A South Carolina House regulations panel voted last week to approve allowing the state’s Unemployment Trust Fund to move to solvency a year sooner than expected.
The state Department of Employment and Workforce (SCDEW) requested the action, one year after the agency announced it had made the final payment on what was once a nearly $978 million debt to the federal government.
Subcommittee member State Rep. Ralph Kennedy, R-Leesville, said it’s a positive move to have the fund on sound financial ground earlier. “From five years to four years for the unemployment trust fund to return to solvency,” he said during the meeting. “And we felt like anytime that time is lessened, rather than lengthened, that’s a good thing.”
At the height of the recession, the state had to borrow from the federal government to make unemployment insurance payments to individuals who were laid off. The recession’s high unemployment rate combined with poor mismanagement by the old Employment Security Commission meant the state could not afford the benefits on its own.
South Carolina was one of 36 states to take out loans during the recession’s aftermath, but was one of the first to pay it back ahead of schedule, according to Gov. Nikki Haley’s administration.
The Unemployment Trust Fund’s insolvency was what ultimately led state legislators to eliminate the state’s former Employment Security Commission and move jobless benefits into a new Cabinet-level Department of Employment and Workforce in 2010. SCDEW then revamped how businesses would pay into the system, requiring larger companies to pay higher unemployment insurance rates (since they were seen as more likely to lay off employees than small businesses).
State Rep. Wayne George, D-Marion, said returning to solvency earlier will not have any additional impact on business. “Reducing it by a year doesn’t put any additional burdens on small businesses.”
The health of the trust fund has improved substantially after all of those federal loans were repaid. “They just felt like they could return to solvency quicker than they thought before,” Kennedy said.