The Republican nominee, state Rep. Nikki Haley, said her Democratic opponent, state Sen. Vincent Sheheen, was asleep at the switch in 2008 when a committee he served on was informed about the dire condition of the trust fund.
Sheheen countered that he was among about 20 senators from both parties who requested an audit of the agency by the Legislative Audit Council in December 2008.
South Carolina has borrowed nearly $887 million from the federal government since December 2008 to pay unemployment benefits. The most recent loan was in April. The state Department of Employment and Workforce says it might have to borrow money again as early as next month. The state's jobless rate has remained high for years, ranking among the nation's worst, and hit a record-high of 12.5 percent in January.
Becky Richardson, a former commissioner with the work force agency's predecessor, said lawmakers were alerted to a problem in 2001 when the fund fell $63 million short of federally recommended reserve levels.
Richardson and the two other commissioners were fired this year when the duties of the commission were moved to a division of the governor's office as part of an overhaul of the agency. She said commissioners reported the trust fund's condition every year to lawmakers and staffers in the governor's office, but no one wanted to raise the unemployment insurance tax to bolster the fund.
Haley accused Sheheen of not following through after at least one commissioner said in April 2008 the trust fund would go broke soon, noting the balance had dropped to $114 million, down from $800 million in 2001, as jobless payouts exceeded collections from employers.
"Everyone asked where was the red flag," Haley said. "That was the red flag, and Sen. Sheheen sat at that table and he did absolutely nothing about it."
Sheheen, however, noted that Haley's party was in control of the House, Senate and governor's office at the time.
"She was a leader in the majority in the General Assembly," Sheheen said. "To pretend she wasn't the one who was the much better one to influence the majority party is being disingenuous."
According to a Legislative Audit Council report, commissioners began meeting with legislative leaders on the subject in 2006.
Haley says Sheheen is to blame as the only legislator on that Republican-led committee who is running for governor.
"He oversaw the committee that saw the problem," she said. "What good is someone overseeing a problem when he oversaw it back in 2008 and didn't do anything about it?"
Asked why Republicans didn't either, she said, "This is not a partisan issue. I don't care whether they are Republicans or Democrats, as a representative of our state, it is their job to act."
In December 2008, as Gov. Mark Sanford faced a deadline to apply for a loan -- or face tens of thousands of residents cut off from benefits -- the Republican governor faulted GOP legislative leaders, saying they'd known of the situation for months.