Good afternoon ladies and gentlemen. I appreciate your being here this afternoon.

As you are aware, as of January 1, 2009, the SC Employment Security Commission will be unable to pay unemployment insurance claims unless Gov. Mark Sanford approves a request for a $146 million line of credit from the U.S. Treasury.

Unemployment Insurance is an entitlement program and under federal law these benefits must be paid. However, the S.C. Employment Security Commission’s Trust Fund will be insolvent at the end of this month and a federal loan, which must be authorized by the Governor, must be received to insure payments through the first part of the New Year.

Governor Sanford previously authorized a $15 million line of credit to cover a shortfall in funds through the end of the current year. However, the Governor has refused to authorize the $146 million loan unless the Employment Security Commission agrees to an independent audit and provides additional unemployment claimant information to the Governor’s Office and the S.C. Department of Commerce. Our agency has been negotiating in good faith to meet the Governor’s demands in a manner that would allow us to continue payments to some 70,000 South Carolinians who are currently receiving benefits from our agency.

The state’s UI Trust Fund, which is funded by taxes from the state’s employers, had a balance of $814 million in July of 2000. South Carolina has not increased that tax since that time.

For the last couple of weeks, the Employment Security Commission has been paying out weekly benefits of over $14 million. This is nearly twice the amount paid out at this time last year. Those figures do not include the 27,000 additional claimants receiving Emergency Unemployment Compensation, which was recently passed by Congress and is paid directly by the federal government.

This is a clear reflection of the increased number of job losses brought on by the current economic downturn, both in South Carolina and across the country. In fact, South Carolina's current unemployment rate of 8.4 percent is nearly two points higher than the national average of 6.7 percent, and has increased a full percentage point over the last two months, marking the state's highest unemployment rate in 25 years. Several states across the nation are facing insolvency with their Trust Funds and many others have less than a year before they face a similar situation.

This agency has had to borrow money from the federal government only once before to supplement the UI Trust Fund, in 1983, and that was for one week

The Governor's office annually receives a report on the condition of the state's UI Trust Fund. Numerous meetings have been held recently to try to resolve this matter.

The Commission’s main concern is that the Unemployment Insurance benefits that so many South Carolinians are entitled to continue to be paid at a time when they need it the most.

The S.C. Employment Security Commission certainly believes it is not exempt from scrutiny and has nothing to fear from an audit. We are unable to request an audit from the Legislative Audit Council as that must come from the state legislature itself. In fact, the Agency and the Unemployment Insurance Trust Fund is audited annually by a qualified accounting firm, which has the added advantage of being both independent and free of political influence. The latest audit showed no questioned costs. Not only that, the Unemployment Insurance division has regularly been honored by the Department of Labor for its timeliness and efficiency.

Second of all, the Governor's refusal follows an increasingly familiar pattern with regard to the SCESC. The Governor's office routinely greets high unemployment rates by questioning the Agency's Labor Market Information data -- which follows the same statistical model used in every state in the country, and has been consistently verified by the Bureau of Labor Statistics -- or opposing building or structural improvements, or questioning the management of the agency or, finally, refusing to authorize a loan that will continue to pay the benefits of some 70,000 unemployed citizens across the state.

Unemployment Insurance is a lifeline that supports people who have lost jobs through no fault of their own, and provides a small measure of relief to keep food on the table and the rent paid. They are families from all walks of life, and for many, the weekly benefit check is a simple question of survival.

As stated before, these benefits are federal entitlements, and in the end, there is no question that they will be paid, because federal law demands it.

In the meantime, the Employment Security Commission will continue to seek to remedy this situation on behalf of our constituents.

I will now be happy to take your questions.