Forecasting unemployment insurance trust funds: The case of Tennessee

Abstract

Many state unemployment insurance (UI) trust funds have reached levels inadequate to fund UI programs, resulting in renewed efforts to forecast UI variables. This paper describes efforts in Tennessee to formulate a UI forecasting model that overcomes the weaknesses of existing models. The intent is to help forecasters in other states cope with the problems of UI forecasting and to provide a framework to build upon. The two major goals of the model are to provide accurate forecasts and to facilitate strategic planning. Forecasting errors illuminate some important inaccuracies in the model. However, the model captures the variables most frequently subject to legislative change.