Five months ahead of schedule, South Carolina’s unemployment agency has paid off a nearly $978 million loan that helped the state cover jobless claims during the Great Recession.
The S.C. Department of Employment and Workforce on Thursday made a final $120 million early payment to the U.S. Department of Labor, repaying the debt.
The economic downturn that crippled the state’s economy nearly a decade ago led South Carolina and other states to borrow money to cover unemployment costs, said Gov. Nikki Haley, who announced the payoff Thursday at the State House.
Jobless claims tripled in 2009, depleting the state’s Unemployment Insurance Trust Fund.
The final payment on the debt comes five months before the November deadline that the S.C. Legislature set to repay the federal loan.
“A billion-dollar loan is no small loan,” Haley said, adding the early payoff saved state businesses more than $12 million in interest payments.
Businesses pay employment taxes into the trust fund. That money has been paying off the trust fund’s debt.
By December, the fund is expected to have $200 million on hand, S.C. Department of Employment and Workforce Director Cheryl Stanton said. Stanton said her agency plans to increase the trust fund to just under $1 billion to prepare the state for any future economic downturns.
Haley, Stanton, lawmakers and business leaders credited job growth and employment agency reforms for getting the fund back on track. Those reforms included reducing the number of weeks the unemployed are eligible for payments to 20 from 26 weeks and increasing penalties, Haley said.