1. LCI Subcommittee March 1, 2011 1

2. Seasonal Restrictions Currently in place in 15 states –Arkansas, Arizona, Colorado, Delaware, Indiana, Maine, Massachusetts, Michigan, Mississippi, North Carolina, Ohio, Pennsylvania, South Dakota, West Virginia, and Wisconsin Restrictions vary depending on state but typically wage credits earned during “season” can only be used to qualify for unemployment during the “season.” 2

3. Six Potentially Seasonal Sectors SECTOROFF SEASON AgricultureQ1 ConstructionQ1 & Q4 Retail Sales Q4 Public AdministrationQ4 Professional ServicesQ2, Q3, & Q4 TourismQ1 & Q4 3

4. Potential Cost Savings Compared unemployment cost in “high” and “off” seasons. Difference is projected cost savings from seasonal restrictions. IndustryCost Savings Agriculture$0.18 million Construction$6.21 million Retail Sales$3.22 million Public Administration$0.65 million Professional Services$3.32 million Tourism$5.76 million Total$19.33 million 4

5. Severance Pay South Carolina does not currently take severance pay into consideration when determining weekly benefit payments for unemployment. States with some reduction in benefits: AK, CA, CO, DE, FL, IL, KY, LA, ME, MD, MN, NH, OH, SD, UT, VT, VA, WA, WI (19) States with ineligibility while receiving: AR, AZ, CT, GA, MA, MI, NV, NJ, TN, TX, WV, WY (12) 5

6. Scenario 14: “Senator Thomas” Put all classes at last year’s average tax rate (I.e., 1.45% for tier 1, 4.76% for tier 20 etc) Credit to 1-12 for extra FUTA Surcharge on 13-20 to cover extra FUTA Surcharge on 13-20 to cover cost of benefits (I.e. $500 million) Surcharge on 1-20 to cover interest 6

7. Scenario 14: “Senator Thomas” Stretch repayment out by only collecting enough to cover current benefits and interest. FUTA increases each year Loan repaid in March 2017 $141.4 million total interest Surcharge on 13-20 for extra interest cost 7

8. Scenario 14: Projected Costs Total SUTA & FUTA Cost 2011 8

9. Scenario 14: Change over Current Total SUTA & FUTA Cost 2011 9

10. Scenario 14: Cost Shift For 2011: –Adds $33 million to classes 1-6 –Saves $117 million for classes 7-20 For 2011-2017: –Adds $182 million to classes 1-6 & 13-16 –Saves $182 million for classes 7-12 & 16-20 10

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18. Movement Down Tiers Acme Inc. is in rate class 18 for 2011. Assume that: benefits return to 2006 levels experienced by Acme Inc. taxable wages remain same as 2010 except on the higher taxable wage base. What happens to benefit ratio and tax rates over time? 18

19. Movement Down Tiers YearBenefitsTaxable Wages Benefit Ratio Rate Class Tax Rate (excluding contingency) Cost per Worker 2011$3.4 mil$57.2 mil0.059852189.10%$909.50 2012$4.1 mil$79.9 mil0.051061186.77%$812.52 2013$4.2 mil$104.3 mil0.032091154.69%$562.20 2014$1.1 mil$87.7 mil0.012983101.50%$179.64 Note: TWB increased in 2012, look back period changes in 2014. Improved employment history for Acme Inc. and lower benefit charges in general help lower costs quickly moving forward. 19

20. Agricultural Labor FUTA’s agricultural labor provisions apply to employing units who paid wages in cash of $20,000 or more for agricultural labor in any calendar quarter in the current or preceding calendar year or who employed 10 or more workers on at least 1 day in each of 20 different weeks in the current or preceding calendar year. Typically limits coverage to large farms. 20

21. Agriculture (1111, 1112, 1113, 1114, 1119, 1121, 1122, 1123, 1129, 1131, 1132) 21 Firms in classes 1-12: 73.4% Emp in classes 1-12: 75.6% Firms in classes 13-20: 26.6% Employment in classes 13-20: 24.4% Est Emp Firms 183011.0%16142.5% 22,08027.5%225.8% 34946.5%174.5% 42503.3%112.9% 52853.8%61.6% 6831.1%61.6% 71,03513.7%102.6% 8801.1%71.8% 91061.4%112.9% 101061.4%71.8% 112513.3%133.4% 121131.5%71.8% 133574.7%143.7% 14490.6%92.4% 156748.9%154.0% 161642.2%133.4% 172222.9%133.4% 181351.8%112.9% 19881.2%102.6% 201582.1%164.2% 7,559 379

22. What makes up my rate? 22 BenefitsLoan PrincipalLoan InterestContingency 0.0% 41.8%58.2% 69.4%20.3%4.6%5.8% 69.8%20.4%4.6%5.2% 70.1%20.5%4.7% 70.5%20.6%4.7%4.3% 70.8%20.7%4.7%3.9% 71.0%20.7%4.7%3.5% 71.3%20.8%4.7%3.2% 71.5%20.9%4.8%2.8% 71.7%20.9%4.8%2.6% 71.9%21.0%4.8%2.3% 72.1%21.0%4.8%2.1% 72.8%21.3%4.8%1.1% 72.9%21.3%4.8%1.0% 72.9%21.3%4.9%0.9% 73.0%21.3%4.9%0.8% 73.1%21.3%4.9%0.7% 73.1%21.4%4.9%0.7% 73.2%21.4%4.9%0.6% 73.2%21.4%4.9%0.5% Benefits Loan Principal Loan InterestContingency Cost per Worker $0.00 $4.30$6.00$10.30 $72.01$20.99$4.80$6.00$103.80 $80.02$22.98$5.30$6.00$114.30 $88.91$26.09$5.90$6.00$126.90 $98.79$29.21$6.60$6.00$140.60 $109.76$32.24$7.30$6.00$155.30 $121.96$36.04$8.10$6.00$172.10 $135.51$39.49$9.00$6.00$190.00 $150.56$44.44$10.00$6.00$211.00 $167.29$48.71$11.10$6.00$233.10 $185.88$54.12$12.30$6.00$258.30 $206.54$60.46$13.70$6.00$286.70 $395.14$115.86$26.30$6.00$543.30 $439.05$127.95$29.20$6.00$602.20 $487.83$142.17$32.40$6.00$668.40 $542.03$157.97$36.00$6.00$742.00 $602.26$175.74$40.00$6.00$824.00 $669.18$195.82$44.50$6.00$915.50 $743.53$217.47$49.40$6.00$1,016.40 $826.14$240.86$54.90$6.00$1,127.90 Approximately 26% of cost in 2011 is for loan and interest.

23. Paying Off Deficit 7-year deficit for classes 13-20 is $1 billion Larger than $680 million proposed to be raised in 2011. Does not cover “non-charged” benefits Does not cover “inactive employer” benefits Does not address need to raise money for benefits in the upcoming year. 23

24. Projected Rates with No Debt DOL mandates that lowest max rate is 5.4% (class 20 must be at least 5.4%) 24

25. Paying off Deficit YearNon-ChargedInactive 2005$21 million (5%)$40 million (10%) 2006$53 million (16%)$44 million (13%) 2007$49 million (15%)$26 million (8%) 2008$44 million (13%)$31 million (9%) 2009$53 million (14%)$44 million (11%) 2010$44 million (8%)$56 million (10%) Only 6 years have $264 million in non-charged; $241 million inactive--cannot be made up for with one-time check for deficit. 25