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Head of NC unemployment agency quits

Posted March 16, 2012 1:16 p.m. EDT
Updated March 16, 2012 3:12 p.m. EDT

— The embattled head of North Carolina's unemployment insurance agency will resign next month after facing scrutiny for several months from legislators over the division's management and the state's $2.6 billion debt to the federal government for benefits.

Assistant Commerce Secretary Lynn Holmes told Division of Employment Security employees Thursday of her decision to step down from the post effective April 15.

"After much consideration, I have decided to pursue new opportunities," Holmes wrote in the email to workers. The five-sentence message ended: "Thank you for the work you do and for your continued commitment to serving the people of North Carolina."

Holmes has been criticized by Republican leaders at the legislature for her management of the division, particularly when it was a stand-alone agency until last November. A General Assembly committee took the unusual step of issuing a subpoena for her to testify in January when she didn't attend a panel meeting in December.

Sen. Bob Rucho, R-Mecklenburg, has been one of the most outspoken lawmakers regarding Holmes, but he was conciliatory on Friday.

“I wish Lynn well, and I look forward to working with the new leadership in the Division of Employment Security to solve problems and restore the division to financial health,” Rucho said in a statement.

Commerce Secretary Keith Crisco thanked Holmes for her "valuable guidance" as the commission was shifted over to a division that was under more direct control by Crisco's department.

"I want to thank her for her dedicated work during this time of change," Crisco said in a statement.

A division spokesman said Holmes wasn't at work Friday.

Holmes was grilled Jan. 4 for more than an hour under oath by members of the Revenue Laws Study Committee. She defended her agency, which previously was known as the Employment Security Commission, over whether it reacted soon enough or strongly enough in raising concerns to lawmakers about why business taxes paid to the unemployment fund weren't keeping up with benefits.

The Unemployment Insurance Trust Fund became insolvent in early 2009.

Holmes, who was originally appointed as commission chairwoman by Gov. Beverly Perdue in early 2010, provided lawmakers a list of eight occasions in which she or her agency's staff made presentations to the legislative or executive branches about trust fund challenges.

Republicans also have criticized Holmes' agency for errors that resulted in overpaying benefits to tens of thousands of displaced workers.

An outside study on the trust fund challenges is pending, but any solution likely will include higher unemployment insurance taxes for some businesses to reduce the debt over several years.