In late 2008, the first public hints of problems became known as the commission asked Sanford to sign off on loans to cover payments of jobless benefits checks. Audits since then showed the Employment Security Commission didn't do enough to head off the need to borrow. The audits showed it lacked accounting skills and faced penalties for collecting but not paying income taxes on benefits. Meanwhile, state leaders and legislators didn't heed warnings that showed rapid deterioration in finances.
"There were a lot of early warning signs," Sanford said, adding it was again "a reminder of the simple theme of we've got to look at the early warning signs as we look at policy going forward."
So far, the state has borrowed $838 million to cover benefits. Employers will have to cover those costs and fork over enough in premiums to restore the jobless benefit trust fund.
The legislation that took effect with Sanford's signature creates a Cabinet-level Workforce Department and takes steps toward reducing borrowing and other problems. Among other things, the legislation:
- Bars benefits payments for people fired for gross misconduct, including damaging employer property, theft and insubordination.
- Requires regular audits for the agency and forces it to provide more updates and details on the trust fund's balance and employment trends.
- Increases review of whether people are eligible for benefits and requires instances of fraud to be referred to the attorney general to investigate.
- Requires temporary workers finishing assignments to go back to the company assigning them work before being eligible for benefits.
The role of the three-member commission that now oversees the agency and hires its director will be limited to hearing appeals on unemployment cases.
Sanford said his staff now is reviewing about a dozen resumes for the director job. He said he expects to make a pick within a couple of weeks. Sanford's choice will be vetted by a nine-member panel before the Senate approves the choice. Sanford's interim director will serve until March 2011, when Sanford's successor as governor will choose from candidates the panel will qualify.