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By FITSNews || A new S.C. Legislative Audit Council report released Tuesday found that … surprise! … the legislatively-controlled S.C. Employment Security Commission (ESC) has failed the public in every way imaginable, a major reason why our state’s unemployment rate is so high and why the fund that pays out benefits to unemployed workers is currently $740 million in the red.

And if you run a business in South Carolina, guess what … the cost of this failure will soon be placed on your doorstep in the form of higher taxes.

On the fiscal (mis)management front, the LAC report reveals that the ESC failed to maintain adequate cash reserves beginning in 2001, which led to a fiscal cataclysm when the recession began in December of 2007.

“After the events of 9/11, the state’s unemployment rate began rising and the agency’s reserves began declining,” the report notes. “As a result, when the recession began in 2008, the agency’s reserves were well below the amount needed to pay benefits and maintain the fund’s solvency.”

South Carolina’s current unemployment rate is 12.6 percent – an all-time high.

Speaking of which, in addition to the staggering (and ongoing) fiscal mismanagement at the agency, the report also confirms the ESC’s abysmal job placement record – first uncovered by a 2009 FITS exclusive.

As damning as the report is for the ESC, however, it’s equally damning for the state lawmakers who have presided over this mess – and to some degree for S.C. Gov. Mark Sanford, who didn’t wise up to the scope of this disaster until December of 2008, a year into the ongoing recession.

To his credit, Sanford did propose some belated reforms last year, but those efforts were blocked by state lawmakers like Annette Young (RINO – Summerville), whose friend and former colleague Becky Richardson is one of the agency’s commissioners.

In fact, all three Employment Security Commissioners are former lawmakers who were appointed by their buddies in the General Assembly.

Sadly, the LAC report does not specifically address some of the more sensational allegations (here and here) uncovered recently by FITS, but it does delve into accusations that unemployment benefits were fraudulently administered by several local workforce offices in coordination with key staffers at the agency.

In fact, the language of the report strongly implies that a cover-up took place.

“Central office staff alleged to have been involved in instructing local office staff to violate policy was sent to monitor the local office,” the report notes.

Sure sounds criminal to us …

Anyway, the same lawmakers ultimately responsible for this multi-faceted disaster are now engaged in all sorts of hand-wringing over how to clean up the mess.

Thus far, the only concrete reform that’s been drafted is to stop allowing drug addicts to collect unemployment benefits. Yeah. Well, … that and there are proposals on the table that would force businesses to pick up what could end up being a $2 billion tab.

Gov. Mark Sanford’s solution – which was echoed by the LAC report – is to move the agency into the Cabinet of future governors.

Many lawmakers disagree with that recommendation, however, arguing that it would give governors too much control over the monthly release of the state’s politically-charged unemployment numbers.

Clearly, though, allowing the legislative branch to pick a bunch of ex-lawmakers and pay them six-figure salaries hasn’t worked.

Frankly, we think this agency should be folded into the Department of Commerce, which could then consolidate its excessive number of local offices and implement a more streamlined approach to placing workers in available jobs.

Oh, and hopefully put the kibosh on all the corruption.

For another take on the LAC report, check out the coverage from The Nerve


LAC Audit (Summary)
LAC Audit