SC unemployment agency paying $106M toward debt
COLUMBIA, S.C. (AP) — South Carolina's unemployment agency is paying down $106.5 million of its debt to the federal government, leaving a remaining debt of $676 million.
Director Abraham Turner says the agency is on track to pay back every dime by October 2015. Business leaders hope the timeline will be shorter, saving employers money because of new state laws that mean fewer people are receiving benefits.
The payment Friday will be two months ahead of schedule, saving the state $8,800 daily in interest, according to the Department of Employment and Workforce.
The agency had to borrow nearly $1 billion from the federal government between December 2008 and spring 2011 to keep sending checks amid climbing jobless rates. The state made its first payment on the debt last August.
Other than chronically high unemployment, management problems also contributed to the depleted trust fund and need to borrow. Legislators approved a repayment plan in 2010 that increased workers' rates as part of a law that overhauled the former Employment Security Commission and made it a Cabinet agency. Lawmakers have been clamping down since on who's eligible.
Last year, legislators cut from 26 to 20 the maximum number of weeks the jobless can receive in state-governed benefits. A law passed in June, on the final day of the regular session, requires full, automatic denial of benefits for workers fired for misconduct.
State Chamber of Commerce president and CEO Otis Rawl said he believes the changes mean hundreds of millions of dollars in benefits will no longer be paid out, allowing the state to speed up its timeline to pay off the debt and build up reserves. That could reduce employers' payments to the state trust fund, increasing their cash flow and ability to hire, Rawl said.
The agency has not calculated the changes' estimated savings to the state or businesses, a spokeswoman said.
Rawl said Thursday he was pleased by Turner's testimony to senators this week on the agency's implementation of the law denying benefits to workers fired for misconduct. Subcommittee chairman Sen. Kevin Bryant called the hearing after receiving documentation on 518 cases handled in the law's first week, saying dozens of fired workers were still receiving full benefits. An exact number is unclear, since supervisors have reversed decisions to grant benefits in some of the cases.
Turner, who took the agency's helm a year ago, acknowledged some mistakes were made, but pledged such examples would continue to decline. Internal policy changes at the agency include new systems designed to catch when people are fraudulently drawing benefits, and reducing the number of weeks people can collect benefits when fired for offenses that don't meet the misconduct definition.
Legislators included $77 million in unemployment tax relief in their 2012-13 budget. That designation directly benefits businesses by cutting the impending hike on insurance taxes. On average, businesses will save 12 percent over what their rates would have been starting in January.
Businesses will receive revised tax notices in October, said spokeswoman Mary-Kathryn Craft. Employers could choose to either apply the savings as a credit or get a check in the mail. It would be the second consecutive year of such rebates. The Legislature designated $146 million toward unemployment insurance tax relief in 2011-12.
"The system was just fraught with problems. I think the General Assembly recognizes they had not solved all the problems within the system that allowed people to take money fraudulently," Rawl said. "We've been fighting this battle since 2006.
"If people would've just listened to us when we said people were being paid after drinking on the job, stealing" and other blatant infractions, as well as continuing to draw benefits after getting a new job, the state wouldn't be in debt, he contends.