Cabinet reform for ESC

The lack of competence at the Employment Security Commission has been matched only by the agency's lack of accountability. The ESC needs a strong hand to right its operations and make needed staff changes. The Legislature should provide the necessary accountability by putting the agency under the authority of the governor.

Two of the systemic reforms recommended by the Legislative Audit Council would shift the agency to the governor's Cabinet. Many legislators, including House Speaker Bobby Harrell, support a Cabinet plan.

So does the S.C. Chamber of Commerce, which represents the state's employers, who presumably will be required to refill the coffers of the Unemployment Insurance Trust Fund.

But the Legislature traditionally has been reluctant to give the governor the executive authority that his counterparts in other states possess. South Carolina's part-time lawmakers have instead chosen government by commission, thereby weakening agency accountability.

The shortcomings of that system have never been more apparent than at the ESC.

The agency's biggest failure has been the insolvency of the Unemployment Insurance Trust Fund, forcing South Carolina to borrow from the federal government to pay jobless benefits. That's a real concern in a state with one of the nation's highest unemployment rates.

"As a result of the insolvency, employers face federal and state tax increases, claimants face potential cuts in benefits, and the state faces paying interest charges," the Legislative Audit Council concluded. Broader consequences could include "lower economic growth, less job creation and a reduction in consumer demand."

A recent story by The Post and Courier's Yvonne Wenger cited some halfhearted attempts by ESC management to notify lawmakers about the fund's problems. And you'd think that legislators would have been vitally interested. But this system isn't designed for efficiency.

Sen. Chip Campsen, R-Charleston, observed that the ESC actually has 170 bosses -- those who comprise the Legislature. That effectively means no one really has oversight.

The bad news just keeps piling up at the agency. Last week, it was learned that the ESC failed to send income taxes withheld for jobless benefits to the state Revenue Department and the Internal Revenue Service. Federal penalties might be forthcoming.

Also last week, state Comptroller General Richard Eckstrom said the agency has failed to adequately account for stimulus funding it has received.

The Audit Council found that the agency paid out millions in jobless claims to those who had been fired for cause. The ESC also stopped pursuing fraudulent claims months ago, paying out millions and effectively giving wrongdoers a free hand.

Despite all of the agency's problems, two of the three commissioners -- J. William McLeod and McKinley Washington -- say they intend to stay on the job. The Legislature should do what it can to terminate the commission.

The Employment Security Commission can't be fixed with a little tinkering. Its failure is systemic and requires new governance for top-to-bottom changes.

To ensure future accountability, the Legislature needs to put this agency under the state's chief executive.