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Agency reform one step in SC unemployment crisis

Published Sunday, February 28, 2010
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South Carolina lawmakers have only just begun the work needed to get the state's unemployment agency on sound financial footing.

The state is looking down a $2 billion hole to pay back loans from the federal government and get the unemployment trust fund back to a fiscally responsible level.

That's quite an abyss, but the Senate and House took an important first step this month in passing bills to create a Department of Workforce, a Cabinet-level agency, whose director would report to the governor, to replace the Employment Security Commission. Direct accountability has been sorely missing for this agency.

The agency spiraled out of control over the past decade, and no one seemed to notice or care until it was much too late to contain the damage. The situation is a good example of the kind of problems created by diffuse accountability. Lawmakers blamed agency officials, and agency officials blamed lawmakers. Gov. Mark Sanford was on to the problems, but our weak executive form of government gave him little power to do anything but plead his case.

A damning audit of the agency states that agency officials knew as early as 2001 that fund reserves were not adequate to meet the demand for unemployment benefits, but they didn't pursue changes to benefits or the tax structure to prevent insolvency. It also found that the agency didn't give the General Assembly adequate information about the declining trust fund balance, nor did it suggest ways to prevent the decline.

South Carolina had a more than $800 million surplus in its unemployment benefits trust fund in 2000. When the recession began in 2008, that number had dropped to $229 million. We now have borrowed $800 million from the federal government to meet our unemployment benefit obligations.

The state's debt is projected to grow to $1.28 billion by Dec. 31 if the unemployment rate averages 12 percent this year. In addition to repaying the federal loans, the state is responsible for an estimated $350 million in interest, and legislators must find a way to rebuild the unemployment trust fund. To meet federal guidelines, we need an estimated $1 billion for that.

A consultant has recommended the state overhaul the premium system used to cover unemployment benefits. Under one proposal, 53 percent of the state's employers would see premiums stay the same or fall. Employers with the worst records for layoffs and firings could see costs rise to $645 a year for each worker. Companies now pay between $87 and $427 a year per employee.

But increasing the amount of money coming into the agency is just one fix. Lawmakers also can look for ways to reduce the amount of money flowing out of the agency.

South Carolina, unlike most states, allows employees fired for misconduct to collect unemployment benefits. That cost the state $171 million (10 percent of total benefits) between July 1, 2006, and June 30, 2009.

The Senate proposal gives the agency the right to deny unemployment benefits to workers who are fired for illegal drug use. Workers also could be denied benefits for gross misconduct, which includes reckless damage to employer property, employee theft, and criminal assault or battery against a fellow employee.

South Carolina also is one of only seven states to pay benefits to employees who have a job, but are temporarily unemployed because of plant maintenance, reduced work schedule or other reasons. That cost was $100 million from 2006 to 2009.

An important component of the reformbills is getting the Department of Commerce, the agency charged with creating jobs, to work with a new Department of Workforce. Matching out-of-work people to available jobs would be the best solution for our unemployment agency woes.

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Your Elected Officials

U.S. Congress
State Government
  • Gov. Mark Sanford (R)
    Governor’s Office, State House, P.O. Box 12267, Columbia, S.C. 29211
    Office: (803) 734-2100 Fax: (803) 734-5167
  • Senator Tom Davis(R-District 46)
    P.O. Drawer 1107, Beaufort, 29901-1107
    (843) 252-8583
    602 Gressette Bldg., Columbia, 29201
    Bus. (803) 212-6008
  • Rep. Curtis Brantley (D-District 122)
    194 Bees Creek Rd., Ridgeland, 29936
    (843) 726-5998
    314D Blatt Bldg., Columbia, 29201
    (803) 734-2965
  • Rep. Richard Chalk (R-District 123)
    326C Blatt Building, Columbia, S.C. 29211-1867
    Office: (803) 734-3067; Home: (843) 842-5985
    15 Goldfinch Lane, Hilton Head Island, S.C. 29928
  • Rep. Shannon S. Erickson (R-District 124)
    (843) 986-1090
    306A Blatt Bldg., Columbia, 29201
    (803) 734-3261
  • Rep. Bill Herbkersman (R-District 118)
    P.O. Box 11867, Columbia, S.C. 29211
    Office: (803) 734-3063; Home: (843) 757-5424
    151 Gascoigne Bluff, Bluffton, S.C. 29910
  • Rep. Kenneth F. Hodges (D-District 121)
    PO Drawer 355, Green Pond, 29446
    (843) 525-9006 Home (843) 844-8756
    434B Blatt Bldg., Columbia, 29201
    (803) 734-3062
Beaufort County
  • Rick Caporale (R-District 1)
    17 Salt Wind Way, Hilton Head Island, S.C. 29926
    Office: 680-9999; fax: 681-6700
  • Steven Baer (R-District 2)
    10 Heather Lane, Hilton Head Island, S.C. 29926
    Office: 689-3570; fax: 689-3569
  • Stu Rodman (R-District 3)
    27 Baynard Park, Hilton Head Island, S.C. 29928
    Office: 363-470; fax: 363-6472
  • Weston J. Newton chairman (R-District 4)
    P.O. Drawer 7049, Hilton Head Island, S.C. 29938
    Office: 842-6111; fax: 706-9981
  • William McBride (D-District 5)
    P.O. Box 77, St. Helena Island, SC 29920
    Fax:(843)838-8303
    Home:(843)838-2264
  • Gerald Dawson (D-District 6)
    64-A Horace Dawsone Drive, Seabrook, SC 29940
    Fax:(843)846-4738
    Office:(843)846-4830
  • Paul Sommerville vice chairman (R-District 7)
    1509 Pigeon Point Road, Beaufort, SC 29902
    Fax:(843)379-7115
    Office:(843)379-7114
  • Herbert N. Glaze (D-District 8)
    P.O. Box 4053, Burton, SC 29903
    Fax:(843)846-3601
    Home:(843)846-2845
  • Brian Flewelling (R- District 9)
    25 Petigru Drive, Beaufort, SC 29902
    Fax:(843)379-9806
    Office:(843)379-9805
  • Jerry Stewart (R-District 10)
    11 Teaberry Lane, Bluffton, S.C. 29909
    Office: 705-4753; fax: 705-4723
  • Laura Von Harten (D-District 11)
    166 Fuller Parkway, Beaufort, SC 29902
    Fax:(843)379-1380
    Office:(843)379-1367
Beaufort County School District
  • District Office: 1300 King St., P.O. Drawer 309, Beaufort, SC 29902
    Office: 322-2300; fax: 322-2371
    Hilton Head Island office, 689-4635; fax: 689-4617
    • Beaufort County Board of Education members:
    • Fred S. Washington chairman (District 11)
      PO 325, 804 West Street, Beaufort, SC 29901
      (C) 843-524-8404
    • Bob Arundell vice chairman (District 2)
      198 Woodlake Villas, Hilton Head, S.C. 29926
      Home: 681-8502; work: 7855-8040; fax: 785-3056;
    • Joan Deery (District 1)
      5 old Fort Drive, Hilton Head, S.C. 29926
      Home: 681-8968
    • Wayne Carbiener (District 3)
      Home: 843-363-2113
    • Laura Bush (District 4)
      P.O. Box 172, Bluffton, S.C. 29910
      Home: 757-2638; fax: 757-2638
    • Michael F. Rivers, Sr. (District 5)
      734 Seaside Road, St. Helena, SC 29920
      (H) 843-838-2277
      FAX 843-838-1192
    • Earl Campbell (District 6)
      93 Bruce Smalls, Grays Hill, P.O. Box 768, Lobeco, SC 29931
      (H) 843-846-4531
      (C) 843-476-7512
      FAX 843-846-1373
    • Jim Bequette (District 7)
      4 Broomfield Lane 2532, Beaufort, SC 29907
      (H/C) 843-263-8327
    • Herbert Burnes (District 8)
      95 Pine Grove Road, Beaufort, SC 29906
      (H) 843-846-445
      (C) 843-263-2776
    • Ronald Speaks (District 9)
      3121 Palomino Dr., Burton, SC 29906
      (H) 843-525-1163
      (W) 843-525-8277
      FAX 843-525-1163
    • George Wilson (District 10)
      20 Osprey Circle, Callawassie Island, S.C. 29909
      Home: 987-1234; cell: 812-9870
City of Beaufort
Town of Hilton Head Island
  • Town Hall: One Town Center Court, Hilton Head Island, SC 29928; 341-4600
    • Town Council
    • Mayor Thomas D. Peeples
      4 Hartford Place, Hilton Head Island, SC 29928-3922
      Home: 686-4138; office: 681-2600; fax: 689-3229
    • Bill Ferguson (Ward 1)
      634 William Hilton Parkway, Hilton Head Island, SC 29928
      Home: 686-2863
    • William Harkins (Ward 2)
      3 Old Fort Lane Hilton Head Island, SC 29926
      263-3261 - cell
    • Drew A. Laughlin (Ward 3)
      5 McIntosh Road, Hilton Head Island, SC 29928
      Home: 689-5723; work 689-5700; fax 689-9300
    • John Safay (Ward 4)
      19 Starboard Tack, Hilton Head Island, SC 29928
      Home: 785-4489; work: 785-4696; fax: 785-4696
    • George Williams (Ward 5)
      8 Braddock Cove, Hilton Head Island, SC 29928
      Home: 363-6601; fax: 363-6604
    • Ken S. Heitzke (Ward 6)
      3 Audubon Place, Hilton Head Island, SC 29928
      Home: 681-8182; fax: 681-9864
Town of Bluffton
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