Legislature aims for fix at agency

COLUMBIA -- House legislators are trying to carve out a delicate balance between overhauling the Employment Security Commission and not straining businesses that would, in turn, lay off more workers and exacerbate the agency's troubles.

The agency has been under fire for the past year for a laundry list of problems: alleged mismanagement, erroneously issuing duplicate unemployment checks, not sending checks on time, poor record keeping and inadequate job placement resources. The agency also failed to alert the Legislature about a change needed to extend jobless benefits for an additional five months, an issue first raised by The Post and Courier that triggered a special session in October.

Top of the list of concerns is the unsustainable unemployment trust fund that caused the state to borrow nearly $1 billion from the federal government to cut benefit checks since October 2008.

The Ways and Means subcommittee met three times this month in advance of the Legislature's January return to gather information and discuss solutions.

Rep. Jim Merrill, a Daniel Island Republican, said the subcommittee wants to concentrate on how to structure the agency -- including making it part of the governor's Cabinet -- reviewing eligibility standards and employer rates and how to pay back the federal debt.

Merrill said creating a solvent unemployment trust fund will have to involve closing costly loopholes that make it less expensive for some "bad" employers to fire workers when business is slow and hire them back when it picks back up, shifting a burden on the state to save in payroll costs. One possible solution is to charge employers who frequently dismiss workers en masse a higher rate than employers who rarely layoff workers.

"There is a finite amount of dollars out there," Merrill said. "The business community is picking up the tab. We have to make sure the resources we have are being spent wisely and efficiently."

The account is funded by employer contributions, which generate about $235 million a year. Because unemployment is so high, the account pays out more than $16 million a week.

The Legislature also must come up with a plan for the state to pay back the federal government. Some potential solutions have been floated, including temporarily raising rates on employers to pay back the debt. But Merrill said a rate increase now might only intensify the problem by upsetting the tipping point for business and cause more layoffs, putting more people on unemployment, increasing the payout.

Almost every state has borrowed federal funds, some billions of dollars, to provide unemployment benefits during this recession, Merrill said.

"Virtually every state in the country is in the same shape or worse than us on the unemployment issue," he said. "I think the feds will have to" face that.

Senate leader Glenn McConnell, a Charleston Republican, said the upper chamber also recognizes the need for changes at the Employment Security Commission. Several proposals for reform also are before the Senate, including calls to make it part of the governor's Cabinet. But transferring accountability from an executive director to the governor is not a silver bullet, McConnell said.

"I am not one who believes (that) making Columbia a little Washington on the Congaree is going to solve all the problems," McConnell said.

Sanford is looking forward to working with legislators to fix the agency's problems, the governor's communications director, Ben Fox, said. Sanford has been calling for reform since last December.

"We're encouraged that there now seems to be growing legislative momentum to take the first step toward substantive reform at the Employment Security Commission," Fox said in a statement. "This agency's lack of true accountability, an Unemployment Trust Fund deficit nearly $1 billion, and other recent concerns all emphasize the need for this reform."

To comment on the reforms

Debate is under way to overhaul the Employment Security Commission after the agency that hands out unemployment checks has been under fire for the last year.

Members of the House Ways and Means Committee are meeting in subcommittee to discuss possible changes. To submit public comment, send an e-mail to escadhocsubcomm@schouse.gov.

For more information, check out the Citizen's Interest page on the state Legislature's Web site at www.scstatehouse.gov. Look for Citizen's Interest on the light blue bar across the top of the home page.

Reach Yvonne Wenger at 803-926-7855 or ywenger@postandcourier.com.