • “In 2008, ESC stopped referring claimants for criminal prosecution who had fraudulently obtained unemployment benefits. Claimants defrauded the agency out of $7.3 million” in FY08-2009.

Just because South Carolina is not alone in its mismanagement of funds does not excuse the waste of taxpayer dollars. As The Nerve pointed out last week, this ESC boondoggle has been years in the making. And the key difference here in South Carolina is that the General Assembly, which appoints the members of the ESC, is squarely to blame.

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Written by Geoff Pallay

January 27, 2010 at 10:42 am

One Response

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  1. According to estimates made by SC MCDC which are based on the SC illegal alien population: social services rendered, costs to educate and treat at the ER, cost at least 4 billion dollars in 2007 alone. Include the jobs LOST by citizens of SC which were taken by aliens and that number escalates.

    The legislature took too long to pass the weakened immigration reform bill of 2007. They let the Chamber of Commerce along with those in the tourism industry, restaurant industry, Agribusiness and construction lobbiests ignor the 250,000-500,000 aliens in SC have the blesings of our labors for free-at the cost of South Carolinians. Illegal aliens comprised a higher number of jobs in SC from 2001 through 2007, while unemployment exceeded 5%.

    The businesses that are left standing will be expected to pay for these blunders of government but there arent that many left. This amounts to a double-whammy on the people.

    Sen. Greg Ryberg, R-Aiken, wrote a letter to the Audit Council in January 2009 asking for the probe of the ESC. No fewer than 20 additional lawmakers signed on to the request.

    “They asked us to have a report out as soon as possible at the beginning of the (legislative) session,” Audit Council director Tom Bardin says, and they “are going to give a 10-year history of how we got here.”

    So they misused the funds, and now we have to waste more time to watch over their shoulders then pay to find out what went wrong. Then 2-2.5 BILLION to clean it up!?

    Moreover, the federal government charges interest on the borrowed federal stimulus.

    The state must begin repaying its unemployment debt in September 2011. The state’s estimated interest in 2011 will be about $50 million. Now WHY does SC have to suffer for the mandates from the federal govt which say-you must take people at the ER and you must teach the aliens in your schools? And they are eligble for social service funds.

    Including South Carolina, 26 states have borrowed a combined $28.7 billion from the federal government to cover unemployment checks. Many of the states have alien woes like we have had.

    These federal mandates have to stop.

    Martha Washington

    February 8, 2010 at 8:35 pm


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