SCESC RESPONDS TO GOVERNOR’S REQUEST

 

  December 23, 2008                                                                           For Immediate Release

      As of Jan. 1, 2009, the S.C. Employment Security Commission (SCESC) will be unable to pay unemployment insurance claims through the first quarter of the year unless Gov. Mark Sanford approves a request for a $146 million line of credit from the U.S. Treasury Department.

            Unemployment Insurance is an entitlement program and under federal law these benefits must be paid. However, these benefits currently cannot be paid without a federal loan, and this loan requires the authorization of the state’s governor. Governor Sanford has refused, thus far, to sign an authorization for the loan.

           The S.C. state Unemployment Insurance Trust Fund, which is funded by taxes from the state's employers, has dwindled from a balance of roughly $814 million in July of 2000 to around $8 million as of the week of Dec. 20, 2008.

            The SCESC previously had to secure a $15 million line of credit in October from the U.S. Treasury Department to cover the shortfall in funds through the end of the current year. While Governor Sanford signed the authorization for the loan, through his chief spokesperson Joel Sawyer, he criticized the Employment Security Commission saying they waited too late to notify him of the need for additional funds and likened it to “holding a gun to our heads”.   SCESC Executive Director Roosevelt T. Halley said, “there is no way we could know exactly how much money would be needed based on the number layoffs we had been informed of at that time.”  Those unemployment numbers have steadily increased each week. The Employment Security Commission 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

            For the last two weeks, the SCESC has been paying out weekly benefits in the amount of $14.5 million to almost 77,000 UI claimants. This dollar figure is nearly twice the $7.2 million that was paid out in the same time frame 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.

            Halley noted that this situation 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 nation. In fact, South Carolina’s current unemployment rate of 8.4 percent, third highest in the country, 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.

           Governor Sanford has indicated that he may agree to authorize the $146 million in federal loans to insure unemployment payments through March, 2009, if the SCESC agrees to two conditions. He has asked that the agency share unemployment data with the State Department of Commerce (DOC) and also submit to an independent audit. Executive Director Halley says that the agency has initiated talks with DOC about giving them the data they need and would agree to an audit by the U.S. Department of Labor, the federal agency that primarily funds the SCESC.

            Each year, the Employment Security Commission is required to provide the Governor's office with a report on the condition of the state's UI Trust Fund. A copy of that report has also been provided to the state legislature.

            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. The Employment Security Commission’s Unemployment Insurance Division has also regularly been honored by the Department of Labor for its timeliness and efficiency.       

            The Governor's office has routinely greeted high unemployment rates by questioning the Employment Security Commission’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. The governor has also opposed the building of four new workforce centers in Beaufort, Hartsville, Newberry and Orangeburg that provide much needed space to serve claimants and employers and accommodates fellow workforce system partners, actually saving them money. The new offices were paid for by federal Reed Act funds that were approved in 2002.

            “The bottom line right now is providing benefits to those who are entitled to it and need it the most,” stated Halley. “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. These are families from all walks of life, and for many, the weekly benefit check is a simple question of survival.”

            “We are working closely with the governor’s office to reach a solution that allows us to continue to properly serve the citizens of this state”, Halley concluded.

For more information, contact Clark Newsom at 737-2645