Tennessee: Claims draw down state fund

Tennessee’s jobless rate rose in September to its highest level in more than 21 years, putting additional pressure on the fund that pays benefits to jobless Tennesseans, state Labor Commissioner James Neeley said Thursday.

Unemployment in Tennessee jumped in September to 7.2 percent, topping the comparable U.S. jobless rate of 6.1 percent and the Georgia unemployment rate of 6.5 percent. Last month’s rate in Tennessee was the highest since March 1987.

“Tennessee, like the rest of the nation, is experiencing job losses across all industries.” Mr. Neeley said.

Over the past year, the biggest job losses in Tennessee were in manufacturing, down by 10,000 jobs, and professional and business services, which lost a net 6,800 jobs.

With more jobless Tennesseans qualifying for unemployment insurance, the state’s unemployment trust fund has dropped by more than $53 million in the past year, state records show.

Mr. Neeley, who has served as labor commissioner since 2003, said the decline will likely lead the Bredesen administration to ask the General Assembly to make some changes in the fund for the first time.

“We are concerned about the overall economy and the impact on our trust fund,” Mr. Neeley said. “But I’m not alarmed at this point.”

Since 1983 when Tennessee’s unemployment insurance fund ran out of money, the state has adjusted its tax rates for employers twice a year to ensure its solvency. As the reserves in the trust fund decline, taxes on employers are raised, based upon each business’s layoff experience.

Mr. Neeley said the fund, which reported assets of $549.3 million two weeks ago, “is not where we would like it to be” and may require some legislative changes in 2009 to help improve its long-term viability.

“I would like our trust fund to get to $1 billion,” he said.

The highest the fund ever reached, however, was about $750 million in the 1990s.

The National Employment Law Project, a policy group based in New York that lobbies on behalf of the unemployed, said Tennessee is about average in its unemployment trust fund reserves. The group identified unemployment trust funds in seven states — California, Michigan, Missouri, New York, Ohio, South Carolina and Wisconsin — as being in danger of insolvency.

Deborah K. Woolley, president of the Tennessee Chamber of Commerce and Industry and a member of the state advisory board on the unemployment insurance fund, said Tennessee may have to revise the wage base and criteria used to help set some the employer unemployment insurance tax rates.

“We want to have the best fund that we can for those who are unemployed at the least cost that we can for our employers,” she said.