Making the point that the Employment Security Commission is not the inefficient, incompetent organization as many critics have tried to describe it, E.S.C. Interim Executive Director Samuel Foster says the commission has for the past wight months provided staff support and assistance to the Legislative Audit council in their efforts to review the operational and administrative procedures within the agency. Foster says the Legislative Audit Council’s report was thorough.
“Nine address differences of opinion on how we conduct administrative functions, three are matters to be decided by the legislature, six were initiated or enacted before the audit or published, the remaining eight identify procedural changes which have been or will be implemented. Not once in the 26 recommendations is there mention of the agency’s being out of control or incompetent,” says Foster.
Governor Mark Sanford has been one the E.S.C.’s harshest critics. During his State of the State address last week, Sanford said the agency needs to be part of his cabinet because of its lack of accountability.
In its report the Legislative Audit Council stated that the E.S.C. did not follow United States Department of Labor guidance regarding minimum reserves. Under D.O.L. guidelines, South Carolina would have needed a reserve of more than $1.6 billion. Had the Labor Department’s guidance been followed, the UI trust fund would still have a significant surplus. Foster says overtime during the decade the lack of job growth, coupled with the recession stymied the build up of the U.I. trust Fund.
Foster says South Carolina is not alone when it comes to this dilemma: “Beginning with Michigan in December 2007, 25 states have had their U.I. trust funds go insolvent. We are not alone in this situation. It is estimated that 40 states will be insolvent by the end of 2010.”
In its report The L.A.C. points out that 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.
Foster pointed out that during the past week a Department of Labor official viewed the E.S.C. in a favorable light. Foster said that in his visit D.O.L. Regional Office Director of the Office of State Systems Pete Fleming acknowledged he knew “we were having some difficulty” in South Carolina, however he commented that the state was in the top tier of states with the measurements that the D.O.L. uses for evaluation.
According to Foster, “He went on to say that South Carolina’s U.I. appeals rate leads the nation with 98.8 percent of appeals heard within 30 days. this compares to a national average of 35.6 percent. In the last quarter, South Carolina paid 84.5 percent of claims timely, while 27 states were slower in paying benefits timely.”
In its report the L.A.C. cited the E.S.C. for not providing adequate information in its reports to the General Assembly about the declining trust fund balance. Commission Director of Labor Market Information Bob Brown says the trust fund balance was rapidly exhausted with the bottom falling out of the state’s job market over the decade coupled with the recession causing a huge increase in the unemployment rate and the numbers of people applying for benefits.
Brown says, “The economists call this decade, the “Lost Decade’ because there was such a loss of jobs; there was no job growth to be seen. The bottom line is that we didn’t lose the jobs at the same rate everybody else did. So I don’t think we need to look for blame but at what are the circumstances surrounding this. Again, this is a national issue, not just a South Carolina issue.”
The E.S.C. has had to borrow $733 million since the fall of 2008 in order to keep paying claims. Brown refuted critics who say that there is a disconnect when it comes to the E.S.C. connecting qualified people with available jobs.
“We’ve had over a half a million South Carolinians in our offices this year. Over 200,000 of those people have gone to work, over 100,000 of those are claimants we put to work, that we went out and found jobs for. The whole concept that the labor exchange system in South Carolina is not working sounds good in the newspapers. But he fact of the matter is, we have a normal process going on here in terms of job openings and this agency continues to do a good job in terms of job placement,” says Brown.